Flowers Foods Q1 Sales Increase 6.8% Due to COVID-19 Consumer Stockpiling
The makers of Nature’s Own, Dave’s Killer Bread, Wonder, Tastykake, and other bakery foods generated $1.3 billion despite drop in foodservice business.
Flowers Foods, producer of Nature’s Own, Dave’s Killer Bread, Wonder, Tastykake, and other bakery foods, reported financial results for the company’s 16-week first quarter ended April 18, 2020.
First Quarter Summary:
Compared to the prior year first quarter where applicable
• Sales increased 6.8% to $1.349 billion, including an estimated 6.5% to 7.5% increase attributable to the impact of the COVID-19 pandemic. Sales for the same 16-week period in 2019 were 1.263 billion.
• Diluted EPS decreased $0.34 to a loss of $0.03, including a non-cash settlement and curtailment charge of $0.41 per share related to the termination of a defined benefit pension plan.
• Adjusted diluted EPS(1) increased $0.09 to $0.41.
• GAAP and adjusted EPS includes an estimated $0.09 to $0.10 increase attributable to the COVID-19 pandemic.
(1) Adjusted for items affecting comparability. See reconciliations of non-GAAP measures in the financial statements following this release.
“First of all, there are no words to sufficiently describe how incredibly proud I am of our entire team,” said Ryals McMullian, Flowers Foods president and CEO. “Their performance, from plant operations, to sales, to distribution, to head office and support staff, has been nothing short of remarkable. They have demonstrated once again the power of shared purpose and they are the embodiment of our core values. Because of the team’s extraordinary commitment to feed America and serve our customers, consumers, and communities, we were able to deliver a record quarter in terms of both sales and earnings.”
McMullian continued, “Our top priority is ensuring the health and safety of our team members. In keeping with guidance from health authorities, we have taken measures to safeguard their wellness, including enhanced sanitation and cleaning procedures, restricted admittance to company facilities, daily wellness screening, suspension of non-essential business travel, company-provided masks, and remote work for business office team members. I am especially grateful for the hard work and dedication of our frontline workers. To recognize their extraordinary efforts, we announced $6.2 million in appreciation bonuses in April.”
McMullian added, “During the first quarter, our retail business benefitted from a significant increase in demand, while foodservice was pressured by the slowdown in restaurant sales. Although the unknown duration and severity of the pandemic makes forecasting results difficult for the remainder of 2020, we believe Flowers is uniquely positioned to succeed during this period of great uncertainty. We have weathered many crises during our 100 years in business. However, more important than our ability to manage through this crisis, is our ability to manage out of it. It is critical that we stay focused on the future and on our strategic priorities even as we continue to operate in what still is a fluid environment. As we look ahead to the balance of 2020, we remain committed to our portfolio and supply chain optimization initiatives, which are expected to deliver approximately $10 million to $20 million of savings this year. While there is uncertainty around the pace of recovery in our foodservice business and the duration of elevated in-home eating, we are confident that our increased digital investments and ongoing optimization projects will allow us to exit this crisis in an improved competitive position and with strong business fundamentals.”
For the 53-week Fiscal 2020, the Company Expects:
• Sales in the range of approximately $4.206 billion to $4.289 billion, representing growth of approximately 2.0% to 4.0%.
• Diluted EPS in the range of approximately $0.57 to $0.65, including a $0.41 per share charge related to the termination of a defined benefit pension plan.
• Adjusted diluted EPS in the range of approximately $1.00 to $1.08, adjusted for items affecting comparability, representing growth of approximately 4.2% to 12.5%.
The company’s outlook includes the following assumptions:
• Portfolio and supply chain optimization benefit of $10 million to $20 million
• Depreciation and amortization in the range of $140 million to $145 million
• Other pension expense of approximately $2 million • Net interest expense in the range of $8 million to $10 million
• An effective tax rate of approximately 24%
• Weighted average diluted share count for the year of approximately 212.5 million shares
• Capital expenditures for the year in the range of $95 million to $105 million
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