Form 8-K
FLOWERS FOODS INC false 0001128928 0001128928 2020-08-06 2020-08-06

 

 

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): August 7, 2020 (August 6, 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 August 6, 2020, Flowers Foods, Inc. issued a press release announcing its financial condition and results of operations as of and for the 12 weeks ended July 11, 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 August 6, 2020.
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: August 7, 2020

EX-99.1

Exhibit 99.1

 

LOGO

Company Press Release

 

August 6, 2020

Flowers Foods (NYSE: FLO)

FLOWERS FOODS, INC. REPORTS SECOND QUARTER 2020 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 second quarter ended July 11, 2020.

Second Quarter Summary:

Compared to the prior year second quarter where applicable

 

   

Sales increased 5.1% to $1.026 billion, reflecting the continued impact of the COVID-19 pandemic.

 

   

Diluted EPS increased by $0.02 to $0.27.

 

   

Adjusted diluted EPS(1) increased by $0.08 to $0.33.

 

  (1)

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

CEO’s Remarks:

“I am pleased to report a record quarter in which we executed well and capitalized on the strong demand for our leading brands,” said Ryals McMullian, Flowers Foods’ president and CEO. “Our team continued to perform admirably in challenging circumstances, and I am grateful for their dedication and commitment. Their hard work combined with the flexibility of our bakery network have enabled us to continue serving our markets uninterrupted throughout the COVID-19 pandemic.”

McMullian added, “A key driver of our strong performance was the mix shift to branded retail products, which allowed us to leverage costs and increase margins. The COVID-19 pandemic was a significant driver of that shift this quarter, and we are actively working to maintain and expand that favorable mix going forward through our portfolio optimization initiatives.”

McMullian continued, “Looking to the second half of 2020, we are balancing the higher demand and positive mix shift with the increased costs and uncertainty caused by this new environment. We remain committed to our portfolio and supply chain optimization initiatives and our expectation to deliver approximately $10 million to $20 million of savings this year. As part of our ongoing efforts to streamline operations, and to ensure we have the right resources in place


to sustain long-term growth, we announced an organizational restructuring in July to further reduce the complexity of our business, improve margins, and ultimately unleash the full potential of our brands and innovation efforts. By continuing to strengthen our powerful brands, we expect to expand their market leading share positions and better-utilize our supply chain network with the goal of driving strong shareholder returns over the long-term.”

Revised Guidance:

For the 53-week fiscal 2020 the company expects

 

   

Sales in the range of approximately $4.290 billion to $4.330 billion, representing growth of approximately 4.0% to 5.0%.

 

   

Diluted EPS in the range of approximately $0.66 to $0.76.

 

   

Adjusted diluted EPS in the range of approximately $1.15 to $1.25, adjusted for items affecting comparability, representing growth of approximately 19.8% to 30.2%.

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 $145 million to $150 million

 

   

Net interest expense of approximately $11 million

 

   

An effective tax rate of approximately 24.0% to 24.5%

 

   

Weighted average diluted share count for the year of approximately 212.5 million shares

 

   

Capital expenditures for the year in the range of $85 million to $95 million

Matters Affecting Comparability:

 

Reconciliation of Earnings per Share to Adjusted Earnings per Share

 
     For the 12 Weeks Ended  
     Jul. 11, 2020      Jul. 13, 2019  

Net income per diluted common share

   $ 0.27      $ 0.25  

Restructuring and related impairment charges

     0.04        0.01  

Project Centennial consulting costs

     0.02        —    

Legal settlements (recovery)

     —          (0.01

Executive retirement agreement

     —          NM  
  

 

 

    

 

 

 

Adjusted net income per diluted common share

   $ 0.33      $ 0.25  
  

 

 

    

 

 

 

NM - Not Meaningful

Certain amounts may not compute due to rounding.


Consolidated Second Quarter 2020 Results

Compared to the prior year second quarter where applicable

 

   

Sales increased 5.1% to $1.026 billion.

 

   

Percentage point change in sales attributed to:

 

     

Pricing/mix: 8.4%

 

     

Volume: -3.3%

 

   

Branded retail sales increased $103.6 million, or 17.7%, to $689.5 million, store branded retail sales decreased $17.7 million, or 10.9%, to $145.2 million, while non-retail and other sales decreased $35.8 million, or 15.8%, to $191.2 million.

 

   

Branded retail sales increased due to the impact of the COVID-19 pandemic, new product introductions, reduced promotional activity, and a reduction in product returns.

 

   

Store branded retail sales decreased primarily due to lost breakfast bread business and volume declines for other store branded products as consumer purchasing shifted to more branded retail products.

 

   

Non-retail and other sales declined primarily due to the impact of the pandemic on foodservice customers.

 

   

Net income increased 9.1% to $57.9 million. Adjusted net income increased 31.5% to $70.0 million.

 

   

Adjusted EBITDA increased 21.4% to $128.5 million, representing 12.5% of sales, a 170-basis point increase.

 

   

Materials, supplies, labor and other production costs (exclusive of depreciation and amortization) were 49.3% of sales, a 280-basis point decrease. These costs were lower as a percentage of sales due to positive shifts in mix from non-retail and store branded retail products to branded retail products. Ingredient and packaging costs declined due to the mix shift and lower product returns. Partially offsetting the lower costs were $1.5 million of start-up costs incurred with the ongoing conversion of our Lynchburg, Virginia facility to an organic bakery, which were largely workforce related.

 

   

Selling, distribution and administrative (SD&A) expenses were 38.7% of sales, a 190-basis point increase. Excluding matters affecting comparability, adjusted SD&A expenses were 38.1% of sales, a 110-basis point increase. Higher employee incentive costs, an increase in distributor distribution fees due to a shift in product mix, and consulting costs related to Project Centennial were the primary drivers of the increased costs. Partially offsetting the higher costs were lower logistics expenses related to the product mix shift.

 

   

Depreciation and amortization (D&A) expenses were $33.2 million, 3.2% of sales, a 20-basis point decrease.

Cash Flow, Capital Allocation, and Capital Return

Year-to-date through the second quarter of fiscal 2020, cash flow from operating activities increased by $67.7 million to $275.8 million, capital expenditures decreased by $0.8 million to $46.6 million, and dividends paid increased by $3.0 million to $82.6 million. To ensure liquidity, out of an abundance of caution, total indebtedness increased by $142.5 million year-to-date through the second quarter.


There remain 6.2 million 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.

Investor Webcast

Flowers Foods will hold an investor update webcast to discuss its second quarter results, strategic priorities, and long-term targets at 8:00 a.m. (ET) on August 7, 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 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 and the ultimate impact of the novel strain of coronavirus (COVID-19) pandemic on our business, results of operations and financial condition, 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) the ultimate impact of the COVID-19 pandemic and measures taken in response thereto, including, among other things, temporary or ongoing bakery closures, on our business, results of operations and financial condition, which are highly uncertain and are difficult to predict, (b) general economic and business conditions and the competitive conditions in the baked foods industry, including promotional and price competition, (c) 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, (d) the success of productivity improvements and new product introductions, (e) a significant reduction in business with any of our major customers including a reduction from adverse developments in any of our customer’s business, (f) fluctuations in commodity pricing, (g) energy and raw material costs and availability and hedging and counterparty risk, (h) our ability to fully integrate recent acquisitions into our business, (i) our ability to achieve cash flow from capital expenditures and acquisitions and the availability of new acquisitions that build shareholder value, (j) 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, (k) consolidation within the baking industry and related industries, (l) 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, (m) increasing legal complexity and legal proceedings that we are or may become subject to, (n) product recalls or safety concerns related to our products, and (o) 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, adjusted EBIT, 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, 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 earnings before interest, taxes, depreciation and amortization. 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, adjusted EBIT, EBITDA margin, adjusted EBITDA margin, adjusted net income, adjusted operating income, adjusted EPS, adjusted income tax expense, adjusted SD&A, respectively, excluding the impact of asset impairment charges, Project Centennial consulting 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)

 

     July 11, 2020      December 28, 2019  

Assets

             

Cash and Cash Equivalents

   $ 299,562      $ 11,044  

Other Current Assets

     521,699        515,165  

Property, Plant & Equipment, net

     697,127        717,822  

Right-of-Use Leases, net

     374,723        399,302  

Distributor Notes Receivable (1)

     215,751        226,348  

Other Assets

     14,565        12,644  

Cost in Excess of Net Tangible Assets, net

     1,275,367        1,295,451  
  

 

 

    

 

 

 

Total Assets

   $ 3,398,794      $ 3,177,776  
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

             

Current Liabilities

   $ 478,375      $ 463,431  

Long-term Debt (2)

     1,009,596        866,508  

Right-of-Use Lease Liabilities (3)

     384,226        404,503  

Other Liabilities

     190,109        179,904  

Stockholders’ Equity

     1,336,488        1,263,430  
  

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 3,398,794      $ 3,177,776  
  

 

 

    

 

 

 

 

(1)

Includes current portion of $28,211 and $27,709, respectively.

(2)

Includes current portion of $0 and $3,730, respectively.

(3)

Includes current portion of $59,701 and $60,982, respectively.


Flowers Foods, Inc.

Consolidated Statement of Operations

 

 

(000’s omitted, except per share data)

 

     For the 12 Week     For the 12 Week Period      For the 28 Week      For the 28 Week Period  
     Period Ended     Ended      Period Ended      Ended  
     July 11, 2020     July 13, 2019      July 11, 2020      July 13, 2019  

Sales

   $ 1,025,861     $ 975,759      $ 2,375,305      $ 2,239,654  

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

     506,033       508,552        1,176,906        1,160,693  

Selling, distribution and administrative expenses

     396,904       359,497        918,939        835,546  

Recovery on inferior ingredients

     —         —          —          (413

Restructuring and related impairment charges

     10,535       2,047        10,535        2,765  

Depreciation and amortization expense

     33,180       33,329        77,843        78,148  
  

 

 

   

 

 

    

 

 

    

 

 

 

Income from operations

     79,209       72,334        191,082        162,915  

Other pension (benefit) cost

     (72     519        71        1,211  

Pension plan settlement and curtailment loss

     —         —          116,207        —    

Interest expense, net

     2,869       2,769        6,183        6,593  
  

 

 

   

 

 

    

 

 

    

 

 

 

Income before income taxes

     76,412       69,046        68,621        155,111  

Income tax expense

     18,493       15,951        16,474        36,150  
  

 

 

   

 

 

    

 

 

    

 

 

 

Net income

   $ 57,919     $ 53,095      $ 52,147      $ 118,961  
  

 

 

   

 

 

    

 

 

    

 

 

 

Net income per diluted common share

   $ 0.27     $ 0.25      $ 0.25      $ 0.56  
  

 

 

   

 

 

    

 

 

    

 

 

 

Diluted weighted average shares outstanding

     212,284       211,957        212,192        211,924  
  

 

 

   

 

 

    

 

 

    

 

 

 


Flowers Foods, Inc.

Condensed Consolidated Statement of Cash Flows

 

 

(000’s omitted)

 

     For the 12 Week     For the 12 Week Period     For the 28 Week     For the 28 Week Period  
     Period Ended     Ended     Period Ended     Ended  
     July 11, 2020     July 13, 2019     July 11, 2020     July 13, 2019  

Cash flows from operating activities:

        

Net income

   $ 57,919     $ 53,095     $ 52,147     $ 118,961  

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

        

Total non-cash adjustments

     49,862       42,792       193,513       97,569  

Changes in assets and liabilities and pension contributions

     61,828       15,992       30,134       (8,473
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     169,609       111,879       275,794       208,057  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

        

Purchase of property, plant and equipment

     (24,894     (26,651     (46,594     (47,412

Proceeds from sale of property, plant and equipment

     590       308       1,452       543  

Other

     5,342       989       9,363       1,125  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash disbursed for investing activities

     (18,962     (25,354     (35,779     (45,744
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

        

Dividends paid

     (42,342     (40,314     (82,628     (79,610

Payment of contingent consideration

     —         —         (4,700     —    

Stock repurchases

     —         —         (783     (7,054

Net change in debt borrowings

     (61,250     (46,250     142,500       (86,750

Payments on financing leases

     (1,720     (1,431     (3,900     (3,303

Other

     1,544       (345     (1,986     (1,133
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (disbursed for) financing activities

     (103,768     (88,340     48,503       (177,850
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     46,879       (1,815     288,518       (15,537

Cash and cash equivalents at beginning of period

     252,683       11,584       11,044       25,306  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 299,562     $ 9,769     $ 299,562     $ 9,769  
  

 

 

   

 

 

   

 

 

   

 

 

 


Flowers Foods, Inc.

Sales by Sales Class and Sales Bridge

 

 

(000’s omitted)

 

      For the 12 Week      For the 12 Week Period                 
Sales by Sales Class    Period Ended      Ended                 
      July 11, 2020      July 13, 2019      $ Change     % Change  

Branded Retail

   $ 689,481      $ 585,886      $ 103,595       17.7

Store Branded Retail

     145,160        162,843        (17,683     -10.9

Non-Retail and Other

     191,220        227,030        (35,810     -15.8
    

 

 

    

 

 

    

 

 

     

Total Sales

   $ 1,025,861      $ 975,759      $ 50,102       5.1
    

 

 

    

 

 

    

 

 

     
                                    

 

      For the 28 Week      For the 28 Week Period                 
Sales by Sales Class    Period Ended      Ended                 
      July 11, 2020      July 13, 2019      $ Change     % Change  

Branded Retail

   $ 1,579,811      $ 1,343,338      $ 236,473       17.6

Store Branded Retail

     335,352        353,896        (18,544     -5.2

Non-Retail and Other

     460,142        542,420        (82,278     -15.2
    

 

 

    

 

 

    

 

 

     

Total Sales

   $ 2,375,305      $ 2,239,654      $ 135,651       6.1
    

 

 

    

 

 

    

 

 

     
                                    

 

Sales Bridge                            
            Net     Total        
For the 12 Week Period Ended July 11, 2020    Volume     Price/Mix     Sales Change        

Flowers Foods

     -3.3     8.4     5.1  
        
Sales Bridge                            
            Net     Total        
For the 28 Week Period Ended July 11, 2020    Volume     Price/Mix     Sales Change        

Flowers Foods

     -1.1     7.2     6.1  


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
Period Ended
    For the 12 Week
Period Ended
    For the 28 Week
Period Ended
    For the 28 Week
Period Ended
 
     July 11, 2020     July 13, 2019     July 11, 2020     July 13, 2019  

Net income per diluted common share

   $ 0.27     $ 0.25     $ 0.25     $ 0.56  

Recovery on inferior ingredients

     —         —         —         NM  

Restructuring and related impairment charges

     0.04       0.01       0.04       0.01  

Project Centennial consulting costs

     0.02       —         0.03       —    

Legal settlements

     —         (0.01     0.01       NM  

Executive retirement agreement

     —         NM       —         NM  

Canyon acquisition costs

     —         —         —         NM  

Pension plan settlement and curtailment loss

     —         —         0.41       —    

Other pension plan termination costs

     —         —         NM       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income per diluted common share

   $ 0.33     $ 0.25     $ 0.74     $ 0.57  
  

 

 

   

 

 

   

 

 

   

 

 

 

NM - not meaningful.

        

Certain amounts may not add due to rounding.

        
     Reconciliation of Gross Margin  
    

For the 12 Week

Period Ended

 

 

   

For the 12 Week

Period Ended

 

 

   

For the 28 Week

Period Ended

 

 

   

For the 28 Week

Period Ended

 

 

     July 11, 2020       July 13, 2019       July 11, 2020       July 13, 2019  

Sales

   $ 1,025,861     $ 975,759     $ 2,375,305     $ 2,239,654  

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

     506,033       508,552       1,176,906       1,160,693  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Margin excluding depreciation and amortization

     519,828       467,207       1,198,399       1,078,961  

Less depreciation and amortization for production activities

     18,113       18,590       42,371       43,568  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Margin

   $ 501,715     $ 448,617     $ 1,156,028     $ 1,035,393  
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and amortization for production activities

   $ 18,113     $ 18,590     $ 42,371     $ 43,568  

Depreciation and amortization for selling, distribution and administrative activities

     15,067       14,739       35,472       34,580  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total depreciation and amortization

   $ 33,180     $ 33,329     $ 77,843     $ 78,148  
  

 

 

   

 

 

   

 

 

   

 

 

 
     Reconciliation of Selling, Distribution and Administrative Expenses to Adjusted
SD&A
 
    

For the 12 Week

Period Ended

 

 

   

For the 12 Week

Period Ended

 

 

   

For the 28 Week

Period Ended

 

 

   

For the 28 Week

Period Ended

 

 

     July 11, 2020       July 13, 2019       July 11, 2020       July 13, 2019  

Selling, distribution and administrative expenses (SD&A)

   $ 396,904     $ 359,497     $ 918,939     $ 835,546  

Project Centennial consulting costs

     (5,584     —         (8,976     —    

Legal (settlements) recovery

     —         1,286       (3,220     1,136  

Executive retirement agreement

     —         568       —         (763

Canyon acquisition costs

     —         —         —         (22

Other pension plan termination costs

     —         —         (133     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted SD&A

   $ 391,320     $ 361,351     $ 906,610     $ 835,897  
  

 

 

   

 

 

   

 

 

   

 

 

 
     Reconciliation of Net Income to EBITDA and Adjusted EBITDA  
    

For the 12 Week

Period Ended

 

 

   

For the 12 Week

Period Ended

 

 

   

For the 28 Week

Period Ended

 

 

   

For the 28 Week

Period Ended

 

 

     July 11, 2020       July 13, 2019       July 11, 2020       July 13, 2019  

Net income

   $ 57,919     $ 53,095     $ 52,147     $ 118,961  

Income tax expense

     18,493       15,951       16,474       36,150  

Interest expense, net

     2,869       2,769       6,183       6,593  

Depreciation and amortization

     33,180       33,329       77,843       78,148  
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     112,461       105,144       152,647       239,852  

Other pension cost

     (72     519       71       1,211  

Pension plan settlement and curtailment loss

     —         —         116,207       —    

Other pension plan termination costs

     —         —         133       —    

Recovery on inferior ingredients

     —         —         —         (413

Restructuring and related impairment charges

     10,535       2,047       10,535       2,765  

Project Centennial consulting costs

     5,584       —         8,976       —    

Legal settlements (recovery)

     —         (1,286     3,220       (1,136

Executive retirement agreement

     —         (568     —         763  

Canyon acquisition costs

     —         —         —         22  
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 128,508     $ 105,856     $ 291,789     $ 243,064  
  

 

 

   

 

 

   

 

 

   

 

 

 

Sales

   $ 1,025,861     $ 975,759     $ 2,375,305     $ 2,239,654  

Adjusted EBITDA margin

     12.5     10.8     12.3     10.9
  

 

 

   

 

 

   

 

 

   

 

 

 


Flowers Foods, Inc.

Reconciliation of GAAP to Non-GAAP Measures

 

 

(000’s omitted, except per share data)

 

     Reconciliation of Income Tax Expense to Adjusted Income Tax Expense  
     For the 12 Week
Period Ended
     For the 12 Week
Period Ended
    For the 28 Week
Period Ended
     For the 28 Week
Period Ended
 
     July 11, 2020      July 13, 2019     July 11, 2020      July 13, 2019  

Income tax expense

   $ 18,493      $ 15,951     $ 16,474      $ 36,150  

Tax impact of:

          

Recovery on inferior ingredients

     —          —         —          (104

Restructuring and related impairment charges

     2,634        517       2,634        698  

Project Centennial consulting costs

     1,396        —         2,244        —    

Legal (recovery) settlements

     —          (325     805        (287

Executive retirement agreement

     —          (143     —          193  

Canyon acquisition costs

     —          —         —          6  

Pension plan settlement and curtailment loss

     —          —         29,052        —    

Other pension plan termination costs

     —          —         33        —    
  

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted income tax expense

   $ 22,523      $ 16,000     $ 51,242      $ 36,656  
  

 

 

    

 

 

   

 

 

    

 

 

 
     Reconciliation of Net Income to Adjusted Net Income  
     For the 12 Week
Period Ended
     For the 12 Week
Period Ended
    For the 28 Week
Period Ended
     For the 28 Week
Period Ended
 
     July 11, 2020      July 13, 2019     July 11, 2020      July 13, 2019  

Net income

   $ 57,919      $ 53,095     $ 52,147      $ 118,961  

Recovery on inferior ingredients

     —          —         —          (309

Restructuring and related impairment charges

     7,901        1,530       7,901        2,067  

Project Centennial consulting costs

     4,188        —         6,732        —    

Legal (recovery) settlements

     —          (961     2,415        (849

Executive retirement agreement

     —          (425     —          570  

Canyon acquisition costs

     —          —         —          16  

Pension plan settlement and curtailment loss

     —          —         87,155        —    

Other pension plan termination costs

     —          —         100        —    
  

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted net income

   $ 70,008      $ 53,239     $ 156,450      $ 120,456  
  

 

 

    

 

 

   

 

 

    

 

 

 

 

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

Net income per diluted common share

   $   0.66     to    $   0.76  

Restructuring and related impairment charges

     0.04          0.04  

Project Centennial consulting costs

     0.03          0.03  

Legal settlements

     0.01          0.01  

Pension plan settlement and curtailment loss

     0.41          0.41  

Other pension plan termination costs

     NM          NM  
  

 

 

      

 

 

 

Adjusted net income per diluted common share

   $   1.15     to    $   1.25  
  

 

 

      

 

 

 

Certain amounts may not add due to rounding.

       
v3.20.2
Document and Entity Information
Aug. 06, 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 Aug. 06, 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