8-K
FLOWERS FOODS INC false 0001128928 0001128928 2020-02-05 2020-02-05

 

 

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): February 6, 2020 (February 5, 2020)

 

FLOWERS FOODS, INC.

(Exact name of registrant as specified in its charter)

 

Georgia

 

1-16247

 

58-2582379

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

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

Symbol(s)

 

Name of each exchange

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 February 5, 2020, Flowers Foods, Inc. issued a press release announcing (i) its financial condition and results of operations as of and for the 12 and 52 weeks ended December 28, 2019 and (ii) guidance for fiscal 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
Number

   

Description

         
 

99.1

   

Press Release of Flowers Foods, Inc. dated February 5, 2020.

         
 

104

   

Cover Page Interactive Data File (embedded within the Inline XBRL document).

- 2 -


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 Administrative Officer

Date: February 6, 2020

- 3 -

EX-99.1

Exhibit 99.1

 

LOGO

Company Press Release

 

February 5, 2020

  Flowers Foods (NYSE: FLO)            

FLOWERS FOODS, INC. REPORTS FOURTH QUARTER

AND FULL YEAR 2019 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 fourth quarter ended December 28, 2019.

Fiscal 2019 Summary:

Compared to the prior year where applicable

 

   

Sales increased 4.4% to $4.124 billion; excluding the acquisition of Canyon Bakehouse, net sales increased 2.2%.

 

   

Diluted EPS increased $0.04 to $0.78.

 

   

Adjusted diluted EPS(1) increased $0.02 to $0.96.

Fourth Quarter Summary:

Compared to the prior year fourth quarter where applicable

 

   

Sales increased 4.2% to $917.8 million; excluding the acquisition of Canyon Bakehouse, net sales increased 1.2%.

 

   

Diluted EPS decreased $0.09 to $0.01.

 

   

Adjusted diluted EPS(1) increased $0.02 to $0.18.

 

  (1)

Adjusted for items affecting comparability. See reconciliations of non-GAAP measures in the financial statements following this release.

CEO’s Remarks:

Ryals McMullian, Flowers Foods’ president and CEO, said, “We are pleased to report solid fourth quarter performance and record sales and operating cash flow for the full year. In the quarter, results were better than expected, driven by continued top-line momentum and improved profitability. During the quarter, we saw growth from our key brands, made important progress in our portfolio and supply chain optimization efforts, and continued to invest in our team’s capabilities. As a result, we ended the year on the right trajectory, demonstrating clear progress against our dual imperatives of sales growth and margin expansion.”


McMullian continued, “Looking ahead, our 2020 plans engage the core value creation strategies we have put in place to focus on brands, manage costs, pursue smart acquisitions, and develop our team. We expect fiscal 2020 sales growth in-line with our long-term targets driven by the strength of our national brands and the expected stabilization and growth of our foodservice and cake businesses. We intend to drive earnings growth by executing against our initiatives to improve manufacturing efficiencies, optimize our portfolio and supply chain network, and reduce fixed costs. We made great strides in 2019 and are now moving aggressively to capture the opportunities we see in 2020 that we believe can enhance shareholder value.”

Fiscal 2020 Outlook:

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 $0.50 to $0.64, including charges related to the termination of a defined benefit pension plan in the range of $125 million to $143 million.

 

   

Adjusted diluted EPS(1) in the range of approximately $1.00 to $1.08, representing growth of approximately 4.2% to 12.5%.

 

  (1)

Adjusted for items affecting comparability. See reconciliations of non-GAAP measures in the financial statements following this release.

The company’s outlook assumes the following:

 

   

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 $105 million to $115 million

Matters Affecting Comparability:

 

Reconciliation of Earnings per Share to Adjusted Earnings per Share

 
     For the 12 Weeks Ended  
     Dec. 28, 2019      Dec. 29, 2018  

Net income per diluted common share

   $ 0.01      $ 0.10  

Loss on inferior ingredients

     NM        NM  

Restructuring and related impairment charges

     0.06        0.03  

Project Centennial consulting costs

     NM        NM  

Impairment of assets

     —          0.01  

Legal settlements

     0.10        NM  

Acquisition costs

     —          0.02  

Pension plan settlement loss

     —          NM  
  

 

 

    

 

 

 

Adjusted net income per diluted common share

   $ 0.18      $ 0.16  
  

 

 

    

 

 

 

NM - Not Meaningful

Certain amounts may not compute due to rounding.

     


Consolidated Fourth Quarter 2019 Operating Highlights

Compared to the prior year fourth quarter where applicable

 

   

Sales increased 4.2% to $917.8 million.

 

   

Percentage point change in sales attributed to:

 

   

Pricing/mix: 2.1%

 

   

Volume: -0.9%

 

   

Acquisition: 3.0%

 

   

Branded retail sales increased $29.0 million, or 5.5%, to $551.7 million, store branded retail sales increased $9.8 million, or 7.5% to $140.3 million, while non-retail and other sales decreased $1.7 million, or 0.8%, to $225.8 million.

 

   

Branded retail sales increased due primarily to the Canyon acquisition, continued growth of Dave’s Killer Bread and Nature’s Own Perfectly Crafted branded products and more favorable price/mix, partially offset by lower volumes for traditional loaf breads, bakery deli items, and cake products.

 

   

Store branded retail sales increased primarily due to gluten-free, store-branded items produced by Canyon, volume growth from additional distribution, and positive price/mix, partially offset by volume declines in store branded cake and breakfast breads.

 

   

Volume declines in foodservice, vending, and institutional products drove the decrease in non-retail and other sales.

 

   

Net income decreased 89.4% to $2.2 million. Adjusted net income increased 11.6% to $38.1 million.

 

   

Adjusted EBITDA increased 7.3% to $84.5 million, representing 9.2% of sales, a 30-basis point increase.

 

   

Materials, supplies, labor and other production costs (exclusive of depreciation and amortization) were 53.0% of sales, flat compared to the prior year. Higher workforce-related costs and decreased manufacturing efficiencies, were offset by improved pricing/mix and lower ingredient costs as a percent of sales.

 

   

Selling, distribution and administrative (SD&A) expenses were 41.1% of sales, a 260-basis point increase. Excluding items affecting comparability, the largest of which being a $29.2 million legal settlement in the quarter, SD&A expenses decreased by 20-basis points. Higher workforce-related costs and marketing expenses were offset by lower distributor distribution fees as a percentage of sales due to a shift in product mix, and lower transportation costs.

 

   

Depreciation and amortization (D&A) expenses were $32.9 million, 3.6% of sales, a 10-basis point decrease.

Cash Flow, Capital Allocation, and Capital Return

For fiscal 2019, cash flow from operating activities increased by $71.1 million to $367.0 million, capital expenditures increased by $4.3 million to $103.7 million, and dividends paid increased by $9.8 million to $160.0 million. During fiscal 2019, the company made cash debt repayments of $114.3 million.

The company has 6.2 million remaining 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.


Conference Call

Flowers Foods will hold a conference call to discuss its fourth quarter 2019 results at 8:30 a.m. (Eastern) on February 6, 2020. The call can be accessed by following the webcast link on flowersfoods.com. The call also 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 fresh 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, 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) general economic and business conditions and the competitive conditions in the baked foods industry, including promotional and price competition, (b) 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, (c) the success of productivity improvements and new product introductions, (d) a significant reduction in business with any of our major customers including a reduction from adverse developments in any of our customer’s business, (e) fluctuations in commodity pricing, (f) energy and raw material costs and availability and hedging and counterparty risk, (g) our ability to fully integrate recent acquisitions into our business, (h) our ability to achieve cash flow from capital expenditures and acquisitions and the availability of new acquisitions that build shareholder value, (i) 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 integration of recent acquisitions or the acquisition or disposition of assets at presently targeted values, the deployment of new systems and technology and an enhanced organizational structure, (j) consolidation within the baking industry and related industries, (k) 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, (l) increasing legal complexity and legal proceedings that we are or may become subject to, (m) product recalls or safety concerns related to our products, and (n) the failure of our information technology systems to perform adequately, including any interruptions, intrusions or security breaches of such systems. 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, 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 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. 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. 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 operating income, adjusted EPS, adjusted income tax expense, adjusted SD&A expenses, respectively, to further exclude, as applicable, the impact of pension plan settlements and other costs, loss or recovery on inferior ingredients, restructuring and related impairment charges, Project Centennial consulting costs, asset impairment charges, lease terminations and legal settlements, costs related to executive retirement, acquisition-related costs, and and multi-employer pension plan withdrawal costs. Adjusted net income and 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 ratio of 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 in accordance with 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)

 

     December 28, 2019      December 29, 2018  

Assets

     

Cash and Cash Equivalents

   $ 11,044      $ 25,306  

Other Current Assets

     515,165        492,073  

Property, Plant & Equipment, net

     717,822        743,847  

Right-of-Use Leases, net

     399,302        —    

Distributor Notes Receivable (1)

     226,348        230,470  

Other Assets

     12,644        13,533  

Cost in Excess of Net Tangible Assets, net

     1,295,451        1,340,308  
  

 

 

    

 

 

 

Total Assets

   $ 3,177,776      $ 2,845,537  
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current Liabilities

   $ 463,431      $ 389,443  

Long-term Debt and Capital Lease Liabilities (2)

     866,508        1,001,536  

Right-of-Use Lease Liabilities (3)

     404,503        —    

Other Liabilities

     179,904        196,291  

Stockholders’ Equity

     1,263,430        1,258,267  
  

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 3,177,776      $ 2,845,537  
  

 

 

    

 

 

 

 

(1)

Includes current portion of $27,709 and $26,345, respectively.

(2)

Includes current portion of $3,730 and $10,896, respectively.

(3)

Includes current portion of $60,982.


Flowers Foods, Inc.

Consolidated Statement of Operations

 

(000’s omitted, except per share data)

 

     For the 12 Week     For the 12 Week      For the 52 Week     For the 52 Week  
     Period Ended     Period Ended      Period Ended     Period Ended  
     December 28, 2019     December 29, 2018      December 28, 2019     December 29, 2018  

Sales

   $ 917,759     $ 880,667      $ 4,123,974     $ 3,951,852  

Materials, supplies, labor and other production costs

         

(exclusive of depreciation and amortization shown separately below)

     485,960       467,155        2,155,709       2,066,828  

Selling, distribution and administrative expenses

     377,196       339,377        1,575,122       1,507,256  

Loss (recovery) on inferior ingredients

     376       1,219        (37     3,212  

Restructuring and related impairment charges

     17,482       7,210        23,524       9,767  

Impairment of assets

     —         3,516        —         5,999  

Multi-employer pension plan withdrawal costs

     —         —          —         2,322  

Depreciation and amortization expense

     32,884       32,175        144,228       144,124  
  

 

 

   

 

 

    

 

 

   

 

 

 

Income from operations

     3,861       30,015        225,428       212,344  

Other pension cost (benefit)

     519       675        2,248       (529

Pension plan settlement loss

     —         1,148        —         7,781  

Interest expense, net

     2,170       1,717        11,097       7,931  
  

 

 

   

 

 

    

 

 

   

 

 

 

Income before income taxes

     1,172       26,475        212,083       197,161  

Income tax expense (benefit)

     (1,047     5,634        47,545       40,001  
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income

   $ 2,219     $ 20,841      $ 164,538     $ 157,160  
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income per diluted common share

   $ 0.01     $ 0.10      $ 0.78     $ 0.74  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted weighted average shares outstanding

     212,041       211,800        211,974       211,632  
  

 

 

   

 

 

    

 

 

   

 

 

 


Flowers Foods, Inc.

Condensed Consolidated Statement of Cash Flows

 

(000’s omitted)

 

     For the 12 Week     For the 12 Week     For the 52 Week     For the 52 Week  
     Period Ended     Period Ended     Period Ended     Period Ended  
     December 28, 2019     December 29, 2018     December 28, 2019     December 29, 2018  

Cash flows from operating activities:

        

Net income

   $ 2,219     $ 20,841     $ 164,538     $ 157,160  

Adjustments to reconcile net income to net cash from operating activities:

        

Total non-cash adjustments

     63,788       48,182       203,806       198,160  

Changes in assets and liabilities and pension contributions

     22,845       (5,189     (1,392     (59,427
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     88,852       63,834       366,952       295,893  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

        

Purchase of property, plant and equipment

     (33,075     (24,430     (103,685     (99,422

Acquisitions, net of cash acquired

     —         (200,174     —         (200,174

Proceeds from sale of property, plant and equipment

     101       547       2,649       1,913  

Other

     987       (4,336     3,943       (4,122
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash disbursed for investing activities

     (31,987     (228,393     (97,093     (301,805
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

        

Dividends paid

     (40,188     (37,967     (159,987     (150,214

Exercise of stock options

     —         —         —         791  

Stock repurchases

     —         —         (7,054     (2,489

Net change in debt borrowings

     (11,750     177,000       (114,250     173,250  

Payments on financing leases

     (952     —         (5,937     —    

Other

     101       1,105       3,107       4,751  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (disbursed for) financing activities

     (52,789     140,138       (284,121     26,089  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     4,076       (24,421     (14,262     20,177  

Cash and cash equivalents at beginning of period

     6,968       49,727       25,306       5,129  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 11,044     $ 25,306     $ 11,044     $ 25,306  
  

 

 

   

 

 

   

 

 

   

 

 

 


Flowers Foods, Inc.

Sales by Sales Class and Sales Bridge

 

(000’s omitted)

 

     For the 12 Week      For the 12 Week               

Sales by Sales Class

   Period Ended      Period Ended               
     December 28, 2019      December 29, 2018      $ Change     % Change  

Branded Retail

   $ 551,665      $ 522,658      $ 29,007       5.5

Store Branded Retail

     140,288        130,478        9,810       7.5

Non-Retail and Other

     225,806        227,531        (1,725     -0.8
  

 

 

    

 

 

    

 

 

   

Total Sales

   $ 917,759      $ 880,667      $ 37,092       4.2
  

 

 

    

 

 

    

 

 

   
     For the 52 Week      For the 52 Week               

Sales by Sales Class

   Period Ended      Period Ended               
     December 28, 2019      December 29, 2018      $ Change     % Change  

Branded Retail

   $ 2,481,835      $ 2,346,944      $ 134,891       5.7

Store Branded Retail

     645,091        586,661        58,430       10.0

Non-Retail and Other

     997,048        1,018,247        (21,199     -2.1
  

 

 

    

 

 

    

 

 

   

Total Sales

   $ 4,123,974      $ 3,951,852      $ 172,122       4.4
  

 

 

    

 

 

    

 

 

   

 

Sales Bridge                Sales Change              
           Net     excluding     Acquisition     Total  

For the 12 Week Period Ended December 28, 2019

   Volume     Price/Mix     Acquisition     Contribution     Sales Change  

Flowers Foods

     -0.9     2.1     1.2     3.0     4.2
Sales Bridge                Sales Change              
           Net     excluding     Acquisition     Total  

For the 52 Week Period Ended December 28, 2019

   Volume     Price/Mix     Acquisition     Contribution     Sales Change  

Flowers Foods

     -0.2     2.4     2.2     2.2     4.4


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 Week     For the 12 Week Period     For the 52 Week     For the 52 Week Period  
     Period Ended     Ended     Period Ended     Ended  
     December 28, 2019     December 29, 2018     December 28, 2019     December 29, 2018  

Net income per diluted common share

   $ 0.01     $ 0.10     $ 0.78     $ 0.74  

Loss (recovery) on inferior ingredients

     NM       NM       NM       0.01  

Restructuring and related impairment charges

     0.06       0.03       0.08       0.03  

Project Centennial consulting costs

     NM       NM       NM       0.03  

Impairment of assets

     —         0.01       —         0.01  

Legal settlements (recovery)

     0.10       NM       0.10       0.08  

Executive retirement agreement

     —         —         NM       —    

Canyon acquisition costs

     —         0.02       NM       0.02  

Pension plan settlement loss

     —         NM       —         0.03  

Multi-employer pension plan withdrawal costs

     —         —         —         0.01  

Adjustment to prior year provisional tax reform benefit

     —         —         —         (0.03
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income per diluted common share

   $ 0.18     $ 0.16     $ 0.96     $ 0.94  
  

 

 

   

 

 

   

 

 

   

 

 

 
NM - not meaningful.         
Certain amounts may not add due to rounding.

 

     
     Reconciliation of Gross Margin  
     For the 12 Week     For the 12 Week Period     For the 52 Week     For the 52 Week Period  
     Period Ended     Ended     Period Ended     Ended  
     December 28, 2019     December 29, 2018     December 28, 2019     December 29, 2018  

Sales

   $ 917,759     $ 880,667     $ 4,123,974     $ 3,951,852  

Materials, supplies, labor and other production costs (exclusive of depreciation and amortization)

     485,960       467,155       2,155,709       2,066,828  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Margin excluding depreciation and amortization

     431,799       413,512       1,968,265       1,885,024  

Less depreciation and amortization for production activities

     18,937       18,799       80,959       81,597  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Margin

   $ 412,862     $ 394,713     $ 1,887,306     $ 1,803,427  
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and amortization for production activities

   $ 18,937     $ 18,799     $ 80,959     $ 81,597  

Depreciation and amortization for selling, distribution and administrative activities

     13,947       13,376       63,269       62,527  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total depreciation and amortization

   $ 32,884     $ 32,175     $ 144,228     $ 144,124  
  

 

 

   

 

 

   

 

 

   

 

 

 
     Reconciliation of Selling, Distribution and Administrative Expenses to Adjusted SD&A  
     For the 12 Week     For the 12 Week Period     For the 52 Week     For the 52 Week Period  
     Period Ended     Ended     Period Ended     Ended  
     December 28, 2019     December 29, 2018     December 28, 2019     December 29, 2018  

Selling, distribution and administrative expenses (SD&A)

   $ 377,196     $ 339,377     $ 1,575,122     $ 1,507,256  

Project Centennial consulting costs

     (784     (347     (784     (9,723

Legal (settlements) recovery

     (29,150     164       (28,014     (21,452

Executive retirement agreement

     —         —         (763     —    

Canyon acquisition costs

     —         (4,476     (22     (4,476
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted SD&A

   $ 347,262     $ 334,718     $ 1,545,539     $ 1,471,605  
  

 

 

   

 

 

   

 

 

   

 

 

 
     Reconciliation of Net Income to EBITDA and Adjusted EBITDA  
     For the 12 Week     For the 12 Week Period     For the 52 Week     For the 52 Week Period  
     Period Ended     Ended     Period Ended     Ended  
     December 28, 2019     December 29, 2018     December 28, 2019     December 29, 2018  

Net income

   $ 2,219     $ 20,841     $ 164,538     $ 157,160  

Income tax expense (benefit)

     (1,047     5,634       47,545       40,001  

Interest expense, net

     2,170       1,717       11,097       7,931  

Depreciation and amortization

     32,884       32,175       144,228       144,124  
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     36,226       60,367       367,408       349,216  

Other pension cost (benefit)

     519       675       2,248       (529

Pension plan settlement loss

     —         1,148       —         7,781  

Loss (recovery) on inferior ingredients

     376       1,219       (37     3,212  

Restructuring and related impairment charges

     17,482       7,210       23,524       9,767  

Project Centennial consulting costs

     784       347       784       9,723  

Impairment of assets

     —         3,516       —         3,516  

Legal settlements (recovery)

     29,150       (164     28,014       21,452  

Executive retirement agreement

     —         —         763       —    

Canyon acquisition costs

     —         4,476       22       4,476  

Multi-employer pension plan withdrawal costs

     —         —         —         2,322  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 84,537     $ 78,794     $ 422,726     $ 410,936  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales

   $  917,759     $ 880,667     $ 4,123,974     $ 3,951,852  

Adjusted EBITDA margin

     9.2     8.9     10.3     10.4
  

 

 

   

 

 

   

 

 

   

 

 

 


Flowers Foods, Inc.

Reconciliation of GAAP to Non-GAAP Measures

 

(000’s omitted, except per share data)

 

     Reconciliation of Income Tax Expense (Benefit) to Adjusted Income Tax Expense  
     For the 12 Week     For the 12 Week Period     For the 52 Week     For the 52 Week Period  
     Period Ended     Ended     Period Ended     Ended  
     December 28, 2019     December 29, 2018     December 28, 2019     December 29, 2018  

Income tax expense (benefit)

   $ (1,047   $ 5,634     $ 47,545     $ 40,001  

Tax impact of:

        

Loss (recovery) on inferior ingredients

     95       308       (9     811  

Restructuring and related impairment charges

     4,414       1,821       5,940       2,466  

Project Centennial consulting costs

     198       88       198       2,455  

Impairment of assets

     —         888       —         888  

Legal settlements (recovery)

     7,238       (41     6,951       5,417  

Executive retirement agreement

     —         —         193       —    

Canyon acquisition costs

     —         1,130       6       1,130  

Pension plan settlement loss

     —         290       —         1,965  

Multi-employer pension plan withdrawal costs

     —         —         —         586  

Adjustment to prior year provisional tax reform benefit

     —         —         —         5,575  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income tax expense

   $ 10,898     $ 10,118     $ 60,824     $ 61,294  
  

 

 

   

 

 

   

 

 

   

 

 

 
     Reconciliation of Net Income to Adjusted Net Income  
     For the 12 Week     For the 12 Week Period     For the 52 Week     For the 52 Week Period  
     Period Ended     Ended     Period Ended     Ended  
     December 28, 2019     December 29, 2018     December 28, 2019     December 29, 2018  

Net income

   $ 2,219     $ 20,841     $ 164,538     $ 157,160  

Loss (recovery) on inferior ingredients

     281       911       (28     2,401  

Restructuring and related impairment charges

     13,068       5,389       17,584       7,301  

Project Centennial consulting costs

     586       259       586       7,268  

Impairment of assets

     —         2,628       —         2,628  

Legal settlements (recovery)

     21,912       (123     21,063       16,035  

Executive retirement agreement

     —         —         570       —    

Canyon acquisition costs

     —         3,346       16       3,346  

Pension plan settlement loss

     —         858       —         5,816  

Multi-employer pension plan withdrawal costs

     —         —         —         1,736  

Adjustment to prior year provisional tax reform benefit

     —         —         —         (5,575
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income

   $ 38,066     $ 34,109     $ 204,329     $ 198,116  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     Reconciliation of Earnings per Share - Full Year       
     Fiscal 2020 Guidance       
     Range Estimate       

Net income per diluted common share

   $ 0.50       to      $ 0.64     

Pension plan settlement loss

     0.50          0.44     
  

 

 

      

 

 

    

Adjusted net income per diluted common share

   $ 1.00       to      $ 1.08     
  

 

 

      

 

 

    

Certain amounts may not add due to rounding.

          
v3.19.3.a.u2
Document and Entity Information
Feb. 05, 2020
Cover [Abstract]  
Entity Registrant Name FLOWERS FOODS INC
Amendment Flag false
Entity Central Index Key 0001128928
Document Type 8-K
Document Period End Date Feb. 05, 2020
Entity Incorporation State Country Code GA
Entity File Number 1-16247
Entity Tax Identification Number 58-2582379
Entity Address, Address Line One 1919 Flowers Circle
Entity Address, City or Town Thomasville
Entity Address, State or Province GA
Entity Address, Postal Zip Code 31757
City Area Code (229)
Local Phone Number 226-9110
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, par value $0.01 per share
Trading Symbol FLO
Security Exchange Name NYSE
Entity Emerging Growth Company false