THOMASVILLE, Ga., May 22 /PRNewswire-FirstCall/ -- Flowers Foods
(NYSE: FLO) today reported results for its 16-week first quarter
ended April 19, 2008. The company also updated its earnings
guidance for the year. -- Sales increased 10.9% to $676.7 million
in the first quarter of 2008 over the first quarter of 2007. The
increase was driven by higher pricing, increased volume, and
positive mix shifts. -- Net income in the quarter increased 25.6%
to $35.8 million, or $.39 per diluted share, over the prior year's
first quarter. -- EBITDA was $75.1 million, or 11.1% of sales, an
increase of 15.4% over the same period in 2007. -- Branded retail
sales were up 13.8% in the quarter, driven by Nature's Own soft
variety and premium breads and Nature's Own Whitewheat breads as
well as by regional white bread brands. -- Sales and earnings
guidance for 2008 was updated, increasing expected sales to a new
range of $2.220 billion to $2.271 billion and net income to a new
range of $106.6 million to $113.6 million, or $1.15 per share to
$1.23 per share. George E. Deese, Flowers Foods' Chairman, CEO, and
President said, "Our results in the first quarter once again prove
the strength of our brands, our team, and our operating strategies.
Sales of our branded products were robust and our internal data
shows unit growth of 2.6%. Increased sales to fast food restaurants
partially offset lower unit sales to casual dining providers.
"Investments over the long term in bakery technology, distribution
systems, and information technology have helped make Flowers Foods
one of the most efficient operators in our industry. We continue to
face the most dramatic cost increases the baking industry has ever
experienced, but our team remains focused on executing our
strategies, further improving our efficiencies, taking costs out of
our business wherever possible, and maintaining the quality and
value of our products. These efforts, along with pricing actions,
helped offset our higher input costs in the quarter and allowed us
to achieve another good quarter." In keeping with the company's
separate announcement today concerning several key executive
appointments and operating alignment, financial information
presented in this first quarter earnings release shows segment data
for direct-store-delivery or DSD, which was previously reported as
Bakeries Group, and warehouse delivery, which was previously
reported as Specialty Group. First Quarter Results For the first
quarter, sales increased 10.9% to $676.7 million over the $609.9
million reported for last year's first quarter. Net income was
$35.8 million, or $.39 per diluted share, an increase of 25.6% over
the $28.5 million, or $.31 per diluted share, reported for the 2007
first quarter. The quarter's sales increase of 10.9% was achieved
through a favorable pricing/mix of 9.5% and volume increase of
1.4%. During the quarter, the company's direct- store-delivery
sales grew at 13.3% due to a favorable pricing/mix of 10.4% and
unit volume increase of 2.9%. Sales through warehouse delivery
increased 1.5%, reflecting positive pricing/mix of 2.8% partially
offset by a volume decline of 1.3%. For the quarter, gross margin
as a percent of sales was 48.3% compared to 49.7% in the first
quarter of 2007. The decrease in margin as a percent of sales was
due to higher ingredient costs, partially offset by sales gains,
better stales control, improved manufacturing efficiencies, and
lower labor costs as a percent of sales. Selling, marketing, and
administrative costs as a percent of sales for the quarter were
37.2% compared to 39.0% in the prior year. The improvement as a
percent of sales was due primarily to increased sales and lower
employee- related and advertising costs as a percent of sales.
Logistic costs as a percent of sales also decreased despite higher
energy costs due to the company's continued efforts to minimize
miles traveled and to locate production closer to markets served.
Depreciation and amortization expenses for the first quarter
remained relatively stable as compared to the prior quarter. Net
interest income for the quarter was $1.6 million higher than the
prior year first quarter due to higher interest income related to
the sale of new territories to independent distributors and a
decrease in interest expense due to lower average debt outstanding
under the company's credit facility. The effective tax rate for the
quarter was 35.7% and the full-year tax rate is expected to be
approximately 36.0%. Operating margin for the first quarter also
was strong at 8.0% as compared to 7.4% for the same period last
year. EBITDA for the quarter was $75.1 million, or 11.1% of sales,
an increase of 15.4% over EBITDA for the first quarter of 2007. For
the quarter, net cash provided by operating activities remained
strong at $61.4 million. The company invested $23.3 million in
capital improvements and paid dividends totaling $11.5 million to
shareholders during the quarter. Under the share repurchase plan,
the company acquired 256,248 shares of its common stock for $5.8
million, an average of $22.75 per share. Since the inception of the
share repurchase plan, the company has acquired 19.4 million shares
of its common stock for $286.2 million, an average of $14.76 per
share. The plan authorizes the company to repurchase up to 30.0
million shares of common stock. Updated Guidance for Fiscal 2008
"The second quarter brings our steepest increase in commodity costs
for the year and, in the short term, we will experience greater
pressure due to those high costs," Deese said. "However, we are
confident in our ability to deliver strong results for the full
year." Updating guidance for fiscal 2008, he said the company now
expects sales growth of 9.0% to 11.5%, excluding any future
acquisitions. Therefore, sales for fiscal 2008 are expected to be
$2.220 billion to $2.271 billion. Fiscal 2008 is a 53-week year and
approximately 1.6% of estimated fiscal 2008 sales are expected from
the 53rd week. The company expects net income will be 4.8% to 5.0%
of sales, or $106.6 million to $113.6 million. With approximately
92.5 million average shares outstanding, earnings per share are
expected to be $1.15 to $1.23, an increase of 12.7% to 20.6% over
fiscal 2007. Previously, the company's guidance for 2008 had been
for sales $2.210 billion to $2.258 billion, net income of $99.5
million to $108.4 million, and earnings per share of $1.07 to
$1.17. Capital spending in fiscal 2008 is expected to be $95.0
million to $100.0 million, an amount that includes costs for
construction of new production capacity as well as for maintaining
and improving efficiencies in the company's 36 existing bakeries.
Deese said, "To meet our goals, we must continue to manage our
business well and further implement the strategies that have
created competitive advantages for us in the marketplace. Our
performance in the first quarter was strong in the face of cost
pressures and the uncertainty of consumer behavior as energy and
food costs rose. The updated guidance for this year anticipates
continued sales growth in spite of possible economic downturn. Our
team is focused on delivering good results that will help build
shareholder value over the long term." 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 first quarter conference call
over the Internet at 8:30 a.m. (Eastern) May 22, 2008. 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, Cobblestone Mill, Sunbeam, Blue Bird, and Mrs. Freshley's.
Flowers operates 36 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,
Southwest, and Mid-Atlantic. 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 and (f)
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
16 Week For the 16 Week Period Ended Period Ended 04/19/08 04/21/07
Sales $676,707 $609,947 Materials, supplies, labor and other
production costs 349,971 306,952 Selling, marketing and
administrative expenses 251,675 237,963 Depreciation and
amortization 20,912 20,117 Income before interest, income taxes and
minority interest (EBIT) 54,149 44,915 Interest income, net 3,497
1,933 Income before income taxes and minority interest (EBT) 57,646
46,848 Income tax expense 20,562 16,500 Income before minority
interest 37,084 30,348 Minority interest in variable interest
entity (1,301) (1,855) Net income $35,783 $28,493 Per share
amounts: Net income $0.39 $0.31 Diluted weighted average shares
outstanding 92,352 91,958 Flowers Foods Segment Reporting (000's
omitted) For the 16 Week For the 16 Week Period Ended Period Ended
04/19/08 04/21/07 Sales: Direct-Store-Delivery $553,934 $489,012
Warehouse Delivery 122,773 120,935 $676,707 $609,947 EBITDA:
Direct-Store-Delivery $70,911 $61,324 Warehouse Delivery 11,419
12,099 Flowers Foods (7,269) (8,391) $75,061 $65,032 Depreciation
and Amortization: Direct-Store-Delivery $16,338 $16,207 Warehouse
Delivery 4,341 3,968 Flowers Foods 233 (58) $20,912 $20,117 EBIT:
Direct-Store-Delivery $54,573 $45,117 Warehouse Delivery 7,078
8,131 Flowers Foods (7,502) (8,333) $54,149 $44,915 Flowers Foods
Condensed Consolidated Balance Sheet (000's omitted) 04/19/08
Assets Cash and Cash Equivalents $42,478 Other Current Assets
274,827 Property, Plant & Equipment, net 489,083 Distributor
Notes Receivable (includes $11,294 current portion) 101,562 Other
Assets 47,440 Cost in Excess of Net Tangible Assets, net 97,908
Total Assets $1,053,298 Liabilities and Stockholders' Equity
Current Liabilities $231,197 Bank Debt 0 Other Debt and Capital
Leases (includes $4,414 current portion) 27,521 Other Liabilities
87,653 Minority Interest in Variable Interest Entity 8,735 Common
Stockholders' Equity 698,192 Total Liabilities and Stockholders'
Equity $1,053,298 Flowers Foods Condensed Consolidated Statement of
Cash Flows (000's omitted) For the 16 Week Period Ended 04/19/08
Cash flows from operating activities: Net income $35,783
Adjustments to reconcile net income to net cash from operating
activities: Depreciation and amortization 20,912 Minority interest
in variable interest entity 1,301 Stock compensation 3,399 Changes
in assets and liabilities 52 Net cash provided by operating
activities 61,447 Cash flows from investing activities: Purchase of
property, plant and equipment (23,324) Other (2,030) Net cash
disbursed for investing activities (25,354) Cash flows from
financing activities: Dividends paid (11,534) Stock options
exercised 2,404 Income tax benefit related to stock awards 1,599
Stock repurchases (5,829) Increase in book overdraft 1,675 Proceeds
from debt borrowings 3,500 Debt and capital lease obligation
payments (5,408) Net cash disbursed for financing activities
(13,593) Net increase in cash and cash equivalents 22,500 Cash and
cash equivalents at beginning of period 19,978 Cash and cash
equivalents at end of period $42,478 Flowers Foods Reconciliation
of Net Income to EBITDA from Continuing Operations (000's omitted)
For the 16 Weeks Ended 4/19/08 Net Income $35,783 Minority interest
in variable interest entity 1,301 Income tax expense 20,562
Interest income, net (3,497) Depreciation and amortization 20,912
EBITDA from Continuing Operations $75,061 DATASOURCE: Flowers Foods
CONTACT: Investors, Marta J. Turner, Senior VP-Corporate Relations,
+1-229-227-2348, or Media, Mary A. Krier, VP-Communications,
+1-229-227-2333, both of Flowers Foods Web site:
http://www.flowersfoods.com/
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