8-K
FLOWERS FOODS INC (FLO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 6, 2020 (November 5, 2020)
FLOWERS FOODS, INC.
(Exact name of registrant as specified in its charter)
| Georgia | 1-16247 | 58-2582379 |
|---|---|---|
| (State or other jurisdiction<br> <br>of incorporation) | (Commission<br> <br>File Number) | (I.R.S. Employer<br> <br>Identification No.) |
| 1919 Flowers Circle, Thomasville, GA | 31757 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (229) 226-9110
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | FLO | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On November 5, 2020, Flowers Foods, Inc. issued a press release announcing its financial condition and results of operations as of and for the 12 weeks ended October 3, 2020. A copy of the press release is furnished with this Report as Exhibit 99.1.
| Item 9.01. | Financial Statements and Exhibits. |
|---|
(d) Exhibits.
| Exhibit<br>Number | Description |
|---|---|
| 99.1 | Press Release of Flowers Foods, Inc. dated November 5, 2020. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FLOWERS FOODS, INC. | |
|---|---|
| By: | /s/ R. Steve Kinsey |
| Name: | R. Steve Kinsey |
| Title: | Chief Financial Officer and Chief Accounting Officer |
Date: November 6, 2020
EX-99.1
Exhibit 99.1
Company Press Release
| November 5, 2020 | Flowers Foods (NYSE: FLO) |
|---|
FLOWERS FOODS, INC. REPORTS THIRD QUARTER 2020 RESULTS
THOMASVILLE, Ga. – Flowers Foods, Inc. (NYSE: FLO), producer of Nature’s Own, Dave’s Killer Bread, Wonder, Tastykake, and other bakery foods, today reported financial results for the company’s 12-week third quarter ended October 3, 2020.
Third Quarter Summary:
Compared to the prioryear third quarter where applicable
| • | Sales increased 2.4% to $989.7 million. |
|---|---|
| • | Net income increased 2.3% to $44.3 million. Adjusted net income increased 36.3% to $62.4 million.<br> |
| --- | --- |
| • | Adjusted EBITDA^(1)^ increased 22.4% to $116.4 million,<br>representing 11.8% of sales, a 200-basis point increase. |
| --- | --- |
| • | Diluted EPS increased $0.01 to $0.21. Adjusted diluted<br>EPS^(1)^ increased $0.07 to $0.29. |
| --- | --- |
| (1) | Adjusted for items affecting comparability. See reconciliations ofnon-GAAP measures in the financial statements following this release. |
| --- | --- |
CEO’sRemarks:
“Our record third quarter reflects a favorable operating environment for our branded retail business and our continued focus on achieving our strategic priorities,” said Ryals McMullian, Flowers Foods’ president and CEO. “The impact of the COVID-19 pandemic persisted in the third quarter, though at more moderate levels than in the second quarter. Our team continues to perform exceptionally well in this unprecedented environment and I am proud of their resiliency as they continue to serve our markets.”
“We are capitalizing on the increased frequency of in-home eating, which has driven elevated trial of our market-leading products, by executing on our portfolio strategy and supply chain optimization initiatives,” he continued. “We expect the demand environment to continue to moderate, but we believe our focus on product quality, innovation, and marketing will allow us to retain many of these new consumers and drive improved sales growth and margin expansion in support of our long-term growth targets.”
McMullian added, “We remain confident in our ability to deliver at least $20 million of cost savings this year and are working tirelessly to drive even more efficiencies. With our organizational restructuring and portfolio and supply chain optimization initiatives, we are becoming a more branded-focused company, which will ultimately boost our ability to drive shareholder value.”
For the 53-week Fiscal 2020, the Company Expects:
| • | Sales in the range of approximately $4.350 billion to $4.370 billion, representing growth of<br>approximately 5.5% to 6.0%. |
|---|---|
| • | Diluted EPS in the range of approximately $0.65 to $0.70. |
| --- | --- |
| • | Adjusted diluted EPS in the range of approximately $1.23 to $1.28, adjusted for items affecting comparability,<br>representing annual growth of approximately 28.1% to 33.3%. |
| --- | --- |
The company’s outlook includes the following assumptions:
| • | Portfolio and supply chain optimization benefit in excess of $20 million |
|---|---|
| • | Depreciation and amortization in the range of $140 million to $145 million |
| --- | --- |
| • | Net interest expense of approximately $11 million |
| --- | --- |
| • | An effective tax rate of approximately 24.0% to 24.5% |
| --- | --- |
| • | Weighted average diluted share count for the year of approximately 212.5 million shares<br> |
| --- | --- |
| • | Capital expenditures for the year in the range of $85 million to $95 million |
| --- | --- |
Matters Affecting Comparability:
Reconciliation of Earnings per Share to Adjusted Earnings per Share
| For the 12 Weeks Ended | |||||
|---|---|---|---|---|---|
| Oct. 3, 2020 | Oct. 5, 2019 | ||||
| Net income per diluted common share | $ | 0.21 | $ | 0.20 | |
| Restructuring and related impairment charges | 0.07 | 0.01 | |||
| Project Centennial consulting costs | 0.02 | — | |||
| ERP road mapping consulting costs | 0.01 | — | |||
| Legal settlements | 0.01 | — | |||
| Pension plan settlement gain | (0.03 | ) | — | ||
| Adjusted net income per diluted common share | $ | 0.29 | $ | 0.22 |
Certain amounts may not compute due to rounding.
Consolidated Third Quarter Operating Highlights
Compared to the prior year third quarter where applicable
| • | Sales increased 2.4% to $989.7 million. |
|---|---|
| • | Percentage point change in sales attributed to: |
| --- | --- |
| • | Pricing/mix: 8.1%, primarily driven by mix |
| --- | --- |
| • | Volume: -5.7% |
| --- | --- |
| • | Branded retail sales increased $71.2 million or 12.2% to $657.1 million, store branded retail sales<br>decreased $14.4 million or 9.5% to $136.6 million, while non-retail and other sales decreased $33.7 million or 14.7% to $196.0 million. |
| --- | --- |
| • | Branded retail sales increased due to the impact of the COVID-19<br>pandemic, new product introductions, lower promotional activity, and a reduction in product returns. |
| --- | --- |
| • | Store branded retail sales decreased primarily due to volume declines as consumer purchasing shifted to branded<br>retail products, partly offset by improved price/mix. |
| --- | --- |
| • | Non-retail and other sales declined primarily due to the impact of the<br>pandemic on foodservice customers. |
| --- | --- |
| • | Net income increased 2.3% to $44.3 million. Adjusted net income increased 36.3% to $62.4 million.<br> |
| --- | --- |
| • | Adjusted EBITDA increased 22.4% to $116.4 million, representing 11.8% of sales, a 200-basis point increase. |
| --- | --- |
| • | Materials, supplies, labor and other production costs (exclusive of depreciation and amortization) were 50.3% of<br>sales, a 240-basis point decrease. These costs were lower as a percentage of sales due to positive shifts in mix from non-retail and store branded retail products to<br>branded retail products. Ingredient and packaging costs declined due to the mix shift and lower product returns. |
| --- | --- |
| • | Selling, distribution and administrative (SD&A) expenses were 39.1% of sales, a 160-basis point increase. Excluding matters affecting comparability, adjusted SD&A expenses were 38.0% of sales, a 50-basis point increase. Higher employee incentive costs<br>and an increase in distributor distribution fees due to a shift in product mix were the primary drivers of the increased costs. Partially offsetting the higher costs were lower logistics expenses related to the product mix shift, lower fuel costs,<br>and the benefit of supply chain optimization projects. |
| --- | --- |
| • | Depreciation and amortization (D&A) expenses were $32.2 million, or 3.2% of sales, a 20-basis point decrease. |
| --- | --- |
Cash Flow, Capital Allocation, and Capital Return
Year-to-date, through the third quarter of fiscal 2020, cash flow from operating activities increased by $86.3 million to $364.4 million, capital expenditures decreased $2.3 million to $68.3 million, and dividends paid increased $5.1 million to $124.9 million. There were no debt borrowings or repayments in the quarter. Cash and cash equivalents were $325.8 million at quarter-end.
There are 6.2 million shares authorized for repurchase under the company’s current share repurchase plan. The company expects to continue to make opportunistic share repurchases from time to time under this plan.
Pre-Recorded Management Remarks and Question and Answer Webcast
In conjunction with this release, Flowers Foods will post pre-recorded management remarks and a supporting slide presentation to its website. The company will host a live question and answer webcast at 8:30 a.m. (Eastern) on November 6, 2020. The pre-recorded remarks and the webcast can be accessed at flowersfoods.com/investors and 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 packaged bakery foods in the United States with 2019 sales of $4.1 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, Dave’s Killer Bread, Wonder, and Tastykake. Learn more at www.flowersfoods.com.
Investor Contact: J.T. Rieck (229) 227-2253
Media Contact: Paul Baltzer (229) 227-2380
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 and the ultimate impact of the novel strain of coronavirus (COVID-19) pandemic on our business, results of operations and financial condition, 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) the ultimate impact of the COVID-19 pandemic and measures taken in response thereto, including, among other things, temporary or ongoing bakery closures, on our business, results of operations and financial condition, which are highly uncertain and are difficult to predict, (b) general economic and business conditions and the competitive conditions in the baked foods industry, including promotional and price competition, (c) 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, (d) the success of
productivity improvements and new product introductions, (e) a significant reduction in business with any of our major customers including a reduction from adverse developments in any of our customer’s business, (f) fluctuations in commodity pricing, (g) energy and raw material costs and availability and hedging and counterparty risk, (h) our ability to fully integrate recent acquisitions into our business, (i) our ability to achieve cash flow from capital expenditures and acquisitions and the availability of new acquisitions that build shareholder value, (j) 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 deployment of new systems and technology and an enhanced organizational structure; (k) our ability to integrate recent acquisitions or the acquisition or disposition of assets at presently targeted values, (l) consolidation within the baking industry and related industries, (m) 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, (n) increasing legal complexity and legal proceedings that we are or may become subject to, (o) product recalls or safety concerns related to our products, and (p) the failure of our information technology systems to perform adequately, including any interruptions, intrusions or security breaches of such systems or risks associated with the planned implementation of a new enterprise resource planning system. 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 EPS, adjusted income tax expense, adjusted selling, distribution and administrative expenses (SD&A), gross margin excluding depreciation and amortization, free cash flow, 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 earnings before interest, taxes, depreciation and amortization. The company defines free cash flow as operating cash flow minus capital expenditures. The company believes that free cash flow provides investors a better understanding of the company’s liquidity position. 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, EBITDA margin, adjusted EBITDA margin, adjusted net income, adjusted operating income, adjusted EPS, adjusted income tax expense, adjusted SD&A, respectively, excluding the impact of asset impairment charges, Project Centennial consulting costs, lease terminations and legal settlements, acquisition-related costs, and pension plan settlements. Adjusted income tax expense also excludes the impact of tax reform. 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.
The company defines net debt as total debt less cash and cash equivalents. 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.
Condensed Consolidated Balance Sheets
(000’s omitted)
| October 3, 2020 | December 28, 2019 | |||
|---|---|---|---|---|
| Assets | ||||
| Cash and Cash Equivalents | $ | 325,831 | $ | 11,044 |
| Other Current Assets | **** | 512,521 | 515,165 | |
| Property, Plant & Equipment, net | **** | 694,450 | 717,822 | |
| Right-of-Use<br>Leases, net | **** | 353,400 | 399,302 | |
| Distributor Notes Receivable (1) | **** | 210,352 | 226,348 | |
| Other Assets | **** | 20,676 | 12,644 | |
| Cost in Excess of Net Tangible Assets, net | **** | 1,268,238 | 1,295,451 | |
| Total Assets | $ | 3,385,468 | $ | 3,177,776 |
| Liabilities and Stockholders’ Equity | ||||
| Current Liabilities | $ | 459,107 | $ | 463,431 |
| Long-term Debt (2) | **** | 1,009,839 | 866,508 | |
| Right-of-Use Lease<br>Liabilities (3) | **** | 372,364 | 404,503 | |
| Other Liabilities | **** | 192,672 | 179,904 | |
| Stockholders’ Equity | **** | 1,351,486 | 1,263,430 | |
| Total Liabilities and Stockholders’ Equity | $ | 3,385,468 | $ | 3,177,776 |
| (1) | Includes current portion of $28,291 and $27,709, respectively. | |||
| --- | --- | |||
| (2) | Includes current portion of $0 and $3,730, respectively. | |||
| --- | --- | |||
| (3) | Includes current portion of $57,176 and $60,982, respectively. | |||
| --- | --- |
Flowers Foods, Inc.
Consolidated Statement of Operations
(000’s omitted, except per share data)
| For the 12 WeekPeriod Ended | For the 12 Week<br>Period Ended | For the 40 WeekPeriod Ended | For the 40 Week<br>Period Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| October 3, 2020 | October 5, 2019 | October 3, 2020 | October 5, 2019 | ||||||||
| Sales | $ | 989,650 | **** | $ | 966,561 | $ | 3,364,955 | **** | $ | 3,206,215 | |
| Materials, supplies, labor and other production costs (exclusive of depreciation and<br>amortization shown separately below) | **** | 497,659 | **** | 509,056 | **** | 1,674,565 | **** | 1,669,749 | |||
| Selling, distribution and administrative expenses | **** | 386,739 | **** | 362,380 | **** | 1,305,678 | **** | 1,197,926 | |||
| Recovery on inferior ingredients | **** | — | **** | — | **** | — | **** | (413 | ) | ||
| Restructuring and related impairment charges | **** | 20,100 | **** | 3,277 | **** | 30,635 | **** | 6,042 | |||
| Depreciation and amortization expense | **** | 32,162 | **** | 33,196 | **** | 110,005 | **** | 111,344 | |||
| Income from operations | **** | 52,990 | **** | 58,652 | **** | 244,072 | **** | 221,567 | |||
| Other pension (benefit) cost | **** | (72 | ) | 518 | **** | (1 | ) | 1,729 | |||
| Pension plan settlement and curtailment (gain) loss | **** | (7,153 | ) | — | **** | 109,054 | **** | — | |||
| Interest expense, net | **** | 2,755 | **** | 2,334 | **** | 8,938 | **** | 8,927 | |||
| Income before income taxes | **** | 57,460 | **** | 55,800 | **** | 126,081 | **** | 210,911 | |||
| Income tax expense | **** | 13,113 | **** | 12,442 | **** | 29,587 | **** | 48,592 | |||
| Net income | $ | 44,347 | **** | $ | 43,358 | $ | 96,494 | **** | $ | 162,319 | |
| Net income per diluted common share | $ | 0.21 | **** | $ | 0.20 | $ | 0.45 | **** | $ | 0.77 | |
| Diluted weighted average shares outstanding | **** | 212,458 | **** | 212,014 | **** | 212,270 | **** | 211,956 |
Flowers Foods, Inc.
Condensed Consolidated Statement of Cash Flows
(000’s omitted)
| For the 12 WeekPeriod Ended | For the 12 Week<br>Period Ended | For the 40 WeekPeriod Ended | For the 40 Week<br>Period Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 3, 2020 | October 5, 2019 | October 3, 2020 | October 5, 2019 | |||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 44,347 | **** | $ | 43,358 | $ | 96,494 | **** | $ | 162,319 | ||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||||||||
| Total non-cash adjustments | **** | 40,622 | **** | 42,449 | **** | 234,135 | **** | 140,018 | ||||
| Changes in assets and liabilities and pension contributions | **** | 3,673 | **** | (15,764 | ) | **** | 33,807 | **** | (24,237 | ) | ||
| Net cash provided by operating activities | **** | 88,642 | **** | 70,043 | **** | 364,436 | **** | 278,100 | ||||
| Cash flows from investing activities: | ||||||||||||
| Purchase of property, plant and equipment | **** | (21,676 | ) | (23,198 | ) | **** | (68,270 | ) | (70,610 | ) | ||
| Proceeds from sale of property, plant and equipment | **** | 248 | **** | 2,005 | **** | 1,700 | **** | 2,548 | ||||
| Other | **** | 4,620 | **** | 1,831 | **** | 13,983 | **** | 2,956 | ||||
| Net cash disbursed for investing activities | **** | (16,808 | ) | (19,362 | ) | **** | (52,587 | ) | (65,106 | ) | ||
| Cash flows from financing activities: | ||||||||||||
| Dividends paid | **** | (42,320 | ) | (40,189 | ) | **** | (124,948 | ) | (119,799 | ) | ||
| Payment of contingent consideration | **** | — | **** | — | **** | (4,700 | ) | — | ||||
| Stock repurchases | **** | — | **** | — | **** | (783 | ) | (7,054 | ) | |||
| Net change in debt borrowings | **** | — | **** | (15,750 | ) | **** | 142,500 | **** | (102,500 | ) | ||
| Payments on financing leases | **** | (2,593 | ) | (1,682 | ) | **** | (6,493 | ) | (4,985 | ) | ||
| Other | **** | (652 | ) | 4,139 | **** | (2,638 | ) | 3,006 | ||||
| Net cash (disbursed for) provided by financing activities | **** | (45,565 | ) | (53,482 | ) | **** | 2,938 | **** | (231,332 | ) | ||
| Net increase (decrease) in cash and cash equivalents | **** | 26,269 | **** | (2,801 | ) | **** | 314,787 | **** | (18,338 | ) | ||
| Cash and cash equivalents at beginning of period | **** | 299,562 | **** | 9,769 | **** | 11,044 | **** | 25,306 | ||||
| Cash and cash equivalents at end of period | $ | 325,831 | **** | $ | 6,968 | $ | 325,831 | **** | $ | 6,968 |
Flowers Foods, Inc.
Sales by Sales Class and Sales Bridge
(000’s omitted)
| Sales by Sales Class | For the 12 Week Period Ended | For the 12 Week Period<br>Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
| October 3, 2020 | October 5, 2019 | Change | % Change | ||||||
| Branded Retail | $ | 657,050 | $ | 585,844 | 12.2 | % | |||
| Store Branded Retail | **** | 136,639 | 151,057 | ) | -9.5 | % | |||
| Non-Retail and Other | **** | 195,961 | 229,660 | ) | -14.7 | % | |||
| Total Sales | $ | 989,650 | $ | 966,561 | 2.4 | % | |||
| Sales by Sales Class | For the 40 WeekPeriod Ended | For the 40 Week Period<br>Ended | |||||||
| October 3, 2020 | October 5, 2019 | Change | % Change | ||||||
| Branded Retail | $ | 2,236,301 | $ | 1,928,500 | 16.0 | % | |||
| Store Branded Retail | **** | 472,238 | 505,388 | ) | -6.6 | % | |||
| Non-Retail and Other | **** | 656,416 | 772,327 | ) | -15.0 | % | |||
| Total Sales | $ | 3,364,955 | $ | 3,206,215 | 5.0 | % |
All values are in US Dollars.
Sales Bridge
| For the 12 Week Period Ended October 3,2020 | Volume | NetPrice/Mix | TotalSales Change | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Flowers Foods | **** | -5.7 | % | **** | 8.1 | % | **** | 2.4 | % |
Sales Bridge
| Net | Total | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| For the 40 Week Period Ended October 3,2020 | Volume | Price/Mix | Sales Change | ||||||
| Flowers Foods | **** | -2.5 | % | **** | 7.5 | % | **** | 5.0 | % |
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 WeekPeriod Ended | For the 12 Week<br>Period Ended | For the 40 WeekPeriod Ended | For the 40 Week<br>Period Ended | |||||||||
| October 3, 2020 | October 5, 2019 | October 3, 2020 | October 5, 2019 | |||||||||
| Net income per diluted common share | $ | 0.21 | **** | $ | 0.20 | $ | 0.45 | $ | 0.77 | |||
| Recovery on inferior ingredients | **** | — | **** | — | **** | — | NM | |||||
| Restructuring and related impairment charges | **** | 0.07 | **** | 0.01 | **** | 0.11 | 0.02 | |||||
| Project Centennial consulting costs | **** | 0.02 | **** | — | **** | 0.05 | — | |||||
| ERP road mapping consulting costs | **** | 0.01 | **** | — | **** | 0.01 | — | |||||
| Legal settlements (recovery) | **** | 0.01 | **** | — | **** | 0.02 | NM | |||||
| Executive retirement agreement | **** | — | **** | — | **** | — | NM | |||||
| Canyon acquisition costs | **** | — | **** | — | **** | — | NM | |||||
| Pension plan settlement and curtailment (gain) loss | **** | (0.03 | ) | — | **** | 0.39 | — | |||||
| Other pension plan termination costs | **** | — | **** | — | **** | NM | — | |||||
| Adjusted net income per diluted common share | $ | 0.29 | **** | $ | 0.22 | $ | 1.03 | $ | 0.78 | |||
| NM - not meaningful. | ||||||||||||
| Certain amounts may not add due to rounding. | ||||||||||||
| Reconciliation of Gross Margin | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| For the 12 WeekPeriod Ended | For the 12 Week<br>Period Ended | For the 40 WeekPeriod Ended | For the 40 Week<br>Period Ended | |||||||||
| October 3, 2020 | October 5, 2019 | October 3, 2020 | October 5, 2019 | |||||||||
| Sales | $ | 989,650 | $ | 966,561 | $ | 3,364,955 | $ | 3,206,215 | ||||
| Materials, supplies, labor and other production costs (exclusive of depreciation and<br>amortization) | **** | 497,659 | 509,056 | **** | 1,674,565 | 1,669,749 | ||||||
| Gross Margin excluding depreciation and amortization | **** | 491,991 | 457,505 | **** | 1,690,390 | 1,536,466 | ||||||
| Less depreciation and amortization for production activities | **** | 17,443 | 18,454 | **** | 59,814 | 62,022 | ||||||
| Gross Margin | $ | 474,548 | $ | 439,051 | $ | 1,630,576 | $ | 1,474,444 | ||||
| Depreciation and amortization for production activities | $ | 17,443 | $ | 18,454 | $ | 59,814 | $ | 62,022 | ||||
| Depreciation and amortization for selling, distribution and administrative activities | **** | 14,719 | 14,742 | **** | 50,191 | 49,322 | ||||||
| Total depreciation and amortization | $ | 32,162 | $ | 33,196 | $ | 110,005 | $ | 111,344 | ||||
| Reconciliation of Selling, Distribution and Administrative Expenses toAdjusted SD&A | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| For the 12 WeekPeriod Ended | For the 12 Week<br>Period Ended | For the 40 WeekPeriod Ended | For the 40 Week<br>Period Ended | |||||||||
| October 3, 2020 | October 5, 2019 | October 3, 2020 | October 5, 2019 | |||||||||
| Selling, distribution and administrative expenses (SD&A) | $ | 386,739 | **** | $ | 362,380 | $ | 1,305,678 | **** | $ | 1,197,926 | ||
| Project Centennial consulting costs | **** | (5,068 | ) | — | **** | (14,044 | ) | — | ||||
| ERP road mapping consulting costs | **** | (3,079 | ) | — | **** | (3,079 | ) | — | ||||
| Legal (settlements) recovery | **** | (3,011 | ) | — | **** | (6,231 | ) | 1,136 | ||||
| Executive retirement agreement | **** | — | **** | — | **** | — | **** | (763 | ) | |||
| Canyon acquisition costs | **** | — | **** | — | **** | — | **** | (22 | ) | |||
| Other pension plan termination costs | **** | — | **** | — | **** | (133 | ) | — | ||||
| Adjusted SD&A | $ | 375,581 | **** | $ | 362,380 | $ | 1,282,191 | **** | $ | 1,198,277 | ||
| Reconciliation of Net Income to EBITDA and Adjusted EBITDA | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| For the 12 WeekPeriod Ended | For the 12 Week<br>Period Ended | For the 40 WeekPeriod Ended | For the 40 Week<br>Period Ended | |||||||||
| October 3, 2020 | October 5, 2019 | October 3, 2020 | October 5, 2019 | |||||||||
| Net income | $ | 44,347 | **** | $ | 43,358 | $ | 96,494 | **** | $ | 162,319 | ||
| Income tax expense | **** | 13,113 | **** | 12,442 | **** | 29,587 | **** | 48,592 | ||||
| Interest expense, net | **** | 2,755 | **** | 2,334 | **** | 8,938 | **** | 8,927 | ||||
| Depreciation and amortization | **** | 32,162 | **** | 33,196 | **** | 110,005 | **** | 111,344 | ||||
| EBITDA | **** | 92,377 | **** | 91,330 | **** | 245,024 | **** | 331,182 | ||||
| Other pension (benefit) cost | **** | (72 | ) | 518 | **** | (1 | ) | 1,729 | ||||
| Pension plan settlement and curtailment (gain) loss | **** | (7,153 | ) | — | **** | 109,054 | **** | — | ||||
| Other pension plan termination costs | **** | — | **** | — | **** | 133 | **** | — | ||||
| Recovery on inferior ingredients | **** | — | **** | — | **** | — | **** | (413 | ) | |||
| Restructuring and related impairment charges | **** | 20,100 | **** | 3,277 | **** | 30,635 | **** | 6,042 | ||||
| Project Centennial consulting costs | **** | 5,068 | **** | — | **** | 14,044 | **** | — | ||||
| ERP road mapping consulting costs | **** | 3,079 | **** | — | **** | 3,079 | **** | — | ||||
| Legal settlements (recovery) | **** | 3,011 | **** | — | **** | 6,231 | **** | (1,136 | ) | |||
| Executive retirement agreement | **** | — | **** | — | **** | — | **** | 763 | ||||
| Canyon acquisition costs | **** | — | **** | — | **** | — | **** | 22 | ||||
| Adjusted EBITDA | $ | 116,410 | **** | $ | 95,125 | $ | 408,199 | **** | $ | 338,189 | ||
| Sales | $ | 989,650 | **** | $ | 966,561 | $ | 3,364,955 | **** | $ | 3,206,215 | ||
| Adjusted EBITDA margin | **** | 11.8 | % | 9.8 | % | **** | 12.1 | % | 10.5 | % |
Flowers Foods, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(000’s omitted, except per share data)
| Reconciliation of Income Tax Expense to Adjusted Income Tax Expense | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| For the 12 WeekPeriod Ended | For the 12 Week<br>Period Ended | For the 40 WeekPeriod Ended | For the 40 Week<br>Period Ended | ||||||||
| October 3, 2020 | October 5, 2019 | October 3, 2020 | October 5, 2019 | ||||||||
| Income tax expense | $ | 13,113 | **** | $ | 12,442 | $ | 29,587 | $ | 48,592 | ||
| Tax impact of: | |||||||||||
| Recovery on inferior ingredients | **** | — | **** | — | **** | — | (104 | ) | |||
| Restructuring and related impairment charges | **** | 5,025 | **** | 828 | **** | 7,659 | 1,526 | ||||
| Project Centennial consulting costs | **** | 1,267 | **** | — | **** | 3,511 | — | ||||
| ERP road mapping consulting costs | **** | 770 | **** | — | **** | 770 | — | ||||
| Legal settlements (recovery) | **** | 753 | **** | — | **** | 1,558 | (287 | ) | |||
| Executive retirement agreement | **** | — | **** | — | **** | — | 193 | ||||
| Canyon acquisition costs | **** | — | **** | — | **** | — | 6 | ||||
| Pension plan settlement and curtailment (gain) loss | **** | (1,788 | ) | — | **** | 27,264 | — | ||||
| Other pension plan termination costs | **** | — | **** | — | **** | 33 | — | ||||
| Adjusted income tax expense | $ | 19,140 | **** | $ | 13,270 | $ | 70,382 | $ | 49,926 | ||
| Reconciliation of Net Income to Adjusted Net Income | |||||||||||
| For the 12 WeekPeriod Ended | For the 12 Week<br>Period Ended | For the 40 WeekPeriod Ended | For the 40 Week<br>Period Ended | ||||||||
| October 3, 2020 | October 5, 2019 | October 3, 2020 | October 5, 2019 | ||||||||
| Net income | $ | 44,347 | **** | $ | 43,358 | $ | 96,494 | $ | 162,319 | ||
| Recovery on inferior ingredients | **** | — | **** | — | **** | — | (309 | ) | |||
| Restructuring and related impairment charges | **** | 15,075 | **** | 2,449 | **** | 22,976 | 4,516 | ||||
| Project Centennial consulting costs | **** | 3,801 | **** | — | **** | 10,533 | — | ||||
| ERP road mapping consulting costs | **** | 2,309 | **** | — | **** | 2,309 | — | ||||
| Legal settlements (recovery) | **** | 2,258 | **** | — | **** | 4,673 | (849 | ) | |||
| Executive retirement agreement | **** | — | **** | — | **** | — | 570 | ||||
| Canyon acquisition costs | **** | — | **** | — | **** | — | 16 | ||||
| Pension plan settlement and curtailment (gain) loss | **** | (5,365 | ) | — | **** | 81,790 | — | ||||
| Other pension plan termination costs | **** | — | **** | — | **** | 100 | — | ||||
| Adjusted net income | $ | 62,425 | **** | $ | 45,807 | $ | 218,875 | $ | 166,263 | ||
| Reconciliation of Earnings per Share - Full YearFiscal 2020 Guidance | |||||||||||
| Range Estimate | |||||||||||
| Net income per diluted common share | $ | 0.65 | **** | to | $ | 0.70 | |||||
| Restructuring and related impairment charges | **** | 0.11 | **** | **** | 0.11 | ||||||
| Project Centennial consulting costs | **** | 0.05 | **** | **** | 0.05 | ||||||
| ERP road mapping consulting costs | **** | 0.01 | **** | **** | 0.01 | ||||||
| Legal settlements | **** | 0.02 | **** | **** | 0.02 | ||||||
| Pension plan settlement and curtailment loss | **** | 0.39 | **** | **** | 0.39 | ||||||
| Other pension plan termination costs | **** | NM | **** | **** | NM | ||||||
| Adjusted net income per diluted common share | $ | 1.23 | **** | to | $ | 1.28 |
Certain amounts may not add due to rounding.