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 12, 2021 (November 11, 2021)
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 11, 2021, Flowers Foods, Inc. issued a press release announcing its financial condition and results of operations as of and for the 12 weeks ended October 9, 2021. 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 11, 2021. |
| 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 12, 2021
EX-99.1
Exhibit 99.1
Company Press Release
| November 11, 2021 | Flowers Foods (NYSE: FLO) |
|---|
FLOWERS FOODS, INC. REPORTS THIRD QUARTER 2021 RESULTS
THOMASVILLE, Ga. – Flowers Foods, Inc. (NYSE: FLO), producer of Nature’s Own, Dave’s Killer Bread, Wonder, Canyon Bakehouse,Tastykake, and other bakery foods, today reported financial results for the company’s 12-week third quarter ended October 9, 2021.
Third Quarter Summary:
Compared to the prioryear third quarter where applicable
| • | Sales increased 3.9% to $1.028 billion compared to results in the prior year period. |
|---|---|
| • | Net income decreased 12.4% to $38.9 million. Adjusted net income increased 3.9% to $64.9 million.<br> |
| --- | --- |
| • | Adjusted EBITDA^(1)^ increased 1.8% to $118.5 million.<br>Adjusted EBITDA represented 11.5% of sales, a 30-basis point decrease. |
| --- | --- |
| • | Diluted EPS decreased $0.03 to $0.18. Adjusted diluted<br>EPS^(1)^ increased $0.01 to $0.30. |
| --- | --- |
| (1) | Adjusted for items affecting comparability. See reconciliations ofnon-GAAP measures in the financial statements following this release. |
| --- | --- |
CEO’sRemarks:
“I’m pleased to report another record third quarter,” said Ryals McMullian, Flowers Foods’ president and CEO. “We generated sales and earnings above our strong year-ago results as our leading brands gained market share and our non-retail business steadily recovers from the effects of the pandemic. Our performance is a testament to the dedication of our team members, especially those in our bakeries, who have worked tirelessly to meet consumer demand during this challenging time.
“In light of our strong year-to-date performance, we are raising our 2021 sales and earnings guidance,” he continued. “Investments in innovation and marketing are driving sales growth and brand strength, improving our ability to manage inflationary pressures. We will continue executing on our plans to further strengthen our brands, expand margins, and explore potential acquisitions, and we remain confident in achieving our long-term financial targets.”
For the 52-week Fiscal 2021, the Company Expects:
| • | Sales in the range of approximately $4.300 billion to $4.344 billion, representing a decrease of<br>approximately 1.0% to 2.0% compared to the prior year period. The new guidance represents an increase over prior guidance of approximately $4.256 billion to $4.300 billion. This change includes a 1.8% reduction in sales due to one fewer<br>week in fiscal 2021. |
|---|---|
| • | Diluted EPS in the range of approximately $1.22 to $1.26, an increase over prior guidance of $1.17 to $1.22. EPS<br>guidance includes a $0.01 impact in the fourth quarter for appreciation bonuses to be paid to our frontline workers. The effect of one fewer week in fiscal 2021 impacts EPS by approximately $0.02. |
| --- | --- |
The company’s outlook is based on the following assumptions:
| • | Depreciation and amortization in the range of $135 million to $140 million |
|---|---|
| • | Net interest expense of approximately $8 million |
| --- | --- |
| • | An effective tax rate of approximately 24.5% |
| --- | --- |
| • | Weighted average diluted share count for the year of approximately 213 million shares |
| --- | --- |
| • | Capital expenditures for the year in the range of $125 million to $135 million |
| --- | --- |
Matters Affecting Comparability:
Reconciliation of Earnings per Share to Adjusted Earnings per Share
| For the 12 Week<br>Period Ended | For the 12 Week<br>Period Ended | ||||
|---|---|---|---|---|---|
| October 9, 2021 | October 3, 2020 | ||||
| Net income per diluted common share | $ | 0.18 | $ | 0.21 | |
| Project Centennial consulting costs | — | 0.02 | |||
| Recovery on inferior ingredients | NM | — | |||
| Business process improvement consulting costs | 0.03 | — | |||
| Legal settlements and related costs | 0.08 | 0.01 | |||
| ERP Road Mapping consulting costs | — | 0.01 | |||
| Multi-employer pension plan withdrawal costs | 0.01 | — | |||
| Pension plan settlement gain | — | (0.03 | ) | ||
| Restructuring and related impairment charges | — | 0.07 | |||
| Adjusted net income per diluted common share | $ | 0.30 | $ | 0.29 | |
| NM—not meaningful. | |||||
| --- | |||||
| Certain amounts may not add due to rounding. |
Consolidated Third Quarter Operating Highlights
Compared to the prior year third quarter where applicable
| • | Sales increased 3.9% to $1.028 billion compared to record results in the prior year period.<br> |
|---|---|
| • | Percentage point change in sales attributed to: |
| --- | --- |
| • | Pricing/mix: 6.4% |
| --- | --- |
| • | Volume: -2.5% |
| --- | --- |
| • | Branded retail sales increased $31.6 million or 4.8% to $689.1 million, store branded retail sales<br>decreased $11.5 million or 8.5% to $124.6 million, while non-retail and other sales increased $18.1 million or 9.2% to $214.2 million. |
| --- | --- |
| • | Branded retail sales increased primarily due to favorable price/mix and improved promotional efficiency,<br>partially offset by volume declines from moderating at-home food consumption. |
| --- | --- |
| • | Store branded retail sales decreased primarily due to volume declines as consumer purchasing shifted to branded<br>retail products, partially offset by increased sales of store branded cake and gluten-free items. |
| --- | --- |
| • | Non-retail and other sales increased due to recovering demand from<br>restaurants and schools, as well as more favorable pricing. |
| --- | --- |
| • | Net income decreased 12.4% to $38.9 million due primarily to legal settlements. Adjusted net income<br>increased 3.9% to $64.9 million due to higher sales, which drove cost leverage of certain items, and lower interest expense, partially offset by increased marketing investment and transportation costs. |
| --- | --- |
| • | Adjusted EBITDA increased 1.8% to $118.5 million, representing 11.5% of sales, a 30-basis point decrease. |
| --- | --- |
| • | Materials, supplies, labor, and other production costs (exclusive of depreciation and amortization) were 50.1% of<br>sales, a 20-basis point decrease. These costs decreased as a percentage of sales due to higher sales and $1.9 million of start-up costs in the year-ago period related to the conversion of our Lynchburg, Virginia facility to an organic bakery. More favorable price/mix mitigated rising commodity costs, partially offset by reduced outside purchases.<br> |
| --- | --- |
| • | Selling, distribution and administrative (SD&A) expenses were 41.5% of sales, a 240-basis point increase, impacted by legal settlements and increased consulting costs mostly related to our digital strategy initiatives, as well as increased marketing investments and higher transportation costs.<br>Excluding matters affecting comparability, adjusted SD&A expenses were 38.4% of sales, a 40-basis point increase from the prior year period due to the aforementioned increased marketing investments and<br>higher transportation costs, partially offset by lower distributor distribution fees due to the mix shift. |
| --- | --- |
| • | Depreciation and amortization (D&A) expenses were $31.7 million, or 3.1% of sales, a 10-basis point decrease. |
| --- | --- |
Cash Flow, Capital Allocation, and Capital Return
Year-to-date, through the third quarter of fiscal 2021, cash flow from operating activities decreased by $49.2 million to $315.2 million, capital expenditures increased $18.5 million to $86.7 million, and dividends paid increased $6.6 million to $131.5 million. Cash and cash equivalents were $307.5 million at the end of the third quarter of fiscal 2021.
There are 5.8 million shares that remain authorized for repurchase under the company’s current share repurchase plan. The company expects to continue to execute share repurchases from time to time under this plan.
Pre-Recorded Management Remarks and Question and Answer Webcast
In conjunction with this release, pre-recorded management remarks and a supporting slide presentation will be posted to the Flowers Foods website. The company will host a live question and answer webcast at 8:30 a.m. (Eastern) on November 12, 2021. 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 2020 sales of $4.4 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, Canyon Bakehouse, and Tastykake. Learn more at www.flowersfoods.com.
Investor Contact: J.T. Rieck (229) 227-2253 Media Contact: flowersfoods.com/contact/media-inquiries
Forward-Looking Statements
Statements contained in this filing and certain other written or oral statements made from time to time by Flowers Foods, Inc. (the “company”, “Flowers Foods”, “Flowers”, “us”, “we”, or “our”) and its representatives that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to current expectations regarding our future financial condition and results of operations and the ultimate impact of the novel strain of coronavirus (“COVID-19”) on our business, results of operations and financial condition 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. These forward-looking statements are based upon assumptions we believe are reasonable. Forward-looking statements are based on current information and are subject to risks and uncertainties that could cause our actual results to differ materially from those projected. Certain factors that may cause actual results, performance, liquidity, and achievements to differ materially from those projected are discussed in this Annual Report on Form 10-K (the “Form 10-K”) and may include, but are not limited to, (a) unexpected changes in any of the following: (1) general economic and business conditions; (2) the competitive setting in which we operate, including advertising or promotional strategies by us or our competitors, as well as changes in consumer demand; (3) interest rates and other terms available to us on our borrowings; (4) energy and raw materials costs and availability and hedging counter-party risks; (5) relationships with or increased costs related to our employees and third-party service providers; (6) laws and regulations (including environmental and health-related issues); and (7) accounting standards or tax rates in the markets in which we operate, (b) the ultimate impact of the COVID-19 outbreak and measures taken in response thereto, including additional variants of the virus, the efficacy and distribution of vaccines, and the impact of federal vaccine mandates on our business, workforce, results of operations and financial condition, which are highly uncertain and are difficult to predict, (c) our ability to manage the demand, supply and operational challenges with the actual or perceived effects of the COVID-19 pandemic; (d) the loss or financial instability of any significant customer(s), including as a result of product recalls or safety concerns related to our products, (e) changes in consumer behavior, trends and preferences, including health and whole grain trends, and the movement toward more inexpensive store branded products, (f) the level of success we achieve in developing and introducing new products and entering new markets, (g) our ability to implement new technology and customer requirements as required, (h) our ability to operate existing, and any new, manufacturing lines according to schedule, (i) our ability to implement and achieve our environmental, social, and governance (“ESG”) goals in accordance with suppliers, regulations, and customers; (j) our ability to execute our business strategies which may involve, among other things, (1) the integration of acquisitions or the acquisition or disposition of assets at presently targeted values, (2) the deployment of new systems and technology, and (3) an enhanced organizational structure, (k) consolidation within the baking industry and related industries, (l) changes in pricing, customer and consumer reaction to pricing actions (including decreased volumes), and the pricing environment among competitors within the industry, (m) disruptions in our direct-store-delivery distribution model, including litigation or an adverse ruling by a court or regulatory or governmental body, or other regulatory developments, that could affect the independent contractor classifications of the independent distributor partners, (n) increasing legal complexity and legal proceedings that we are or may become subject to, (o) labor shortages and turnover or increases in employee and employee-related costs, (p) the credit, business, and legal risks associated with independent distributor partners and customers, which operate in the highly competitive retail food and foodservice industries, (q) any business disruptions due to political instability, pandemics, armed hostilities, incidents of terrorism, natural disasters, labor strikes or work stoppages, technological breakdowns, product contamination, product recalls or safety concerns related to our products, or the responses to or repercussions from any of these or similar events or conditions and our ability to insure against such events, (r) 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 (“ERP”) system; and (s) the potential impact of climate change on the company, including physical and transition risks, higher regulatory and compliance costs, reputational risks, and availability of capital on attractive terms. 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 disclosures made by the company (such as in our other filings with the Securities and Exchange Commission (“SEC”) or in company press releases) for other factors that may cause actual results to differ materially from those projected by the company. Refer to Part I, Item 1A., Risk Factors, of the Form 10-K and Part II, Item 1A., Risk Factors of the Form 10-Q for the quarter ended October 9, 2021 for additional information regarding factors that could affect the company’s results of operations, financial condition and liquidity. 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. You are advised, however, to consult any further public disclosures by the company (such as in our filings with the SEC or in company press releases) on related subjects.
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, EBITDA margin, adjusted EBITDA margin, adjusted net 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 as earnings before interest, taxes, depreciation and amortization. Earnings are net income. 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, EBITDA margin, adjusted EBITDA margin, adjusted net income, adjusted diluted EPS, adjusted income tax expense and adjusted SD&A, respectively, excluding the impact of asset impairment charges, Project Centennial consulting costs, business process improvement 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 9, 2021 | January 2, 2021 | |||
|---|---|---|---|---|
| Assets | ||||
| Cash and cash equivalents | $ | 307,523 | $ | 307,476 |
| Other current assets | **** | 512,673 | 502,300 | |
| Property, plant and equipment, net | **** | 706,374 | 699,393 | |
| Right-of-use<br>leases, net | **** | 339,928 | 334,131 | |
| Distributor notes receivable (1) | **** | 187,398 | 204,839 | |
| Other Assets | **** | 21,828 | 14,722 | |
| Cost in excess of net tangible assets, net | **** | 1,247,672 | 1,260,162 | |
| Total assets | $ | 3,323,396 | $ | 3,323,023 |
| Liabilities and Stockholders’ Equity | ||||
| Current liabilities | $ | 480,817 | $ | 452,197 |
| Long-term debt | **** | 890,180 | 960,103 | |
| Right-of-use<br>lease liabilities (2) | **** | 352,331 | 345,762 | |
| Other liabilities | **** | 188,138 | 191,967 | |
| Stockholders’ equity | **** | 1,411,930 | 1,372,994 | |
| Total liabilities and stockholders’ equity | $ | 3,323,396 | $ | 3,323,023 |
| (1) | Includes current portion of $29,137 and $28,427, respectively. | |||
| --- | --- | |||
| (2) | Includes current portion of $55,774 and $51,908, 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 9, 2021 | October 3, 2020 | October 9, 2021 | October 3, 2020 | |||||||||
| Sales | $ | 1,027,800 | **** | $ | 989,650 | $ | 3,347,277 | **** | $ | 3,364,955 | ||
| Materials, supplies, labor and other production costs (exclusive of depreciation and<br>amortization shown separately below) | **** | 515,078 | **** | 497,659 | **** | 1,662,716 | **** | 1,674,565 | ||||
| Selling, distribution and administrative expenses | **** | 426,575 | **** | 386,739 | **** | 1,336,255 | **** | 1,305,678 | ||||
| Recovery on inferior ingredients | **** | (950 | ) | — | **** | (828 | ) | — | ||||
| Restructuring and related impairment charges | **** | — | **** | 20,100 | **** | — | **** | 30,635 | ||||
| Multi-employer pension plan withdrawal costs | **** | 3,300 | **** | — | **** | 3,300 | **** | — | ||||
| Depreciation and amortization expense | **** | 31,680 | **** | 32,162 | **** | 104,685 | **** | 110,005 | ||||
| Income from operations | **** | 52,117 | **** | 52,990 | **** | 241,149 | **** | 244,072 | ||||
| Other pension benefit | **** | (94 | ) | (72 | ) | **** | (312 | ) | (1 | ) | ||
| Pension plan settlement and curtailment (gain) loss | **** | — | **** | (7,153 | ) | **** | — | **** | 109,054 | |||
| Loss on extinguishment of debt | **** | — | **** | — | **** | 16,149 | **** | — | ||||
| Interest expense, net | **** | 1,311 | **** | 2,755 | **** | 6,582 | **** | 8,938 | ||||
| Income before income taxes | **** | 50,900 | **** | 57,460 | **** | 218,730 | **** | 126,081 | ||||
| Income tax expense | **** | 12,048 | **** | 13,113 | **** | 51,865 | **** | 29,587 | ||||
| Net income | $ | 38,852 | **** | $ | 44,347 | $ | 166,865 | **** | $ | 96,494 | ||
| Net income per diluted common share | $ | 0.18 | **** | $ | 0.21 | $ | 0.78 | **** | $ | 0.45 | ||
| Diluted weighted average shares outstanding | **** | 213,187 | **** | 212,458 | **** | 212,979 | **** | 212,270 |
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 9, 2021 | October 3, 2020 | October 9, 2021 | October 3, 2020 | |||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 38,852 | **** | $ | 44,347 | $ | 166,865 | **** | $ | 96,494 | ||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||||||||
| Total non-cash adjustments | **** | 34,045 | **** | 40,622 | **** | 130,649 | **** | 234,135 | ||||
| Changes in assets and liabilities and pension contributions | **** | 18,896 | **** | 3,673 | **** | 17,709 | **** | 33,807 | ||||
| Net cash provided by operating activities | **** | 91,793 | **** | 88,642 | **** | 315,223 | **** | 364,436 | ||||
| Cash flows from investing activities: | ||||||||||||
| Purchase of property, plant and equipment | **** | (28,453 | ) | (21,676 | ) | **** | (86,723 | ) | (68,270 | ) | ||
| Proceeds from sale of property, plant and equipment | **** | 114 | **** | 248 | **** | 2,525 | **** | 1,700 | ||||
| Acquisition of trademarks | **** | — | **** | — | **** | (10,200 | ) | — | ||||
| Other | **** | 3,596 | **** | 4,620 | **** | 12,684 | **** | 13,983 | ||||
| Net cash disbursed for investing activities | **** | (24,743 | ) | (16,808 | ) | **** | (81,714 | ) | (52,587 | ) | ||
| Cash flows from financing activities: | ||||||||||||
| Dividends paid | **** | (44,468 | ) | (42,320 | ) | **** | (131,510 | ) | (124,948 | ) | ||
| Payment of contingent consideration | **** | — | **** | — | **** | — | **** | (4,700 | ) | |||
| Stock repurchases | **** | (8,452 | ) | — | **** | (9,510 | ) | (783 | ) | |||
| Net change in debt borrowings | **** | — | **** | — | **** | (81,858 | ) | 142,500 | ||||
| Payments on financing leases | **** | (445 | ) | (2,593 | ) | **** | (1,311 | ) | (6,493 | ) | ||
| Other | **** | 1,568 | **** | (652 | ) | **** | (9,273 | ) | (2,638 | ) | ||
| Net cash (disbursed for) provided by financing activities | **** | (51,797 | ) | (45,565 | ) | **** | (233,462 | ) | 2,938 | |||
| Net increase in cash and cash equivalents | **** | 15,253 | **** | 26,269 | **** | 47 | **** | 314,787 | ||||
| Cash and cash equivalents at beginning of period | **** | 292,270 | **** | 299,562 | **** | 307,476 | **** | 11,044 | ||||
| Cash and cash equivalents at end of period | $ | 307,523 | **** | $ | 325,831 | $ | 307,523 | **** | $ | 325,831 |
Flowers Foods, Inc.
Sales by Sales Class and Sales Bridge
(000’s omitted)
| Sales by Sales Class | For the 12 WeekPeriod Ended | For the 12 Week Period<br>Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
| October 9, 2021 | October 3, 2020 | Change | % Change | ||||||
| Branded Retail | $ | 689,055 | $ | 657,480 | 4.8 | % | |||
| Store Branded Retail | **** | 124,593 | 136,098 | ) | (8.5 | )% | |||
| Non-Retail and Other | **** | 214,152 | 196,072 | 9.2 | % | ||||
| Total Sales | $ | 1,027,800 | $ | 989,650 | 3.9 | % |
All values are in US Dollars.
| Sales by Sales Class | For the 40 WeekPeriod Ended | For the 40 Week Period<br>Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
| October 9, 2021 | October 3, 2020 | Change | % Change | ||||||
| Branded Retail | $ | 2,225,648 | $ | 2,237,374 | ) | (0.5 | )% | ||
| Store Branded Retail | **** | 418,038 | 470,956 | ) | (11.2 | )% | |||
| Non-Retail and Other | **** | 703,591 | 656,625 | 7.2 | % | ||||
| Total Sales | $ | 3,347,277 | $ | 3,364,955 | ) | (0.5 | )% |
All values are in US Dollars.
Sales Bridge
| For the 12 week period ended October 9, 2021 | Volume | Net<br>Price/Mix | Total<br>Sales Change | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Flowers Foods | (2.5 | )% | 6.4 | % | 3.9 | % | |||
| For the 40 week period ended October 9, 2021 | Volume | Net<br>Price/Mix | Total<br>Sales Change | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Flowers Foods | (4.7 | )% | 4.2 | % | (0.5 | )% |
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 9, 2021 | October 3, 2020 | October 9, 2021 | October 3, 2020 | ||||||
| Net income per diluted common share | $ | 0.18 | $ | 0.21 | $ | 0.78 | $ | 0.45 | |
| Recovery on inferior ingredients | **** | NM | — | **** | NM | — | |||
| Project Centennial consulting costs | **** | — | 0.02 | **** | — | 0.05 | |||
| ERP Road Mapping consulting costs | **** | — | 0.01 | **** | — | 0.01 | |||
| Business process improvement consulting costs | **** | 0.03 | — | **** | 0.10 | — | |||
| Legal settlements and related costs | **** | 0.08 | 0.01 | **** | 0.08 | 0.02 | |||
| Acquisition consideration adjustment | **** | — | — | **** | 0.01 | — | |||
| Restructuring and related impairment charges | **** | — | 0.07 | **** | — | 0.11 | |||
| Multi-employer pension plan withdrawal costs | **** | 0.01 | — | **** | 0.01 | — | |||
| Pension plan settlement and curtailment (gain) loss | **** | — | (0.03 | ) | **** | — | 0.39 | ||
| Other pension plan termination costs | **** | — | — | **** | — | NM | |||
| Loss on extinguishment of debt | **** | — | — | **** | 0.06 | — | |||
| Adjusted net income per diluted common share | $ | 0.30 | $ | 0.29 | $ | 1.04 | $ | 1.03 |
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 9, 2021 | October 3, 2020 | October 9, 2021 | October 3, 2020 | |||||||||
| Sales | $ | 1,027,800 | $ | 989,650 | $ | 3,347,277 | $ | 3,364,955 | ||||
| Materials, supplies, labor and other production costs (exclusive of depreciation and<br>amortization) | **** | 515,078 | 497,659 | **** | 1,662,716 | 1,674,565 | ||||||
| Gross Margin excluding depreciation and amortization | **** | 512,722 | 491,991 | **** | 1,684,561 | 1,690,390 | ||||||
| Less depreciation and amortization for production activities | **** | 18,043 | 17,443 | $ | 58,987 | $ | 59,814 | |||||
| Gross Margin | $ | 494,679 | $ | 474,548 | $ | 1,625,574 | $ | 1,630,576 | ||||
| Depreciation and amortization for production activities | $ | 18,043 | $ | 17,443 | $ | 58,987 | $ | 59,814 | ||||
| Depreciation and amortization for selling, distribution and administrative activities | **** | 13,637 | 14,719 | **** | 45,698 | 50,191 | ||||||
| Total depreciation and amortization | $ | 31,680 | $ | 32,162 | $ | 104,685 | $ | 110,005 | ||||
| Reconciliation of Selling, Distribution and Administrative Expenses to<br>Adjusted 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 9, 2021 | October 3, 2020 | October 9, 2021 | October 3, 2020 | |||||||||
| Selling, distribution and administrative expenses (SD&A) | $ | 426,575 | **** | $ | 386,739 | $ | 1,336,255 | **** | $ | 1,305,678 | ||
| Project Centennial consulting costs | **** | — | **** | (5,068 | ) | **** | — | **** | (14,044 | ) | ||
| ERP Road Mapping consulting costs | **** | — | **** | (3,079 | ) | **** | — | **** | (3,079 | ) | ||
| Business process improvement consulting costs | **** | (9,233 | ) | — | **** | (27,396 | ) | — | ||||
| Legal settlements and related costs | **** | (23,089 | ) | (3,011 | ) | **** | (23,089 | ) | (6,231 | ) | ||
| Acquisition consideration adjustment | **** | — | **** | — | **** | (3,400 | ) | — | ||||
| Other pension plan termination costs | **** | — | **** | — | **** | — | **** | (133 | ) | |||
| Adjusted SD&A | $ | 394,253 | **** | $ | 375,581 | $ | 1,282,370 | **** | $ | 1,282,191 |
Flowers Foods, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(000’s omitted, except per share data)
| 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 9, 2021 | October 3, 2020 | October 9, 2021 | October 3, 2020 | |||||||||
| Net income | $ | 38,852 | **** | $ | 44,347 | $ | 166,865 | **** | $ | 96,494 | ||
| Income tax expense | **** | 12,048 | **** | 13,113 | **** | 51,865 | **** | 29,587 | ||||
| Interest expense, net | **** | 1,311 | **** | 2,755 | **** | 6,582 | **** | 8,938 | ||||
| Loss on extinguishment of debt | **** | — | **** | — | **** | 16,149 | **** | — | ||||
| Depreciation and amortization | **** | 31,680 | **** | 32,162 | **** | 104,685 | **** | 110,005 | ||||
| EBITDA | **** | 83,891 | **** | 92,377 | **** | 346,146 | **** | 245,024 | ||||
| Other pension (benefit) cost | **** | (94 | ) | (72 | ) | **** | (312 | ) | (1 | ) | ||
| Pension plan settlement and curtailment (gain) loss | **** | — | **** | (7,153 | ) | **** | — | **** | 109,054 | |||
| Other pension plan termination costs | **** | — | **** | — | **** | — | **** | 133 | ||||
| Recovery on inferior ingredients | **** | (950 | ) | — | **** | (828 | ) | — | ||||
| Project Centennial consulting costs | **** | — | **** | 5,068 | **** | — | **** | 14,044 | ||||
| Business process improvement consulting costs | **** | 9,233 | **** | — | **** | 27,396 | **** | — | ||||
| ERP Road Mapping consulting costs | **** | — | **** | 3,079 | **** | — | **** | 3,079 | ||||
| Legal settlements and related costs | **** | 23,089 | **** | 3,011 | **** | 23,089 | **** | 6,231 | ||||
| Acquisition consideration adjustment | **** | — | **** | — | **** | 3,400 | **** | — | ||||
| Restructuring and related impairment charges | **** | — | **** | 20,100 | **** | — | **** | 30,635 | ||||
| Multi-employer pension plan withdrawal costs | **** | 3,300 | **** | — | **** | 3,300 | **** | — | ||||
| Adjusted EBITDA | $ | 118,469 | **** | $ | 116,410 | $ | 402,191 | **** | $ | 408,199 | ||
| Sales | $ | 1,027,800 | **** | $ | 989,650 | $ | 3,347,277 | **** | $ | 3,364,955 | ||
| Adjusted EBITDA margin | **** | 11.5 | % | 11.8 | % | **** | 12.0 | % | 12.1 | % | ||
| 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 9, 2021 | October 3, 2020 | October 9, 2021 | October 3, 2020 | |||||||||
| Income tax expense | $ | 12,048 | **** | $ | 13,113 | $ | 51,865 | **** | $ | 29,587 | ||
| Tax impact of: | ||||||||||||
| Recovery on inferior ingredients | **** | (238 | ) | — | **** | (207 | ) | — | ||||
| Project Centennial consulting costs | **** | — | **** | 1,267 | **** | — | **** | 3,511 | ||||
| Business process improvement consulting costs | **** | 2,308 | **** | — | **** | 6,849 | **** | — | ||||
| Legal settlements and related costs | **** | 5,773 | **** | 753 | **** | 5,773 | **** | 1,558 | ||||
| Acquisition consideration adjustment | **** | — | **** | — | **** | 850 | **** | — | ||||
| Restructuring and related impairment charges | **** | — | **** | 5,025 | **** | — | **** | 7,659 | ||||
| Multi-employer pension plan withdrawal costs | **** | 825 | **** | — | **** | 825 | **** | — | ||||
| ERP Road Mapping consulting costs | **** | — | **** | 770 | **** | — | **** | 770 | ||||
| Pension plan settlement and curtailment (gain) loss | **** | — | **** | (1,788 | ) | **** | — | **** | 27,264 | |||
| Other pension plan termination costs | **** | — | **** | — | **** | — | **** | 33 | ||||
| Loss on extinguishment of debt | **** | — | **** | — | **** | 4,037 | **** | — | ||||
| Adjusted income tax expense | $ | 20,716 | **** | $ | 19,140 | $ | 69,992 | **** | $ | 70,382 |
Flowers Foods, Inc.
Reconciliation of GAAP to Non-GAAP Measures
(000’s omitted, except per share data)
| 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 9, 2021 | October 3, 2020 | October 9, 2021 | October 3, 2020 | ||||||||
| Net income | $ | 38,852 | **** | $ | 44,347 | $ | 166,865 | **** | $ | 96,494 | |
| Recovery on inferior ingredients | **** | (712 | ) | — | **** | (621 | ) | — | |||
| Project Centennial consulting costs | **** | — | **** | 3,801 | **** | — | **** | 10,533 | |||
| Business process improvement consulting costs | **** | 6,925 | **** | — | **** | 20,547 | **** | — | |||
| Legal settlements and related costs | **** | 17,316 | **** | 2,258 | **** | 17,316 | **** | 4,673 | |||
| Acquisition consideration adjustment | **** | — | **** | — | **** | 2,550 | **** | — | |||
| Restructuring and related impairment charges | **** | — | **** | 15,075 | **** | — | **** | 22,976 | |||
| Multi-employer pension plan withdrawal costs | **** | 2,475 | **** | — | **** | 2,475 | **** | — | |||
| ERP Road Mapping consulting costs | **** | — | **** | 2,309 | **** | — | **** | 2,309 | |||
| Pension plan settlement and curtailment (gain) loss | **** | — | **** | (5,365 | ) | **** | — | **** | 81,790 | ||
| Other pension plan termination costs | **** | — | **** | — | **** | — | **** | 100 | |||
| Loss on extinguishment of debt | **** | — | **** | — | **** | 12,112 | **** | — | |||
| Adjusted net income | $ | 64,856 | **** | $ | 62,425 | $ | 221,244 | **** | $ | 218,875 | |
| Reconciliation of Earnings per Share -<br>Full Year Fiscal 2021 Guidance | |||||||||||
| --- | --- | --- | --- | --- | --- | ||||||
| Range Estimate | |||||||||||
| Net income per diluted common share | $ | 0.96 | to | $ | 1.00 | ||||||
| Business process improvement consulting costs | **** | 0.10 | **** | 0.10 | |||||||
| Recovery on inferior ingredients | **** | NM | **** | NM | |||||||
| Multi-employer pension plan withdrawal costs | **** | 0.01 | **** | 0.01 | |||||||
| Legal settlements and related costs | **** | 0.08 | **** | 0.08 | |||||||
| Acquisition consideration adjustment | **** | 0.01 | **** | 0.01 | |||||||
| Loss on extinguishment of debt | **** | 0.06 | **** | 0.06 | |||||||
| Adjusted net income per diluted common share | $ | 1.22 | to | $ | 1.26 |
NM—not meaningful.