THOMASVILLE, Ga., Nov. 8, 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 third quarter ended October 7,
2017.
Third Quarter Summary:
Compared to the prior year third quarter where applicable
- Sales increased 1.5% to $932.8 million. Excluding sales related to a divestiture, sales
increased 2.1%.
- Diluted EPS decreased $0.35 to a loss of $0.16.
- Adjusted diluted EPS(1) increased 9.5% to $0.23.
- Net income decreased $73.8 million to a loss of $33.6
million.
- Adjusted net income(1) increased 9.7% to $48.3 million.
- Adjusted EBITDA(2) increased 9.1% to $112.4 million.
- Adjusted EBITDA(2) margin increased 80 basis points to 12.0% of sales.
(1) Adjusted for items affecting comparability. 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.
CEO's Remarks:
"We are pleased with our results for the quarter, which reflect the strength of our brands, the dedication of our team
and independent distributor partners, and the ongoing restructuring efforts under Project Centennial," said Allen Shiver, Flowers Foods president and CEO. "Strong demand for Dave's Killer Bread and outstanding
execution and service in the marketplace drove growth in sales and market share during the quarter. Earnings were impacted by
expected strategic charges that allow us to lower our cost structure and streamline our company, increase focus on our strongest
brands, and improve our supply chain. Excluding these charges, our profitability in the third quarter was solid, driven by
improved manufacturing efficiencies and enhanced cost discipline across the company. Through Project Centennial, we are making
substantial progress and building momentum to achieve the underlying earnings potential of the business."
Mr. Shiver continued, "Our strategic objectives are on track, and the progress we are making is encouraging. We are capturing
savings through organizational efficiencies and reduced spending on purchased goods and services. Our focus on productivity and
continuous improvement is delivering improved efficiencies. We are streamlining our product assortment, reducing complexity in
the marketplace and in our bakeries. With our increased focus on innovation and product differentiation, our team is developing a
robust innovation pipeline to drive brand growth. I am confident the changes we are making will build shareholder value over the
long term."
Guidance for Fiscal 2017:
- The company continues to expect 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%.
- The company continues to expect fiscal 2017 adjusted diluted EPS to be in the range of $0.85 to
$0.90, excluding the matters affecting comparability listed below:
|
|
|
Reconciliation of Earnings per Share -
Full Year Fiscal 2017 Guidance
|
|
|
|
Range Estimate
|
|
|
|
|
|
|
Net income per diluted common share
|
|
$
0.47
|
to
|
$
0.51
|
Gain on sale of Specialty Blending
|
|
(0.09)
|
|
(0.09)
|
Project Centennial consulting costs
|
|
0.11
|
|
0.12
|
Restructuring and related impairments
|
|
0.29
|
|
0.29
|
Pension plan settlement loss
|
|
0.01
|
|
0.01
|
Multi-employer pension plan withdrawal costs
|
|
0.05
|
|
0.05
|
Lease terminations and legal settlement
|
|
0.01
|
|
0.01
|
Adjusted net income per diluted common share
|
|
$
0.85
|
to
|
$
0.90
|
Update on Strategic Priorities:
The company continued to deliver on its strategic priorities under Project Centennial. During the third quarter,
notable accomplishments included:
- Generating Fuel for Growth: On track to achieve fiscal 2018 gross savings goal of $70 million
to $80 million, relative to fiscal 2016, continued transition to the new organizational structure and completed the
voluntary separation incentive program, conducted "lean" events at bakeries to drive continuous improvement in operations,
performed regional scenario analysis to better optimize the manufacturing network, and moved forward with initiatives to reduce
purchased goods and services spending.
- Reinvigorating the Core Business: Streamlined retail product assortment to reduce merchandising complexity and
improve manufacturing efficiencies, and utilized a third-party distribution platform to expand distribution of products in the
upper Midwest.
Third Quarter Matters Affecting Comparability:
In the third quarter of 2017, the company recorded Project Centennial consulting costs of $7.1
million, restructuring and related impairment charges of $100.5 million, a legal settlement
of $4.3 million, pension plan settlement loss of $3.0 million, and
MEPP withdrawal costs of $18.3 million. In the prior year quarter, the company recorded Project
Centennial consulting costs of $1.2 million, legal settlements and related tax liabilities of
$1.3 million, loss on extinguishment of debt of $1.9 million, and a
pension plan settlement loss of $1.8 million.
Reconciliation of Earnings (Loss) per Share to Adjusted Earnings
per Share
|
|
|
|
|
|
|
|
For the Twelve Weeks Ended
|
|
|
Oct 7, 2017
|
|
Oct 8, 2016
|
|
|
|
|
|
Net income (loss) per diluted common share
|
$ (0.16)
|
|
$ 0.19
|
Project Centennial consulting costs
|
0.02
|
|
-
|
Restructuring and related impairment charges
|
0.29
|
|
-
|
Legal settlements
|
0.01
|
|
-
|
Loss on extinguishment of debt
|
-
|
|
0.01
|
Pension plan settlement loss
|
0.01
|
|
0.01
|
Multi-employer pension plan withdrawal costs
|
0.05
|
|
-
|
Adjusted net income per diluted common share
|
$ 0.23
|
|
$ 0.21
|
|
|
|
|
|
Certain amounts may not compute due to rounding.
|
For the remainder of fiscal 2017, the company expects Project Centennial consulting costs to be in the range of $5.5 million to $6.5 million.
Consolidated Third Quarter 2017 Summary
Compared to the prior year third quarter where applicable
- Sales increased 1.5% to $932.8 million.
- Percentage point change in sales attributed to:
-
- Pricing/mix: -0.6%
- Volume: 2.7%
- Divestiture: -0.6%
- Net income decreased $73.8 million to a loss of $33.6 million.
Excluding matters affecting comparability, adjusted net income increased 9.7% to $48.3
million.
- Operating income decreased $119.9 million to a loss of $53.8
million. Excluding matters affecting comparability, adjusted operating income increased 12.7% to $79.4 million.
- Adjusted EBITDA increased 9.1% to $112.4 million, or 12.0% of sales, an 80 basis point
increase.
- Materials, supplies, labor and other production costs (exclusive of depreciation and amortization) were 51.0% of sales, a
90 basis point improvement, primarily driven by fewer outside purchases of product, and improved manufacturing
efficiencies.
- Selling, distribution and administrative (SD&A) expenses were 38.1% of sales, a 90 basis point increase driven
primarily by incremental Project Centennial consulting costs and legal settlement charges.
- Restructuring and related impairment charges, MEPP withdrawal costs, and pension plan settlement loss were $121.8 million.
- Depreciation and amortization (D&A) expenses were $33.0 million, 3.5% of sales, flat when
compared to the prior year quarter.
Continued sales growth from branded organic products and expansion markets, and to a much lesser extent, increased volume due
to the impact of two hurricanes during the quarter, resulted in the sales increase, partially offset by the divestiture of a mix
manufacturing business in January 2017 and by a competitive marketplace. Sales of DKB branded
products continue to increase, partly due to the introduction of breakfast items in the second quarter of the year.
On a consolidated basis, branded retail sales increased 3.0% to $550.8 million and store branded
retail sales increased 1.1% to $138.6 million, while non-retail and other sales decreased 1.4% to
$243.4 million. The sales increase in the branded retail category resulted primarily from increased
sales of branded organic products, partially offset by softer sales of branded buns and rolls. Store branded retail sales
increased primarily as a result of volume increases in buns and rolls. The impact of the mix manufacturing divestiture, somewhat
offset by volume growth in vending sales, principally resulted in the decrease of non-retail and other sales, which includes
contract manufacturing, vending and foodservice.
DSD Segment Summary
Compared to the prior year third quarter where applicable
- Sales increased 2.4% to $787.3 million
- Percentage point change in sales attributed to:
-
- Pricing/mix: 1.4%
- Volume: 1.0%
- Operating income decreased $86.6 million to a loss of $20.2
million. Excluding matters affecting comparability, adjusted operating income increased 16.8% to $78.9 million.
- Adjusted EBITDA increased 12.3% to $107.2 million, or 13.6% of sales, a 120 basis point
increase.
- Materials, supplies, labor and other production costs (exclusive of depreciation and amortization) were 47.2% of segment
sales, a 70 basis point improvement, primarily driven by sales increases due to improved pricing/mix.
- SD&A expenses were 39.7% of segment sales, a 10 basis points decrease. This decrease was primarily driven by lower
workforce-related costs and cost savings initiatives, partially offset by higher distribution fees due to a larger portion of
sales being sold by independent distributors, and a higher legal settlement charge incurred during the quarter.
- Restructuring and related impairment charges and MEPP withdrawal costs were $94.9
million.
- D&A expenses were $28.3 million.
DSD segment branded retail sales increased 3.7% to $514.6 million and store branded retail sales
increased 0.2% to $110.8 million, while non-retail and other sales were unchanged at $161.9 million.
Branded retail sales increased due to significant sales growth for branded organic products and, to a lesser extent, increased
volume related to the impact of two hurricanes during the current quarter, somewhat offset by declines in branded buns and rolls.
Sales of DKB branded products continue to increase, driven by volume gains and the addition of DKB breakfast items in the second
quarter of the year. Store branded retail and non-retail and other sales were relatively unchanged quarter over quarter.
Warehouse Segment Summary
Compared to the prior year third quarter where applicable
- Sales decreased 2.9% to $145.6 million.
- Percentage point change in sales attributed to:
-
- Pricing/mix: -6.8%
- Volume: 7.3%
- Divestiture: -3.4%
- Operating income decreased $21.4 million to a loss of $9.1
million. Excluding matters affecting comparability, adjusted operating income decreased 10.6% to $11.0 million.
- Adjusted EBITDA decreased 6.6% to $15.8 million, 10.8% of sales, a 50 basis point
decline.
- Materials, supplies, labor and other production costs (exclusive of depreciation and amortization) were 71.9% of segment
sales, a 30 basis point improvement, primarily driven by lower outside purchases of product, and increased production for the
DSD segment, partially offset by sales declines.
- SD&A expenses were 17.2% of segment sales, a 70 basis point increase. This increase was primarily driven by
significantly lower sales that spread the costs over a smaller sales base, as well as increased marketing expenses.
- Restructuring costs and related impairment charges were $20.1 million.
- D&A expenses were $4.8 million.
Branded retail sales declined 5.5% to $36.2 million and store branded retail sales increased
5.0% to $27.8 million, while non-retail and other sales decreased 4.1% to $81.5 million. Branded retail sales decreased largely due to declines in branded cake and to a lesser extent
warehouse-delivered branded organic bread. Branded cake sales were negatively impacted by increased competition quarter over
quarter. Volume increases in store branded items due to a new customer resulted in the increase in store branded retail sales.
The decrease in non-retail and other sales, which include contract manufacturing, vending and foodservice, was due primarily to
the impact of the mix manufacturing divestiture and to a lesser extent lost contract manufacturing business, partially offset by
growth in vending volume.
Unallocated Corporate Expense Summary
Note: Comparisons are to consolidated sales
- SD&A expenses increased 70 basis points to 1.9% of consolidated sales, including incremental Project Centennial
consulting costs of $5.8 million, or 60 basis points as a percent of sales.
- Restructuring and related impairment charges and pension plan settlement loss were $6.9
million.
Cash Flow, Capital Allocation, and Capital Return
In the third quarter of fiscal 2017, cash flow from operating activities was $50.4
million, capital expenditures were $19.3 million, and dividends paid were $35.6 million. During the quarter, the company had a net increase in debt and capital lease obligations of
$6.9 million.
The company did not repurchase any shares of its common stock during the period. There are 6.6 million shares remaining under
the company's current share repurchase plan. As in the past, the company expects to continue to make opportunistic share
repurchases under this plan.
Conference Call
Flowers Foods will hold a conference call to discuss its third quarter 2017 results at 8:30
a.m. (Eastern) on November 9, 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) general economic and business
conditions and the 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 operating income, adjusted operating income by segment, adjusted EBIT by segment, 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 operating income, adjusted operating income
by segment, 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 Operations
|
(000's omitted, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the 12 Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
|
|
|
October 7, 2017
|
|
October 8, 2016
|
|
October 7, 2017
|
|
October 8, 2016
|
Sales
|
$
|
932,822
|
$
|
918,791
|
$
|
3,047,110
|
$
|
3,058,168
|
Materials, supplies, labor and other production costs (exclusive of
depreciation and amortization shown separately below)
|
|
476,170
|
|
476,760
|
|
1,552,263
|
|
1,575,905
|
Selling, distribution and administrative expenses
|
|
355,599
|
|
341,538
|
|
1,171,062
|
|
1,124,473
|
Gain on divestiture
|
|
-
|
|
-
|
|
(28,875)
|
|
-
|
Restructuring and related impairment charges
|
|
100,549
|
|
-
|
|
100,549
|
|
-
|
Multi-employer pension plan withdrawal costs
|
|
18,268
|
|
-
|
|
18,268
|
|
-
|
Pension plan settlement loss
|
|
3,030
|
|
1,832
|
|
3,030
|
|
6,473
|
Depreciation and amortization
|
|
32,972
|
|
32,530
|
|
114,288
|
|
108,595
|
Income (loss) from operations
|
|
(53,766)
|
|
66,131
|
|
116,525
|
|
242,722
|
Interest expense, net
|
|
2,730
|
|
4,683
|
|
11,056
|
|
10,471
|
Income (loss) before income taxes
|
|
(56,496)
|
|
61,448
|
|
105,469
|
|
232,251
|
Income tax expense (benefit)
|
|
(22,925)
|
|
21,232
|
|
33,882
|
|
81,517
|
Net income (loss)
|
$
|
(33,571)
|
$
|
40,216
|
$
|
71,587
|
$
|
150,734
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per diluted common share
|
$
|
(0.16)
|
$
|
0.19
|
$
|
0.34
|
$
|
0.72
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding
|
|
209,606
|
|
208,944
|
|
210,231
|
|
210,564
|
Flowers Foods, Inc.
|
Segment Reporting
|
(000's omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the 12 Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
|
October 7, 2017
|
|
October 8, 2016
|
|
October 7, 2017
|
|
October 8, 2016
|
Sales:
|
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
$
|
787,255
|
$
|
768,920
|
$
|
2,580,007
|
$
|
2,553,690
|
Warehouse Delivery
|
|
145,567
|
|
149,871
|
|
467,103
|
|
504,478
|
|
$
|
932,822
|
$
|
918,791
|
$
|
3,047,110
|
$
|
3,058,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on Divestiture:
|
|
|
|
|
|
|
|
|
Warehouse Delivery
|
$
|
-
|
$
|
-
|
$
|
(28,875)
|
$
|
-
|
|
$
|
-
|
$
|
-
|
$
|
(28,875)
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and related impairment charges:
|
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
$
|
76,625
|
$
|
-
|
$
|
76,625
|
$
|
-
|
Warehouse Delivery
|
|
20,091
|
|
-
|
|
20,091
|
|
-
|
Unallocated Corporate
|
|
3,833
|
|
-
|
|
3,833
|
|
-
|
|
$
|
100,549
|
$
|
-
|
$
|
100,549
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-employer pension plan withdrawal costs:
|
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
$
|
18,268
|
$
|
-
|
$
|
18,268
|
$
|
-
|
|
$
|
18,268
|
$
|
-
|
$
|
18,268
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension plan settlement loss:
|
|
|
|
|
|
|
|
|
Unallocated Corporate
|
$
|
3,030
|
$
|
1,832
|
$
|
3,030
|
$
|
6,473
|
|
$
|
3,030
|
$
|
1,832
|
$
|
3,030
|
$
|
6,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (loss) income:
|
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
$
|
8,047
|
$
|
94,183
|
$
|
245,422
|
$
|
331,321
|
Warehouse Delivery
|
|
(4,313)
|
|
16,896
|
|
63,043
|
|
62,224
|
Unallocated Corporate
|
|
(24,528)
|
|
(12,418)
|
|
(77,652)
|
|
(42,228)
|
|
$
|
(20,794)
|
$
|
98,661
|
$
|
230,813
|
$
|
351,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization:
|
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
$
|
28,286
|
$
|
27,852
|
$
|
98,703
|
$
|
92,906
|
Warehouse Delivery
|
|
4,769
|
|
4,585
|
|
15,841
|
|
15,462
|
Unallocated Corporate
|
|
(83)
|
|
93
|
|
(256)
|
|
227
|
|
$
|
32,972
|
$
|
32,530
|
$
|
114,288
|
$
|
108,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT (loss) income:
|
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
$
|
(20,239)
|
$
|
66,331
|
$
|
146,719
|
$
|
238,415
|
Warehouse Delivery
|
|
(9,082)
|
|
12,311
|
|
47,202
|
|
46,762
|
Unallocated Corporate
|
|
(24,445)
|
|
(12,511)
|
|
(77,396)
|
|
(42,455)
|
|
$
|
(53,766)
|
$
|
66,131
|
$
|
116,525
|
$
|
242,722
|
Flowers Foods, Inc.
|
Condensed Consolidated Balance Sheet
|
(000's omitted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 7, 2017
|
Assets
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
7,074
|
|
|
|
|
Other Current Assets
|
|
|
494,482
|
|
|
|
|
Property, Plant & Equipment, net
|
|
|
735,927
|
|
|
|
|
Distributor Notes Receivable (includes $22,465
current portion)
|
|
|
201,589
|
|
|
|
|
Other Assets
|
|
|
30,303
|
|
|
|
|
Cost in Excess of Net Tangible Assets,
net
|
|
|
1,213,304
|
|
|
|
|
Total Assets
|
|
$
|
2,682,679
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
Current Liabilities
|
|
$
|
396,063
|
|
|
|
|
Long-term Debt and Capital Leases (includes
$12,469 current portion)
|
|
856,108
|
|
|
|
|
Other Liabilities
|
|
|
238,534
|
|
|
|
|
Stockholders' Equity
|
|
|
1,191,974
|
|
|
|
|
Total Liabilities and Stockholders'
Equity
|
|
$
|
2,682,679
|
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 40 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
|
|
October 7, 2017
|
|
October 8, 2016
|
|
October 7, 2017
|
|
October 8, 2016
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
(33,571)
|
$
|
40,216
|
$
|
71,587
|
$
|
150,734
|
Adjustments to reconcile net income (loss) to net cash
|
|
|
|
|
|
|
|
|
from operating activities:
|
|
|
|
|
|
|
|
|
|
Total non-cash adjustments
|
|
118,875
|
|
43,125
|
|
181,049
|
|
133,087
|
|
Changes in assets and liabilities and pension contributions
|
|
(34,948)
|
|
7,185
|
|
(41,384)
|
|
2,002
|
Net cash provided by operating activities
|
|
50,356
|
|
90,526
|
|
211,252
|
|
285,823
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
|
(19,294)
|
|
(25,678)
|
|
(51,213)
|
|
(67,400)
|
|
Divestiture of assets
|
|
-
|
|
-
|
|
41,230
|
|
-
|
|
Other
|
|
(589)
|
|
6,242
|
|
9,953
|
|
11,902
|
Net cash disbursed for investing activities
|
|
(19,883)
|
|
(19,436)
|
|
(30)
|
|
(55,498)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
(35,606)
|
|
(33,199)
|
|
(105,207)
|
|
(97,808)
|
|
Exercise of stock options
|
|
2,880
|
|
8,384
|
|
9,296
|
|
18,862
|
|
Stock repurchases, including accelerated stock repurchases
|
|
-
|
|
-
|
|
(2,671)
|
|
(126,298)
|
|
Net change in debt borrowings
|
|
6,850
|
|
(46,608)
|
|
(101,250)
|
|
(22,858)
|
|
Other
|
|
(4,702)
|
|
(3,724)
|
|
(10,726)
|
|
(9,066)
|
Net cash disbursed for financing activities
|
|
(30,578)
|
|
(75,147)
|
|
(210,558)
|
|
(237,168)
|
Net increase (decrease) in cash and cash equivalents
|
|
(105)
|
|
(4,057)
|
|
664
|
|
(6,843)
|
Cash and cash equivalents at beginning of period
|
|
7,179
|
|
11,592
|
|
6,410
|
|
14,378
|
Cash and cash equivalents at end of period
|
$
|
7,074
|
$
|
7,535
|
$
|
7,074
|
$
|
7,535
|
Flowers Foods, Inc.
|
Reconciliation of GAAP to Non-GAAP Measures
|
(000's omitted, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Earnings (Loss) per Share to Adjusted Earnings per
Share
|
|
|
|
|
For the 12 Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
|
|
|
October 7, 2017
|
|
October 8, 2016
|
|
October 7, 2017
|
|
October 8, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per diluted common share
|
|
$
(0.16)
|
|
$
0.19
|
|
$
0.34
|
|
$
0.72
|
|
Gain on divestiture
|
|
-
|
|
-
|
|
(0.09)
|
|
-
|
|
Restructuring and related impairment charges
|
|
0.29
|
|
-
|
|
0.29
|
|
-
|
|
Lease terminations/legal settlement/extinguishment loss
|
|
0.01
|
|
0.01
|
|
0.02
|
|
0.01
|
|
Project Centennial consulting costs
|
|
0.02
|
|
-
|
|
0.09
|
|
0.01
|
|
Pension plan settlement loss
|
|
0.01
|
|
0.01
|
|
0.01
|
|
0.02
|
|
Multi-employer pension plan withdrawal costs
|
|
0.05
|
|
-
|
|
0.05
|
|
-
|
|
Adjusted net income per diluted common share
|
|
$
0.23
|
|
$
0.21
|
|
$
0.72
|
|
$
0.75
|
|
Certain amounts may not add due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Gross Margin
|
|
|
|
|
|
|
|
|
For the 12 Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
|
|
|
|
|
|
|
October 7, 2017
|
|
October 8, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ 932,822
|
|
$ 918,791
|
|
|
|
|
|
Materials, supplies, labor and other production costs (exclusive of
depreciation and amortization)
|
|
476,170
|
|
476,760
|
|
|
|
|
|
Gross Margin excluding depreciation and amortization
|
|
456,652
|
|
442,031
|
|
|
|
|
|
Less depreciation and amortization for production activities
|
|
19,553
|
|
19,807
|
|
|
|
|
|
Gross Margin
|
|
$ 437,099
|
|
$ 422,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization for production activities
|
|
$
19,553
|
|
$ 19,807
|
|
|
|
|
|
Depreciation and amortization for selling, distribution and administrative
activities
|
|
13,419
|
|
12,723
|
|
|
|
|
|
Total depreciation and amortization
|
|
$
32,972
|
|
$ 32,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) to Adjusted EBIT and Adjusted
EBITDA
|
|
|
|
|
For the 12 Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
|
|
|
October 7, 2017
|
|
October 8, 2016
|
|
October 7, 2017
|
|
October 8, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ (33,571)
|
|
$ 40,216
|
|
$
71,587
|
|
$ 150,734
|
|
Income tax expense (benefit)
|
|
(22,925)
|
|
21,232
|
|
33,882
|
|
81,517
|
|
Interest expense, net
|
|
2,730
|
|
4,683
|
|
11,056
|
|
10,471
|
|
Earnings (loss) before interest and income taxes
|
|
(53,766)
|
|
66,131
|
|
116,525
|
|
242,722
|
|
Gain on divestiture
|
|
-
|
|
-
|
|
(28,875)
|
|
-
|
|
Lease terminations and legal settlement
|
|
4,253
|
|
1,250
|
|
5,068
|
|
1,250
|
|
Project Centennial consulting costs
|
|
7,050
|
|
1,219
|
|
31,845
|
|
2,475
|
|
Restructuring and related impairment charges
|
|
100,549
|
|
-
|
|
100,549
|
|
-
|
|
Multi-employer pension plan withdrawal costs
|
|
18,268
|
|
-
|
|
18,268
|
|
-
|
|
Pension plan settlement loss
|
|
3,030
|
|
1,832
|
|
3,030
|
|
6,473
|
|
Adjusted EBIT
|
|
79,384
|
|
70,432
|
|
246,410
|
|
252,920
|
|
Depreciation and amortization
|
|
32,972
|
|
32,530
|
|
114,288
|
|
108,595
|
|
Lease termination depreciation impact
|
|
-
|
|
-
|
|
(1,844)
|
|
-
|
|
Adjusted EBITDA
|
|
$ 112,356
|
|
$ 102,962
|
|
$ 358,854
|
|
$ 361,515
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ 932,822
|
|
$ 918,791
|
|
$ 3,047,110
|
|
$ 3,058,168
|
|
Adjusted EBITDA margin
|
|
12.0%
|
|
11.2%
|
|
11.8%
|
|
11.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA to Cash Flow from
Operations
|
|
|
|
|
For the 12 Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
|
|
|
October 7, 2017
|
|
October 8, 2016
|
|
October 7, 2017
|
|
October 8, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$ 112,356
|
|
$ 102,962
|
|
$ 358,854
|
|
$ 361,515
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities
|
|
85,903
|
|
10,595
|
|
66,761
|
|
24,492
|
|
Changes in assets and liabilities and pension contributions
|
|
(34,948)
|
|
7,185
|
|
(41,384)
|
|
2,002
|
|
Income tax (expense) benefit
|
|
22,925
|
|
(21,232)
|
|
(33,882)
|
|
(81,517)
|
|
Interest expense, net
|
|
(2,730)
|
|
(4,683)
|
|
(11,056)
|
|
(10,471)
|
|
Gain on divestiture
|
|
-
|
|
-
|
|
28,875
|
|
-
|
|
Lease terminations and legal settlement
|
|
(4,253)
|
|
(1,250)
|
|
(3,224)
|
|
(1,250)
|
|
Project Centennial consulting costs
|
|
(7,050)
|
|
(1,219)
|
|
(31,845)
|
|
(2,475)
|
|
Restructuring and related impairment charges
|
|
(100,549)
|
|
-
|
|
(100,549)
|
|
-
|
|
Multi-employer pension plan withdrawal costs
|
|
(18,268)
|
|
-
|
|
(18,268)
|
|
-
|
|
Pension plan settlement loss
|
|
(3,030)
|
|
(1,832)
|
|
(3,030)
|
|
(6,473)
|
|
Cash Flow From Operations
|
|
$
50,356
|
|
$ 90,526
|
|
$ 211,252
|
|
$ 285,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Income Tax Expense (Benefit) to Adjusted Income Tax
Expense
|
|
|
|
|
For the 12 Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
|
|
|
October 7, 2017
|
|
October 8, 2016
|
|
October 7, 2017
|
|
October 8, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit)
|
|
$ (22,925)
|
|
$ 21,232
|
|
$
33,882
|
|
$ 81,517
|
|
Tax impact of:
|
|
|
|
|
|
|
|
|
|
Gain on divestiture
|
|
-
|
|
-
|
|
(11,117)
|
|
-
|
|
Lease terminations and legal settlement
|
|
1,638
|
|
481
|
|
1,952
|
|
481
|
|
Project Centennial consulting costs
|
|
2,714
|
|
469
|
|
12,260
|
|
953
|
|
Loss on extinguishment of debt
|
|
-
|
|
732
|
|
-
|
|
732
|
|
Restructuring and related impairment charges
|
|
38,711
|
|
-
|
|
38,711
|
|
-
|
|
Multi-employer pension plan withdrawal costs
|
|
7,033
|
|
-
|
|
7,033
|
|
-
|
|
Pension plan settlement loss
|
|
1,167
|
|
705
|
|
1,167
|
|
2,492
|
|
Adjusted income tax expense
|
|
$
28,338
|
|
$ 23,619
|
|
$
83,888
|
|
$ 86,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income (Loss) to Adjusted Net Income
|
|
|
|
|
For the 12 Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
|
|
|
October 7, 2017
|
|
October 8, 2016
|
|
October 7, 2017
|
|
October 8, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$ (33,571)
|
|
$ 40,216
|
|
$
71,587
|
|
$ 150,734
|
|
Gain on divestiture
|
|
-
|
|
-
|
|
(17,758)
|
|
-
|
|
Lease terminations and legal settlement
|
|
2,615
|
|
769
|
|
3,116
|
|
769
|
|
Project Centennial consulting costs
|
|
4,336
|
|
750
|
|
19,585
|
|
1,522
|
|
Loss on extinguishment of debt
|
|
-
|
|
1,168
|
|
-
|
|
1,168
|
|
Restructuring and related impairment charges
|
|
61,838
|
|
-
|
|
61,838
|
|
-
|
|
Multi-employer pension plan withdrawal costs
|
|
11,235
|
|
-
|
|
11,235
|
|
-
|
|
Pension plan settlement loss
|
|
1,863
|
|
1,127
|
|
1,863
|
|
3,981
|
|
Adjusted net income
|
|
$
48,316
|
|
$ 44,030
|
|
$ 151,466
|
|
$ 158,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of EBIT to Adjusted EBIT and Adjusted EBITDA -
DSD
|
|
|
|
|
For the 12 Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
|
|
|
October 7, 2017
|
|
October 8, 2016
|
|
October 7, 2017
|
|
October 8, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before interest and income taxes
|
|
$ (20,239)
|
|
$ 66,331
|
|
$ 146,719
|
|
$ 238,415
|
|
Lease terminations and legal settlement
|
|
4,253
|
|
1,250
|
|
5,068
|
|
1,250
|
|
Restructuring and related impairment charges
|
|
76,625
|
|
-
|
|
76,625
|
|
-
|
|
Multi-employer pension plan withdrawal costs
|
|
18,268
|
|
-
|
|
18,268
|
|
-
|
|
Adjusted EBIT
|
|
78,907
|
|
67,581
|
|
246,680
|
|
239,665
|
|
Depreciation and amortization
|
|
28,286
|
|
27,852
|
|
98,703
|
|
92,906
|
|
Depreciation on lease terminations
|
|
-
|
|
-
|
|
(1,844)
|
|
-
|
|
Adjusted EBITDA
|
|
$ 107,193
|
|
$ 95,433
|
|
$ 343,539
|
|
$ 332,571
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ 787,255
|
|
$ 768,920
|
|
$ 2,580,007
|
|
$ 2,553,690
|
|
Adjusted EBITDA margin
|
|
13.6%
|
|
12.4%
|
|
13.3%
|
|
13.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 40 Week
Period Ended
|
|
For the 40 Week Period Ended
|
|
|
|
|
October 7, 2017
|
|
October 8, 2016
|
|
October 7, 2017
|
|
October 8, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before interest and income taxes
|
|
$
(9,082)
|
|
$ 12,311
|
|
$
47,202
|
|
$ 46,762
|
|
Gain on divestiture
|
|
-
|
|
-
|
|
(28,875)
|
|
-
|
|
Restructuring and related impairment charges
|
|
20,091
|
|
-
|
|
20,091
|
|
-
|
|
Adjusted EBIT
|
|
11,009
|
|
12,311
|
|
38,418
|
|
46,762
|
|
Depreciation and amortization
|
|
4,769
|
|
4,585
|
|
15,841
|
|
15,462
|
|
Adjusted EBITDA
|
|
$
15,778
|
|
$ 16,896
|
|
$
54,259
|
|
$ 62,224
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$ 145,567
|
|
$ 149,871
|
|
$ 467,103
|
|
$ 504,478
|
|
Adjusted EBITDA margin
|
|
10.8%
|
|
11.3%
|
|
11.6%
|
|
12.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of EBIT to Adjusted EBIT and Adjusted EBITDA -
Corporate
|
|
|
|
|
For the 12 Week
Period Ended
|
|
For the 12 Week
Period Ended
|
|
For the 40 Week
Period Ended
|
|
For the 40 Week Period Ended
|
|
|
|
|
October 7, 2017
|
|
October 8, 2016
|
|
October 7, 2017
|
|
October 8, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT
|
|
$ (24,445)
|
|
$ (12,511)
|
|
$ (77,396)
|
|
$ (42,455)
|
|
Project Centennial consulting costs
|
|
7,050
|
|
1,219
|
|
31,845
|
|
2,475
|
|
Pension plan settlement loss
|
|
3,030
|
|
1,832
|
|
3,030
|
|
6,473
|
|
Restructuring and related impairment charges
|
|
3,833
|
|
-
|
|
3,833
|
|
-
|
|
Adjusted EBIT
|
|
$ (10,532)
|
|
$
(9,460)
|
|
$ (38,688)
|
|
$ (33,507)
|
|
Depreciation and amortization
|
|
(83)
|
|
93
|
|
(256)
|
|
227
|
|
Adjusted EBITDA
|
|
$ (10,615)
|
|
$
(9,367)
|
|
$ (38,944)
|
|
$ (33,280)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Earnings per Share - Full
Year Fiscal 2017 Guidance
|
|
|
|
|
|
|
|
|
Range Estimate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per diluted common share
|
|
$
0.47
|
to
|
$
0.51
|
|
|
|
|
|
Gain on sale of Specialty Blending
|
|
(0.09)
|
|
(0.09)
|
|
|
|
|
|
Project Centennial consulting costs
|
|
0.11
|
|
0.12
|
|
|
|
|
|
Restructuring and related impairments
|
|
0.29
|
|
0.29
|
|
|
|
|
|
Pension plan settlement loss
|
|
0.01
|
|
0.01
|
|
|
|
|
|
Multi-employer pension plan withdrawal costs
|
|
0.05
|
|
0.05
|
|
|
|
|
|
Lease terminations and legal settlement
|
|
0.01
|
|
0.01
|
|
|
|
|
|
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 October 7, 2017
|
Volume
|
Price/Mix
|
Divestiture
|
Change
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
1.0%
|
1.4%
|
0.0%
|
2.4%
|
|
|
|
|
|
|
|
Warehouse Delivery
|
7.3%
|
-6.8%
|
-3.4%
|
-2.9%
|
|
|
|
|
|
|
|
Total Flowers Foods
|
2.7%
|
-0.6%
|
-0.6%
|
1.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
Total Sales
|
|
For the 40 Week Period Ended October 7, 2017
|
Volume
|
Price/Mix
|
Divestiture
|
Change
|
|
|
|
|
|
|
|
Direct-Store-Delivery
|
0.3%
|
0.7%
|
0.0%
|
1.0%
|
|
|
|
|
|
|
|
Warehouse Delivery
|
-1.9%
|
-2.6%
|
-2.9%
|
-7.4%
|
|
|
|
|
|
|
|
Total Flowers Foods
|
-0.3%
|
0.4%
|
-0.5%
|
-0.4%
|
|
|
|
|
|
|
|
View original content:http://www.prnewswire.com/news-releases/flowers-foods-inc-reports-third-quarter-2017-results-300552365.html
SOURCE Flowers Foods, Inc.