MAY 26, 2005 COMPANY PRESS RELEASE FLOWERS FOODS (NYSE: FLO)
FLOWERS FOODS' FIRST QUARTER FISCAL 2005 RESULTS
AND FISCAL 2005 GUIDANCE UPDATE
THOMASVILLE, GA--Flowers Foods (NYSE: FLO) today reported net income of $20.0
million, or $.46 per share, for its 16-week first quarter ended on April 23,
2005, an increase of 46% compared to net income of $13.7 million, or $.30 per
share, for the first quarter of fiscal 2004. Income from continuing operations
for the first quarter was $20.0 million, or $.46 per share, compared to $17.2
million, or $.38 per share, for the first quarter last year, an increase of 16%.
Sales for the first quarter increased 10.5% to $506.0 million compared to $457.8
million for last year's first quarter. Price increases in all channels of
distribution contributed 4.3% of the gain in sales while a favorable shift in
product mix and increased volume contributed 6.2%. The 6.2% increase in mix and
volume resulted from growth in the company's core business of 2.0%, the
expansion of the company's direct-store-delivery (DSD) system into new markets
and new products, which contributed 2.0%, and the September 2004 acquisition in
Texas, which contributed 2.2%.
Gross margin as a percentage of sales was stable when comparing the first
quarter of 2005 to the same period in 2004. This was achieved with increased
sales, which offset higher energy, packaging and labor costs, including the cost
to start a new bread line in the Denton, Texas facility. In addition, higher
flour costs were partially offset by lower costs of other ingredients. Selling,
marketing, and administrative expenses as a percentage of sales declined by one
half percentage point compared to the year-ago quarter, due primarily to the
higher sales which offset increased labor costs and costs associated with the
geographic expansion of the company's DSD system.
Commenting on the results, George E. Deese, president and chief executive
officer of Flowers Foods, said, "The strength of Flowers Foods' strategy to
provide quality products through multiple distribution channels is reflected in
our sales growth in both retail and foodservice channels. Product innovation in
the foodservice channel, in partnership with our customers, contributed
significantly to our results this quarter," Deese said. "We remain focused on
sound execution through our DSD system, which enables us to grow in our core
territory and expand into new markets."
The company is increasing its fiscal 2005 sales guidance to $1.650 billion to
$1.675 billion from prior guidance of $1.60 billion to $1.625 billion. The
company reaffirms the expectation that net income will be 3.75% to 4.0% of
sales. The company's guidance represents management's estimates and targets only
and is subject to risks and uncertainties as referenced below.
During the first quarter, the company acquired approximately 2.7 million shares
of its common stock for $78.2 million, an average of $29.11 per share. As
announced on April 12, 2005, the company purchased approximately 2.1 million
shares at market price from an institutional holder during the first quarter.
Since the inception of the stock repurchase plan and through the first quarter
of 2005, the company has acquired approximately 4.9 million shares of its common
stock for $135.7 million, an average of $27.45 per share. All shares have been
purchased in accordance with the share repurchase plan approved by the board of
directors in 2002, which authorizes the company to repurchase up to 7.5 million
shares of common stock.
The diluted weighted average shares outstanding for the first quarter was 43.7
million shares. Accounting for share repurchases during the first quarter, the
company expects the diluted weighted average shares to be approximately 42.0
million for quarters two, three, and four, and approximately 42.5 million for
fiscal 2005.
During the quarter, the company used $78.2 million in cash for stock
repurchases. The company drew upon its $150 million credit facility to fund
these repurchases as well as to fund two previously disclosed uses of cash: a
$25.0 million contribution to the company-sponsored defined benefit pension plan
and a $13.4 million payment to settle stock appreciation rights that were
awarded to key employees in 2001. The company expects the operating cash flow
generated during this year will be sufficient to fully repay the amount drawn.
The effective income tax rate for the first quarter was 39.4%, which is higher
than the estimated 38% rate the company expects for the remainder of the year.
The higher tax rate for the first quarter resulted from an additional $600,000
in state income tax expense during the quarter due to the settlement of a state
tax audit.
The board of directors will consider the dividend at its regularly scheduled
meeting. Any action taken will be announced following that meeting.
Flowers Foods will broadcast its quarterly conference call over the Internet at
11:00 a.m. (Eastern) May 26, 2005 at http://www.flowersfoods.com/webcasts.asp.
The call will be archived on Flowers' Web site, www.flowersfoods.com, and can be
accessed by clicking on "Investor Center."
COMPANY INFORMATION
Headquartered in Thomasville, Ga., Flowers Foods is one of the nation's leading
producers and marketers of packaged bakery foods for retail and foodservice
customers. Flowers operates 34 bakeries that produce a wide range of bakery
products marketed throughout the Southeastern, Southwestern, and mid-Atlantic
states via an extensive direct-store-delivery network and nationwide through
other delivery systems. Among the company's top brands are Nature's Own,
Cobblestone Mill, Sunbeam, BlueBird, and Mrs. Freshley's. For more information,
visit www.flowersfoods.com.
FORWARD-LOOKING STATEMENTS
Statements contained in this press release and certain other written or oral
statements made from time to time by the company and its representatives that
are not historical facts are forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
relate to current expectations regarding the company's future financial
condition and results of operations 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. These forward looking statements
are based upon assumptions the company believes are reasonable. Forward-looking
statements are based on current information and are subject to risks and
uncertainties that could cause actual results to differ materially from those
projected. Certain factors that may cause actual results, performance, and
achievements to differ materially from those projected may include, but are not
limited to (a) unexpected changes in any of the following: (i) general economic
and business conditions; (ii) the competitive setting in which the company
operates, including changes in pricing, advertising or promotional strategies by
the company or its competitors, as well as changes in consumer demand; (iii)
interest rates and other terms available to the company on its borrowings; (iv)
energy and raw materials costs and availability; (v) relationships with
employees, independent distributors and third party service providers; and (vi)
laws and regulations (including health-related issues), accounting standards or
tax rates in the markets in which the company operates; (b) the loss or
financial instability of any significant customer(s); (c) the company's ability
to execute its business strategy, which may involve integration of recent
acquisitions or the acquisition or disposition of assets at presently targeted
values; (d) the company's ability to operate existing, and any new,
manufacturing lines according to schedule; (e) the level of success the company
achieves in developing and introducing new products and entering new markets;
(f) changes in consumer behavior, trends and preferences, including weight loss
trends; (g) the company's ability to implement new technology as required; (h)
the credit and business risks associated with independent distributors and
customers that operate in the highly competitive retail food industry, including
the amount of consolidation in that industry; (i) customer and consumer reaction
to pricing actions; (j) existing or future governmental regulations resulting
from the events of September 11, 2001, the military action in Iraq and the
continuing threat of terrorist attacks that could adversely affect the company's
business and its commodity and service costs; and (k) any business disruptions
due to political instability, armed hostilities, incidents of terrorism or the
responses to or repercussions from any of these or similar events or conditions.
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 disclosures made by the company (such as in our other filings with the
Securities and Exchange Commission ("SEC") or in other company press releases)
for other factors that may cause actual results to differ materially from those
projected by the company. You should not 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. You are advised, however, to consult any
further public disclosures by the company (such as in our filings with the SEC
or in company press releases) on related subjects.
Contact:
Jimmy M. Woodward, Senior VP and Chief Financial Officer, (229) 227-2266
Marta J. Turner, Senior VP/Corporate Relations, (229) 227-2348
FLOWERS FOODS
CONSOLIDATED STATEMENT OF INCOME
(000's omitted, except per share data)
FOR THE 16 - WEEK For the 16 - Week
PERIOD ENDED Period Ended
----------------- -----------------
APRIL 23, 2005 April 24, 2004
----------------- -----------------
Sales $ 506,040 $ 457,839
Materials, supplies, labor and other production costs 252,764 228,054
Selling, marketing and administrative expenses 203,991 186,434
Depreciation and amortization 17,740 16,902
--------- ---------
Income from continuing operations before interest, income
taxes and minority interest (EBIT) 31,545 26,449
Interest income, net 2,097 2,677
--------- ---------
Income from continuing operations before income taxes and
minority interest (EBT) 33,642 29,126
Income tax expense 13,270 10,774
--------- ---------
Income from continuing operations before minority interest 20,372 18,352
Minority interest in variable interest entity (375) (1,142)
--------- ---------
Income from continuing operations 19,997 17,210
Discontinued operations, net of tax 0 (3,486)
--------- ---------
Net income $ 19,997 $ 13,724
========= =========
Per share amounts:
Income from continuing operations $ 0.46 $ 0.38
Discontinued operations 0.00 (0.08)
--------- ---------
Net income $ 0.46 $ 0.30
========= =========
Diluted weighted average shares outstanding 43,702 45,473
========= =========
FLOWERS FOODS
SEGMENT REPORTING
(000's omitted)
FOR THE 16 - WEEK For the 16 - Week
PERIOD ENDED Period Ended
----------------- ------------------
APRIL 23, 2005 April 24, 2004
----------------- ------------------
Sales:
Flowers Bakeries Group $ 396,674 $ 357,146
Flowers Specialty Group 109,366 100,693
--------- ---------
$ 506,040 $ 457,839
========= =========
EBITDA from Continuing Operations:
Flowers Bakeries Group $ 44,004 $ 43,349
Flowers Specialty Group 12,927 10,108
Flowers Foods (7,646) (10,106)
--------- ---------
$ 49,285 $ 43,351
========= =========
Depreciation and Amortization:
Flowers Bakeries Group $ 14,393 $ 13,345
Flowers Specialty Group 3,343 3,585
Flowers Foods 4 (28)
--------- ---------
$ 17,740 $ 16,902
========= =========
EBIT from Continuing Operations:
Flowers Bakeries Group $ 29,611 $ 30,004
Flowers Specialty Group 9,584 6,523
Flowers Foods (7,650) (10,078)
--------- ---------
$ 31,545 $ 26,449
========= =========
FLOWERS FOODS
CONDENSED CONSOLIDATED BALANCE SHEET
(000's omitted)
APRIL 23, 2005
----------------
ASSETS
Cash and Cash Equivalents $ 30,443
Other Current Assets 212,034
Property, Plant & Equipment, net 429,239
Distributor Notes Receivable (includes $8,072 current portion) 82,112
Other Assets 16,602
Cost in Excess of Net Tangible Assets, net 76,998
--------
Total Assets $847,428
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $149,771
Bank Debt 59,000
Other Debt and Capital Leases (includes $4,475 current portion) 27,002
Other Liabilities 98,006
Minority Interest in Variable Interest Entity 3,024
Common Stockholders' Equity 510,625
--------
Total Liabilities and Stockholders' Equity $847,428
========
FLOWERS FOODS
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(000's omitted)
FOR THE 16 - WEEK
PERIOD ENDED
-----------------
APRIL 23, 2005
-----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 19,997
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 17,740
Minority interest in variable interest entity 375
Pension contribution (25,000)
Changes in assets and liabilities (6,183)
--------
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,929
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (8,168)
Other 87
--------
NET CASH DISBURSED FOR INVESTING ACTIVITIES (8,081)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (5,347)
Stock options exercised 1,209
Stock repurchases (78,207)
Increase in book overdraft 8,144
Proceeds from debt borrowings 59,000
Debt and capital lease obligation payments (662)
--------
NET CASH DISBURSED FOR FINANCING ACTIVITIES (15,863)
--------
Net decrease in cash and cash equivalents (17,015)
Cash and cash equivalents at beginning of period 47,458
--------
Cash and cash equivalents at end of period $ 30,443
========