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Flowers Foods (FLO) Q2 Earnings Beat Estimates, Sales Down Y/Y
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Flowers Foods, Inc. (FLO - Free Report) reported mixed second-quarter fiscal 2024 results, with the top line missing the Zacks Consensus Estimate and declining year over year. The bottom line surpassed the consensus mark and increased from the year-ago quarter’s reported level.
Results gained from the successful execution of the company’s strategic plan. FLO’s brands exceeded performance expectations in the fresh packaged bread category, showing growth in tracked channels and achieving significant gains in unit and dollar share. Private label and away-from-home margins continued their positive trend and cost-saving initiatives led to notable sequential improvements.
Management is reaffirming its 2024 outlook, anticipating ongoing strong operational performance while considering the potential effects of an uncertain economic environment on consumer and promotional behavior.
Flowers Foods, Inc. Price, Consensus and EPS Surprise
Adjusted earnings per share (EPS) of 36 cents beat the Zacks Consensus Estimate of 33 cents. The bottom line increased from 33 cents reported in the year-ago quarter.
Sales inched down 0.2% year over year to $1,225 million. The top line missed the Zacks Consensus Estimate of $1,244.4 million. The pricing/mix remained favorable by 1%, while volumes dropped 1.2%. These downsides were primarily due to targeted sales rationalizations and weaknesses in the QSR market. We had estimated the price/mix to be up 1.7% and volumes to decline 0.3% in the second quarter.
Branded retail sales inched up 0.3% to reach $789.5 million, driven by a favorable shift toward more premium-priced products. While pricing/mix inched up 0.3%, sales volume remained unchanged.
Other sales inched down 1.2% to $435.5 million, mainly due to a drop in volume from the exit of the lower-margin food service business. The downtick was partially countered by a favorable price/mix for non-retail sales. While pricing/mix improved 1.6%, volume declined 2.8%.
Our model suggested Branded Retail sales growth of 1.7% and Other sales appreciation of 0.8% for the quarter under review.
Costs & Margins
Materials, supplies, labor and other production costs (exclusive of depreciation and amortization) contracted 90 basis points (bps) to 50.1% of sales on lower ingredient and packaging expenses, better sales price/mix and reduced product returns. However, this improvement was partially offset by lower production volumes, higher workforce-related and bakery maintenance costs and increased purchases of products from external sources.
Selling, distribution and administrative (SD&A) expenses came in at 38.5% of sales, down 30 bps. This can mainly be attributed to decreased distributor distribution fees, marketing expenses and consulting costs, among other reasons. However, these factors were somewhat offset by higher workforce-related costs and increased rent expenses, among others. Adjusted SD&A expenses stood at 38.2% of sales, unchanged from the year-ago quarter.
Adjusted EBITDA climbed 7.8% to $143.5 million. The adjusted EBITDA margin was 11.7%, expanding 90 bps.
Image Source: Zacks Investment Research
Financial Aspects
FLO ended its fiscal second quarter with cash and cash equivalents of $6.9 million and long-term debt of $1,068.8 million. Stockholders’ equity amounted to $1,384.4 million.
Year to date through the second quarter of fiscal 2024, cash flow from operating activities totaled $168.4 million and capital expenditures were $61.3 million. The company paid out dividends worth $101.9 million during this time.
Fiscal 2024 Guidance
Management expects sales in the range of $5.091-5.172 billion, suggesting flat to a 1.6% increase year over year.
Adjusted EBITDA is likely to be in the range of $524-$553 million compared with the $501.7 million recorded in the fiscal 2023. For the fiscal 2024, adjusted EPS are envisioned in the range of $1.20-$1.30 compared with $1.20 delivered in the fiscal 2023.
Management expects depreciation and amortization in the range of $155-$160 million, while net interest expenses are likely to be $20-$24 million. For the fiscal 2024, capital expenditures are projected in the range of $145-$155 million.
This Zacks Rank #3 (Hold) stock has inched up 0.8% year to date compared with the industry’s growth of 0.2%.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Vital Farms (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2 (Buy). VITL has a trailing four-quarter earnings surprise of 82.5%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings indicate growth of 26.3% and 88.1%, respectively, from the prior-year reported level.
Nomad Foods (NOMD - Free Report) , carrying a Zacks Rank #2, manufactures and distributes frozen foods. NOMD has a trailing four-quarter earnings surprise of 3.1%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales and earnings indicates growth of 4.3% and 11.5%, respectively, from the prior-year reported level.
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Flowers Foods (FLO) Q2 Earnings Beat Estimates, Sales Down Y/Y
Flowers Foods, Inc. (FLO - Free Report) reported mixed second-quarter fiscal 2024 results, with the top line missing the Zacks Consensus Estimate and declining year over year. The bottom line surpassed the consensus mark and increased from the year-ago quarter’s reported level.
Results gained from the successful execution of the company’s strategic plan. FLO’s brands exceeded performance expectations in the fresh packaged bread category, showing growth in tracked channels and achieving significant gains in unit and dollar share. Private label and away-from-home margins continued their positive trend and cost-saving initiatives led to notable sequential improvements.
Management is reaffirming its 2024 outlook, anticipating ongoing strong operational performance while considering the potential effects of an uncertain economic environment on consumer and promotional behavior.
Flowers Foods, Inc. Price, Consensus and EPS Surprise
Flowers Foods, Inc. price-consensus-eps-surprise-chart | Flowers Foods, Inc. Quote
Q2 Highlights
Adjusted earnings per share (EPS) of 36 cents beat the Zacks Consensus Estimate of 33 cents. The bottom line increased from 33 cents reported in the year-ago quarter.
Sales inched down 0.2% year over year to $1,225 million. The top line missed the Zacks Consensus Estimate of $1,244.4 million. The pricing/mix remained favorable by 1%, while volumes dropped 1.2%. These downsides were primarily due to targeted sales rationalizations and weaknesses in the QSR market. We had estimated the price/mix to be up 1.7% and volumes to decline 0.3% in the second quarter.
Branded retail sales inched up 0.3% to reach $789.5 million, driven by a favorable shift toward more premium-priced products. While pricing/mix inched up 0.3%, sales volume remained unchanged.
Other sales inched down 1.2% to $435.5 million, mainly due to a drop in volume from the exit of the lower-margin food service business. The downtick was partially countered by a favorable price/mix for non-retail sales. While pricing/mix improved 1.6%, volume declined 2.8%.
Our model suggested Branded Retail sales growth of 1.7% and Other sales appreciation of 0.8% for the quarter under review.
Costs & Margins
Materials, supplies, labor and other production costs (exclusive of depreciation and amortization) contracted 90 basis points (bps) to 50.1% of sales on lower ingredient and packaging expenses, better sales price/mix and reduced product returns. However, this improvement was partially offset by lower production volumes, higher workforce-related and bakery maintenance costs and increased purchases of products from external sources.
Selling, distribution and administrative (SD&A) expenses came in at 38.5% of sales, down 30 bps. This can mainly be attributed to decreased distributor distribution fees, marketing expenses and consulting costs, among other reasons. However, these factors were somewhat offset by higher workforce-related costs and increased rent expenses, among others. Adjusted SD&A expenses stood at 38.2% of sales, unchanged from the year-ago quarter.
Adjusted EBITDA climbed 7.8% to $143.5 million. The adjusted EBITDA margin was 11.7%, expanding 90 bps.
Image Source: Zacks Investment Research
Financial Aspects
FLO ended its fiscal second quarter with cash and cash equivalents of $6.9 million and long-term debt of $1,068.8 million. Stockholders’ equity amounted to $1,384.4 million.
Year to date through the second quarter of fiscal 2024, cash flow from operating activities totaled $168.4 million and capital expenditures were $61.3 million. The company paid out dividends worth $101.9 million during this time.
Fiscal 2024 Guidance
Management expects sales in the range of $5.091-5.172 billion, suggesting flat to a 1.6% increase year over year.
Adjusted EBITDA is likely to be in the range of $524-$553 million compared with the $501.7 million recorded in the fiscal 2023. For the fiscal 2024, adjusted EPS are envisioned in the range of $1.20-$1.30 compared with $1.20 delivered in the fiscal 2023.
Management expects depreciation and amortization in the range of $155-$160 million, while net interest expenses are likely to be $20-$24 million. For the fiscal 2024, capital expenditures are projected in the range of $145-$155 million.
This Zacks Rank #3 (Hold) stock has inched up 0.8% year to date compared with the industry’s growth of 0.2%.
Top 3 Picks
The Chef's Warehouse (CHEF - Free Report) , which distributes specialty food products, currently sports a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Vital Farms (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2 (Buy). VITL has a trailing four-quarter earnings surprise of 82.5%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings indicate growth of 26.3% and 88.1%, respectively, from the prior-year reported level.
Nomad Foods (NOMD - Free Report) , carrying a Zacks Rank #2, manufactures and distributes frozen foods. NOMD has a trailing four-quarter earnings surprise of 3.1%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales and earnings indicates growth of 4.3% and 11.5%, respectively, from the prior-year reported level.