USA – Flowers Foods, Inc., a leading producer of packaged bakery products in the United States, announced its financial results for the second quarter of 2024, which ended on July 13.
The company reported a slight decline in sales, down 0.2% to $1.225 billion, attributed to volume decreases primarily due to recent business exits.
However, net income rose by 5.0% to US$67 million, reflecting a growth in operating income despite higher net interest and income tax expenses.
Chairman and CEO Ryals McMullian stated, “We continued to execute well in the second quarter with a solid top- and bottom-line performance.”
He highlighted that the company’s brands outperformed the fresh packaged bread category, achieving unit and dollar share gains.
The positive pricing and mix contributed to this performance, particularly in the branded retail segment, which saw a slight increase in sales by US$2.3 million, attributed to a shift towards more premium-priced products.
Despite the overall sales decline, the company experienced a 7.8% increase in adjusted EBITDA, reaching US$143.5 million, which represents 11.7% of sales.
This increase was supported by cost-saving initiatives that have begun to take effect, improving profitability across existing accounts and filling available capacity with higher-margin business.
McMullian noted, “Savings initiatives are taking hold, driving a meaningful sequential improvement in costs.”
Looking ahead, Flowers Foods has maintained its financial outlook for 2024, projecting sales between US$5.091 billion and US$5.172 billion, which translates to a growth rate of 0.0% to 1.6% compared to the previous year.
Adjusted EBITDA is expected to fall between US$524 million and US$553 million, while adjusted diluted earnings per share (EPS) is projected to be in the range of US$1.20 to US$1.30.
The company’s operational highlights for the second quarter reveal that while sales decreased overall, the branded retail segment performed well.
The decline in sales from other segments, particularly the foodservice business, was partially offset by positive price/mix dynamics.
McMullian emphasized the importance of these trends, stating, “Our portfolio strategy is generating improved overall performance, and we expect to continue that progress through further investments in innovation and marketing.”
In terms of costs, materials, supplies, labor, and other production expenses accounted for 50.1% of sales, a decrease of 90 basis points from the previous year.
This improvement was attributed to moderating ingredient and packaging costs, as well as better sales price/mix and reduced product returns.
However, the company faced challenges, including increased workforce-related costs and higher bakery maintenance expenses.
Year-to-date cash flow from operating activities increased by US$39.5 million to US$168.4 million, indicating a strong operational performance.
Capital expenditures decreased to US$61.3 million, while dividends paid to shareholders rose by US$3.8 million to US$101.9 million.
As Flowers Foods navigates an uncertain economic environment, McMullian remains optimistic about the company’s future.
He concluded, “We are committed to achieving results in line with our long-term financial targets,” reinforcing the company’s dedication to strategic growth and operational efficiency.
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