FLO - Earnings call transcript Q1 2021

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Operator

Good day and thank you for standing by, and welcome to the Flowers Foods First Quarter 2021 Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to your speaker today, J.T. of Investor President Vice Senior Finance Relations. and Rieck, go ahead. Please

J.T. Rieck

prepared post and make company's note Investor this that After also Thank earnings hope Q&A session our forward-looking of on the our good the yesterday everyone replay were session, operator presentation. we Q&A release, website. and These audio slide had to our I evening review morning. this may you, statements posted view to in performance. about the listen Relations remarks, will we today’s an call. Please opportunity

Although, are materially. we could and believe cause these to that statements to be reasonable, uncertainties differ subject they actual to results risks

to to SEC addition important filings. you business remarks, in these factors Flowers our In relating hear are what in Foods' fully detailed

non-GAAP disclosure provided which provide also the and and the for measures the in presentation end financial are slide website. at of release earnings our reconciliations on We

President CFO. to and are Joining CEO; Steve and today the our Kinsey, start Ryals me ready we're Q&A, McMullian, Victor, please.

Operator

Instructions]. [Operator

question comes -- the Dickerson Dickerson. from of sorry, Rob Rob first Our line from

You may begin.

Rob Dickerson

from Great, morning everyone. you, Jefferies. Good thank

A. Ryals McMullian

Rob. morning Good

Rob Dickerson

quarter, consuming a to there investors at a have seems I a next for kind main So, which elevated, pressure. sounds right would manageable home ask be commodity kind in if those There's this retail but I or just is decent maybe have a guidance seems plus prepared it the of they because continue remain think year, good where sounds for now. it says, more inflation of the this it like like remarks QX if are, of like that prices as brands could still question consumers conviction lot at for bit was home the line in been year you that revenue somewhat with consume is great. is

year? more those in And offsets back half that around including color this I appreciate color a of the it that. lot. leave So on at potentially potential pricing just Thanks any then would obviously some of

R. Steve Kinsey

of Sure Rob. the Hey, this markets. commodity is lot Steve. there's volatility in a Obviously

consideration out nine Our of take stay do play will horizon into on seven long on to hedge and XXXX. guidance, as takes know, the what typically that. And believe we and the we months-time coverage you we usually for end

say, think the believe are cover, are at, looking So, and Ralph we a some those do initiatives. several we area rest good can one do arena. we inflation his packaging for efficiencies we bakeries that the But we seeing, visibility particularly cost have near-term of pull, lot well can't more XXXX. few a volatility the around And comments, our little corrugated across decent in like as of being I you of we other area. have feel things as a visibility. There from that we of are like and said I in levers there are packaging,

exchange guidance So quickly, about things but guidance due be with the year comfortable point able we volatility as given we're if I obviously have pretty think And, way necessary do the progresses, we to feel good the and out there. the moved the range feel to that. we'll so I at pretty

a more necessarily crop lot look the to guidance wheat. is corn the for decent at But XXXX, and of reality wheat prepared pretty give we're when that is driving other in market. it's like of Looking is a inflation, and XXXX. obviously, it's shape, commodity mean, but the in not I global of beans, you grains kind what's not

on crops. to We availability there impact starts back as then are grain to and things market is a supply, and in that just the turn wheat and like feed tightness other seeing, big of into that China And -- way. grains grains

go it the lot out crop. to that of transparency to So, the corn would inflation. we we important have significant crop, crop commodity be reality regard it perspective. is thought was we a and there the get that out with bean to But, from a if cycle cover, runway We'll had today's just still but, wheat prices, a

A. Ryals McMullian

of positioned Rob, that, but on just to Steve the -- periods add been board, you I inflation a the most points over would we've able spot years. past say of we're and than we've we've many that ever the think the times been been. in we've through couple we've across to to better is as this experienced know cover today, that like perhaps, I adequately

of branded branded products you think standpoint. from focus obvious some the us about point even think levers you think with positions an that the and the pull on if now about it, of I our consumers better we of environment a -- can the portfolio with for as strength Just desire inflationary difference,

Rob Dickerson

well. you quick Okay, is Like your sense. focus follow-up. that brands, makes consumers just said, branded business And a continue very on doing to

BKP the with elevated. which is phenomenal. in just to remain the remarks relative still [ph] even revenues growth out call XXXX, You prepared overall And, doing

months to to the service of So reverse, it basically your they the way maybe this in service, no, keeping reversion. of some pandemic learned to thinking time? there get would the you going Thank is to I things as reverting Is of just a private what revert ago little through is here, bit three how that's larger you channels, now start that say then the benefits just excess has like kind are relative over little just say that to some usual you. of channel anything you're food as to all we've is bit kind XX XX eye capacity changed and back on, much, to your say, as business leverage as or label, think a we're there this is back, of okay, question not right consumers, the one of but maybe

R. Steve Kinsey

Rob. thanks necessarily goes back don't I Yeah, No, usual. as it think business

do we've of probably patterns some pre-pandemic expect levels. see But, to are think to there back -- some are movement we As before, these permanent. said we've said consistently I do also

well-positioned and should coming at service. I the think we like, where did a ultimately no back. customer think story some started with all it'll give us in better trends our see which quarter, service do branded there portfolio, that, we we're already mentioned. in So as I Having go is, the margins. food looks also coming it matter via the that up to to I back in it of is strategy good when about moves food don't way better said And as a that work But very environment these our that you back what somewhat believe school that long-term are going think indication August, all land. starts

it So, have as that to of prior of it won't work. the execution come that have to mix reverse and food significant impact service as as an strategic starts would back,

Rob Dickerson

Okay, interesting. on you I'll follow-up that. much. Thank very

A. Ryals McMullian

Thanks, Rob.

Operator

you. Thank

Our the Bill Chappell next Truist. from question of line from comes

begin. may You

Bill Chappell

morning. Good Thanks.

A. Ryals McMullian

Good Bill. morning,

Bill Chappell

any imagine pricing, the you the relaxing First your seen pricing -- you all not day competitors landscape, heard follow-up little from we [indiscernible] are competitive pricing. have I very think are. way same on kind other headed of I on that the of

later. sooner the So they may feeling than pinch be

to anything didn't So you've seen that from standpoint? if there follow or looked it know

A. Ryals McMullian

though, pantry relative promotional pricing everything, not to is significant, well with quarters one consistent months. really know some promotions. haven't the given driving don't Still really sales I mean, nothing But balanced, hedge cadence past loading of seen regional down significant. I'd that obviously year-over-year nothing far in or players out. and the like we as least just to remain the do relative Bill. make competitive we the any we still just The Yeah, comment move environment really perhaps day at

So they're more nothing a this to exposed bit But, that the at point. thing. far nothing, kind spot market little and of thus notable

Bill Chappell

it. Got

A. Ryals McMullian

just for of it us a that it But of more died half [ph]. of us, we course feeling back could more like be also have dynamic good will be

Bill Chappell

point it's I pretty And And private the then XX% think what going Yeah, before, gone XX%, that years. to asked of at the mean, down great astounding more in one as really I from but PSP, hey, retailers supply I much category show branded that as label, can the I've and something on and I this in not service think that, since of you push well you you lowest so label, is with the mean, I do the of of a it's would is your question that's to pretty the of shelf that's it private which products the sure. since use to space. on be industry? go this mean, apparent

A. Ryals McMullian

But a bit for consumers in little others, right. prior retailers calls. brands. mean, the about on the benefit Yeah, are I We've preference frankly, of seeing and our think I category this you're talked

items leaning Dave's So, of and that shelf we space our carrying in have. and but, have with been crafted some those to able particularly we perfectly expand

I will retailers strategy are agree see importance certain again is behavior think balanced of of is that's just how but kind than -- consumer it the But how more with in that of and with it the you, the anything amazing I'm I pretty portfolio We pretty far reflection highlighting that. a tune to see else overall.

Bill Chappell

were we demonstrate much could then me, a more coming that continued facilities we by efficient there, grow we've back say, period bakeries a I brutally to or mean, massive of out back could chain, the and ensure you cutting efficient than for hit even we're normalizing, one case, plants ago, down the not of Halo year if efficient supply now surge more further, sales. could and is here a more last a do And or come or time, be operate ships number XXish in to able it? Sure, going the being you and or that it just and back is your had or we look be even have boy, streamlined few

A. Ryals McMullian

the year of [ph] optimization we network Lepage have know. that has on seeing you as are our CAPEX To with year. areas this you elevated focus, been projects going I one and of We key some did contrary, the bakery, numbers this other convert look mean,

So very much a for still point us. focus

lot can it's as make as possible. we're of an say, levers environment, us pull always efficient in but you being inflationary often a it's upon we incumbent to sure As still

evaluating network So our from we're standpoint. that constantly

Bill Chappell

Got mean, year this going more you be really it, I the is into would or big but would CAPEX I to normal XXXX elevated change? process, the just of -- you expect guess

R. Steve Kinsey

the initiatives. the Bill, on of focus this year digital Well kind is

three initiative. to two a isn't year digital the said have We

So on see whether to prepared on years, and it's to optimization while working could it's guidance next those the give some XXXX, would some expect whether digital for of I portfolio elevated or we're projects. CAPEX our not three two you on

Bill Chappell

much. Thanks Got great. it, so

R. Steve Kinsey

Bill. you, Thank

Operator

Our Alwy from from the come will next of Bank. Deutsche question line Faiza

may You begin.

Faiza Alwy

morning. good Hi, Yes.

like sort and the So know hedging I say curious to prices follow-up sounds current out etcetera expecting you XXXX to so open at wanted don't continuing have you these XXXX you on or you of anything on down are this, I willing but on rather hedging of just your wheat still programmatic you're positions these inflation into because to are come I'm point sort prices? if into it are program

R. Steve Kinsey

specifically our overall but to I comment we at Yeah, on months. hedge strategy to the mean, this to stick seven we nine wouldn't tend true is point, pretty XXXX which

do beginning the have we are XXXX for reality range. we beyond wouldn't we end still is first we it's But, on visibility much that, but, of some coverage So, long into -- our XXXX. particular think regard what And, to comment do the coverage do quarter with about the I'll volatile. our to probably of pretty

Faiza Alwy

the segment details improving about put have that, if previously, has I that helpful. going about Thank color, non-retail numbers impact And around talked wonder I of this just the so much an could you've there's of forward more Okay, secondly, around or just you. that's there are this far? profitability talked and but how had can more then know you you

A. Ryals McMullian

XXXX. obviously, Yeah, it food pretty you well compare particularly if a I basis to on if relative Faiza, mean, depressed you remains service back

So, starting to has recover. serve been to The the quick recover. business it's fastest just

bit off. I think still bit of that's the up a with balance actually XXXX, food over being little a business the service

something that we internally. it it's haven't but We quantified measure before,

a or continue. whatever cannot approaching that's it or We margin price business new about have levers have whether we're we or for to if food we the to for get service not that thresholds us food want decision is, we business our business make margin efficiencies a that out maybe and some via piece of there service to own to our set threshold way acceptable then pull,

that good. that We've And successful or margin have business as so that for And a still to been done said so. only been business it piece been executing higher has to really back we're margin come thresholds. a go. months an But come overall far, of I those getting nine level. not early yet. pretty this mean, at in we've nice has we've returns long Having up way I on got said, as back,

business to means if gains given yeah, time lot of you on best Not be than now permission team and And past So but in margin years to that give to expect to a away that to we as from get but for can be more service if in a there going from margin past is little you volume think said one a level the was it there food it some go of even a think, the was in room We've it's But there's been helps the more that time. of sales and overall. I service contributor our a will never believe I I Hopefully at of based go nicely the retail, has additive lot improvement. fit, is service food overall. margin. food bit for industry. team branded be out different we service walking to all that forward, that we a the going opportunity strategic the vision meaningful in color. food have, certainly that of bit to There

Faiza Alwy

then $X.XX investments? that on you're that the of half you should you Thank sort of funding adjust investments far more the comments -- expect just back last from there me through of, you. about. come not reading just to my you initiatives. definitely. made And committed to was of have so Have sort these talked those still the one those you're but your Are Yes, more to of yet, we in you're started any these already making or digital

A. Ryals McMullian

mean, a with is the is have Yeah, be no, working phases. the a front the strategy little time nickel for our plan. it where on you we're At design partners be standpoint. we for half a But on good started. as will that'll headed detail guys some outside I also more we more year, the back already from the the heavily and weighted year, the of lot end in -- we in planning digital executing start later this giving on still which

Faiza Alwy

Thank you Perfect. very much.

A. Ryals McMullian

Thank you.

Operator

line Our of Mitch from Pinheiro come next will the question from Sturdivant.

begin. may You

Mitchell Pinheiro

morning. Good

here. questions of couple So,

ago, drop at First, any of remarkable from for it a just second, of this being trend about back talked is to and private a label led? look is when consumer years you it the several you Is sort behavior retailer led.

A. Ryals McMullian

so. I think don't

is it led. think I consumer

as If you the to overall years innovation, five will, just wasn't ago and Mitch number. nearly our a let's Yeah, category just in round you back up, category. it think use much if there call about just

or coming until obviously certainly competitors. and basically talk DKB You DKB with was a was mean, in and didn't Crafted bought I we coming then Perfectly freezer with have certainly Canyon, with etcetera. Had West later even And phenomenon canyon. our Costco it. on all Coast nationwide, mean, we'll same then, out the thing in us I that case, out that since about [indiscernible], the

that a in Wall I wheat hopes you the obviously in the your watching for both our shift whole items, our new we've segments within category label category, there's at these some innovation in been think a we've of not much wheat time. but the the of and specialty mix too. sold, sub And on there's white shift lot kind And with lows, we've is items those kind driving seen a know, benefited. basically still in as traditional of a lot been in bread. honey buns, of our or particular differentiation wheats to this It's category. your among breakfast items Similarly, category private Bread from

think primary driver Mitch. the I that's

Mitchell Pinheiro

Okay.

obviously looking little growth back you. remainder remainder accurate? staff rate. of you thank of for at quarter. year, of see XXXX Okay, two Is is in you your and did the quarter stack, over at your, growth to it's And it type for at long-term expect revenue then sort looking years, the guidance versus year, looks of that this growth the that a that your this -- your looking first like the That's above to X%

A. Ryals McMullian

Yeah, JT retail our we up mean, actually feel was I is that, believe over Mitch. XX. XX.X%. branded about actually good pretty it business I

So plus a quite we're we've to really over skew acceptable trajectory. right pleased with Frankly, the even is, considering of off bit overall that as it me the more time, fact it's much too. labels that as period of done private

really out taken you've of So the winners. on focusing that the portfolio, complexity all

that some the there. dividends of showing we're optimistic see we quite the paying and that's nice think, I rest We're through year. that

Mitchell Pinheiro

Have defined your ever drag? skew you rationalization

A. Ryals McMullian

I'm say one that sorry, you can more time.

Mitchell Pinheiro

any your guys on or Have terms what in drag declined every you on the rationalization percentage rate? was growth color given skew

R. Steve Kinsey

think No, so. I don't

Mitchell Pinheiro

the it? is it less I I mean, is how meaningful Okay. numbers? at how low or in skew than to Is mean, it these is meaningful X%, single digits

R. Steve Kinsey

go have that Yeah, front don't that and back I well me. at in look Mitch. let’s of

Mitchell Pinheiro

cost as Okay. a in XXth it looking adjusted there besides at And positive EBITDA, this quarter to on or your else thing there, in anything same is in mix relates in all -- else it mixed growth just goods is any it anything on, of current savings shift? there, from quarter, then the how

A. Ryals McMullian

our Yeah, top We year. $XX $XX million in actually portfolio no, savings there of that. absolutely had the is. beat We end to optimization last million

savings. you've savings, mix of of that's that SG&A overhead procurement piece savings, a So got it and

of So broad basket. a it's cost kind

the nice you'll for out some those be year, hear of some and to yard, which XX underperforming in And efficiencies to really bakery of as like the happy at on Navy about know think of things that. progress bakeries, on then you track I if target million Mitch, a have many we're making And We deliver categories. million XX same this to well. there that

was as first in efficiency those. Those quarter Our line meaningfully add bottom well. the up of the to

Mitchell Pinheiro

Okay, has over up market scanner I And the losses seen so? is in regional year call the regional gains bread, terrific. mean, any share question, don't And creeping but differences last or been regional out any market there, the among your there you, then, so last last or anything -- over that have in data, two. are to or see share I year is changes -- noteworthy you

A. Ryals McMullian

last wherever bit up a quarter about where looked to down mean, which under-penetrated been we've I share nice to but been Northeast. to one is massive focus as the market. few focused for that's for Texas, really. be. not quarters, see. at great And share gains. out or region, of good, sequentially on one except Mitch, might the that -- talking the moving But we're There's have lot some California overall been is people last talk nothing that, the kind making gains and important just from out We've out the QX, which to that trends of on. specific it We've little there's Florida call that a over given the of it's obviously there just and geographic about Northeast we shifts the been year, of

So that's you. call to out that would I just one

Mitchell Pinheiro

you time. thank Well, for your

A. Ryals McMullian

Thanks Mitch.

Operator

Instructions]. [Operator

of from question comes Ryan the from Consumer Edge next Our Research. line Bell

begin. may You

Ryan Bell

we in from we've general, of going forward, your get morning label and trends benchmark declining. how your everyone. should track been channel Good I we seeing private Can mean, can about non that branded think across team what I a categories business

to have we've products, growth that your we been that seeing branded software future. Is see foreseeable for what on relative should we from to track your business channels. private something intentional the label expect seen your Given emphasis

A. Ryals McMullian

is it's think obviously as be lot mean, I and consumer our mean, I've I this. a I on yet right. we're driving focusing Well of the said, to I think seen, brands

the in that the in again you private there's shift differentiation So to brand don't find label. brand,

of I is think it that. driving a lot

the private label making extent some relative are under-delivering is. our at to we're the pieces mean, underperforming of business, about We to it's food select decisions that should. kind of it or way private label is service what I it looking what same

I being primary some driver have describe the made certain that primary in but of The wouldn't We of driven. terms yeah, magnitude driver. is pieces as exit business, decisions to consumer

Ryan Bell

thoughts of And you That's fourth landscape strategic in the Thanks. provide M&A about and current terms then helpful. assets build M&A being any availability to talked your Would of priority. about updated valuations the you overall? just

A. Ryals McMullian

-- Ryan, committed where largely opportunity. have We sheet lying bit ones. for the as we've sort public is approach. a has mean there Absolutely. only since Yeah, short year first disciplined approach. last things heating a to the the in few to guys conviction, you years lot of I a we'll so and things in break about have but it's going a are far -- lean challenge maintain We're the reasonable we're of of some out really sure But our valuation. the books now. so took are do high you quite been disciplined there's people it year. past read only have to our right way, maintaining in And more of got there's the I'm certainly and around balance there's up. go

I'm the year start very find land. a I come think space. around it'll money Certainly remain to see we're active, it to of So, out pleased the just And sloshing I There's a we in to a to overall will place -- food active trying active. lot be be there back. think opportunities

Ryan Bell

flatbread. And, I talk Okay. you some me, in uh, last talked you'd expansion? think of organic opportunity about the Thank maybe you terms in Could this one about how some for innovations is fast the that of you. or side, the growth see

A. Ryals McMullian

target. Great Absolutely. continuing out with in we great, Northeast, right Yeah, from the pleased flatbreads introduced reception to consumers. we're it's the that Dave's, obviously really innovate there doing with on rise the

at they've tried early things innovation some I standing mean, a then wrapped just I getting outstanding. up looking just It's shown you the early that of team. haven't But And bread. me you are great out, of we're do. It's rye up. agile we're our loaf we're prototypes suggest days, it, the if If further

important continue grow lot all how how is targets. come, know top all our great long-term we line to to things us a there's we important -- going know of and in the be to with to for innovation So line

Ryan Bell

Great. Thank you for.

A. Ryals McMullian

Ryan. Thanks

Operator

Instructions]. any And not the in queue. am [Operator I questions current showing

A. Ryals McMullian

Okay. we everyone Well, forward Flowers’ in for and speaking your Take much to next look you very thank interest quarter. you care. to

Operator

conference participating. you for Thank call. This today's concludes

now You disconnect. may

Flowers Foods (FLO) 21 May 212021 Q1 Earnings call transcript