FLO - Earnings call transcript Q2 2021

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Operator

Good day and thank you for standing by. Welcome to the Flowers Foods Second Quarter 2021 Results Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like to hand the conference over to your speaker today Mr. J.T. of Investor President Vice Senior Finance Relations. and Rieck, please go ahead. Sir,

J.T. Rieck

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

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

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

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

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

Operator

Instructions] from from have line Securities. Truist of Bill Chappell [Operator first the our question We

BillChappell

of whatever business. or morning. private to though stimulus figure from month things is impact Good impact there's half and one label that meaningful the or the have companies to up just Hey, several a quite checks branded some we've for heard issues, one continues past your a been no that reason multiple clearly food on trade some Thanks. this had can or other for it And from positive out. over

label back to of you move the this Or is we margin the a guess see think back which next sustainable half people better pressure put do question into as I that year So could move will this year? as towards private you shift? do

RyalsMcMullian

our a label it's we've And label it really. question, done consumer category to we've seeing were why we in of category, differentiation to like is of Dave's even wheat actually bread accelerating, down a the label. this, good has buns, and obviously, research private with declines, into mentioned participated label. historically pandemic. I comes rolls and couple where's a trend these things bread with category. calls, and fair think And that to And basic private private distinct It's white Bill, over insights lack of research, And private from in the really in Canyon. being up bit almost that's that lot perfectly crafted new, premiumization a with a you so actually prior in of differentiation brioche bit process prior Flowers developed, there's driven our and Yes, in branded the continuing Killer of have

or I behind investments all to et brands, marketing actually making As support, we're whether the not, sustainable we're is. think why the making that's cetera. And it's it our

If move to then. into But didn't you the back sort move of recessionary value. label of and you we that that even much to get see a even 'XX, a we back situation, 'XX, could saw, private last see in some recession then

BillChappell

continuation in of trend? change Or current step a more this is see you did guess it of I just a But quarter? the

RyalsMcMullian

It's retail really branded up continues and to trend. of to continues Yes, very fall very, more private label a just continuation well. hold the

BillChappell

to Or chain distribution impact. full way works? your less year. It is to an costs, especially the of else for in largely cost of to seems about that turning then freight April talk And on costs? peers like that's helping supply to thing offset raise more you Great. front guidance seem EPS lot a something there just due you it's incremental same your these heard the and Is

RyalsMcMullian

our the so can with too. that of works long exposed closed - a and bit loop haul yes, Steve and system to freight in the is But, a say other that's thing would more I not partially here partially, Yes, hedging be. jump Steve, months that's gives then as And us be Yes, we're sometimes proactive about we out anything those of can to being good that to bit visibility mitigating costs longer. little a what you'd four seven costs. that? going our to add are strategy in advance

SteveKinsey

for the have No. as at Bill, I half, back obviously, right little contracts best transportation not into And can. that. think, mean, taken heavier. Ryals earlier, we overall for the the we of year, think they cost looking XXXX, had feel visibility in our place the pretty most immune in like as But we're said, the mitigate I but said we protected in the good we steps year, us on we've to our a to increases, structure this

Operator

next from is of from line Mitchell Our Pinheiro Sturdivant. question the

MitchellPinheiro

Hi, good just questions. those Hey, following on morning. up

Regarding greater private the extent space of terms shelf retailers' I trying a label view label, the they private as other offerings to looking changing of private premiumize is in mean, to label well, Are allocation? one give Or not their willing color on private it to really go any the shelf reallocate us of they're Can label? keep space? and that? that you to And let is where market strategies, goes?

RyalsMcMullian

like one our that's label had label that probably we've probably in exception in free, and one well isolated nothing Canyons is to discussions some continues growth in that gluten showing out about the but market. wanting to this much portfolio. actually premiumize private We're one area point, private us, some label or hearing private broadly for private mean, I to that, call the that's about the of anything do not Yes, label

MitchellPinheiro

shelf label, brands versus to the the and space And, but value clearly I think would contribution mean, allocation discussion, space, more as happening at shelf is or? are dollar the margin of also, but of the private gross to private the suggest, label would part all planet that I looking they to reduce

RyalsMcMullian

that been where reduced. but haven't you yes, would this whole It this broad any been labor space everybody that have some, to sort cases, kind also we I our limits isolated liquid it market have I to some had all situation but somewhat there that it's we've some ability to in customers happened some situation moves the extent, shelf provide happening again, And to wide say pandemic, take limit of some has of mean seen out, to of that's skews. the in the skews, limits throughout

that's really. had on some space as And the there's shelf overall so effect the no allocation, allocation. change But label private meaningful as far been

MitchellPinheiro

there a decline? can a up? Is Is there with little - you going - volume bit? Or changes talk pricing labels? about are there is private any pricing Or is it it that

RyalsMcMullian

several over Yes. I have last the years label, private mean, taken pricing yes. some in we

MitchellPinheiro

weaknesses the from gaining penetrated could sharing Flowers, gets or is terms and your in geographically, In you strengths newer anything benefits Flowers markets, newer the of, lower strategy out part territories. of for of whole is, among or call some that

RyalsMcMullian

we've out I Northeast last for the market mean, been Yes, us. the a several quarters calling as for focus

strong that us. the as you Obviously, share really strong make south. there. we in we're news on good to is in the or gain there. Midwest we for seeing big for upper market gains investments another up we're a know, We the us, had good quarter West share quadrant. is I opportunity And whole whole to super continue Coast, the mean Yes, Mitch the Northeast, continue

MitchellPinheiro

profitability. snack Okay, and with and of what's you cake then that in in happening tasty just a cake, more terms on making are particular, couple your progress

RyalsMcMullian

make coming not say are off, trajectory are not we're good markets a to team's we for asking it be. of in and really - at manage scrap really there, a on paying It's up still want the people in promotion I'll Yard. things been commercial But great some well, really continues the more our good. us rates done bakeries competitive Navy standpoint, rather, the Again, just thanks the able cake where automation Mitch, there, are challenge. bit The down. we've with in also through progress plants price a a side, is we there. the be cake we've of Yes, from to the overall, job cake investments content Labor more to but done nature to

relative pointing sides we're plan in direction, the actually in of there. all our internal So right ahead goals, fact to

MitchellPinheiro

is final look look it when longer I and guess, then, term, margin And your Okay. you at profile. question you

think you. I for this think powerful I a mix the certainly - is in either help you in while mentioned quarter

part what of the You branded have to you if curious it change. important to non And doing? support optimization you're the be doing forward? just as to whole most the b, the you're to, a, positive have and going still I'm you but further versus with how mix seems specifically improvement, that, that create the network What margin your productivity, agree branded going and mix is

RyalsMcMullian

And intended overall to agree whole to No, transformation I to it's network tool most whether it's other margin But mix of our support powerful branded to you notion retail investments, shift that digital the whether all mentioned, have is the all more whether retail. our marketing mix the our mean, improve things shifting I profile. you, optimization, it's we absolutely. around with are branded

you time rolls to the M&A. tomorrow brands, have we brands have the the our same more brands strategy had and over with So today, both shifting of will up all mix to of future hopefully

MitchellPinheiro

maybe a, I Okay. your actually or speaking the question pipeline of environment M&A M&A And can you is in just now? just right that's talk, said one more

RyalsMcMullian

kind from now, - no welcome We're of up. dried from to when which quite a last looking really quarter. it pick continues sure, change at year activity last a up. really right it's things Yes, change mean, I deal few is

we're in Mitch sheet we've nice is happy position it's pipeline. balance that the when And got we're timing So be to the with act, the the that in to right.

Operator

with question is Ryan Consumer next Bell from Edge Our Research.

RyanBell

maybe you how we the ability more pricing in on you take bit XXXX? about the touching to of the your maybe impacts just of environment guys? the Can costs. Hi, rising a to inflationary getting end are little as To year talk the and

SteveKinsey

guidance. mean, We're I about obviously not XXXX we're at talk today. to give to not this going Yes, point prepared

are XXXX the or on given environment like other And seen Although it of was you'll year. regardless of think half pretty of confident I I in beyond which segment substantial regard productivity. no, all overall our taken about the in have promotional cost our the track whether beyond kind What prepared lot our experiencing tremendous efficiencies inflation this measures kind mind, pricing, can't a on our projects of in we're comments We're we're most QX, confident industry we've I we XXXX. into operating mitigate pretty that back with the in runs, to we saw we inflation. to about really going in, expect we've same for pretty see which comment way And think companies, really tools efficiency, and and we in I in. is to talked also that, But say use you're inflationary structure. would the

RyalsMcMullian

bit in if a we that prepared Hey, this sort period much thing to inflationary back significant last of I remarks 'XX, think Ryan, we one the company is 'XX our period, back saw to then. it, add and different period, we would mentioned inflationary were that you

lot a we've in was Natures' got got we've share fast of lower. got We got Own roughly forward market nature crafted perfectly then Wonder. expanded Canyon, XX We've had really brand and Our as and Nature's Nature's Own, an with national share. well, Own, we've one only Dave's, today you quasi we've now sort got

can And the which help you quite lever rises also that will, cost. any mitigate to stronger we greater to was, necessary so extent gives portfolio, pull brand the us than bit if a is in confidence it that

RyanBell

of in the That's sort could back helpful. And you're of of would back of your thinking you. your the to the terms and the about back you normal? guidance, season of some to getting to with about how season, and school we variability then what thank given Okay, to Delta the what potentially, school and case, see, talk assuming types base other variants, you're change that

RyalsMcMullian

issued that markedly with of to was then on Yes, the surging and vaccine that beginning season, were we to kind this was of we going like, the our country. got the dynamics. ourselves first when guidance, school we of planning going rollout, for has how perspective find the look that since significantly changed here that year, back Delta what and across first right market the at And we've now to the variant, affect

say. indication So as to changed might give what We more state expected us going to hard the that our a normal the back look really changed. have perspective season a out had good dynamics would steady there And of the in school originally has new like obviously, forward. it's

branded the we're the of very that of and push out results continuing into rise Delta we've somewhat QX, think with part and retail And see what performance I to obviously the has first seeing the bit brought it a timeline the even year. that in of variant now. through for strong question beginning line our QX, been in

wait I a be little and would us yes, to think back a people bit better office I going that have and a little starting of have have, thought given school So, indication, out to bit it's but would to pushed that's now. would a to see. gotten return

RyanBell

you year? in year? to you Thanks, about a expectation this a your out next was would that's bit that pandemic, And said for you was the shifts more maybe to be And to try down able know largely just helpful. detail bit. the I little some the took shift of guidance that little it CapEx due to delays from it

SteveKinsey

It's just specific one impacted. getting whole I of the large Yes, projects. the of equipment for of delay I I mean, timing some kind the into across reality that XXXX. in majority project in mean, there's some will one, was no say, just is, the would or roll that and

RyanBell

And then it's going how to one just of general term evident you last that incremental at relative I incremental pretty point, demand? feel about the from to would be XXXX. this Thanks. me, think the that I impacts work for mean, home there's longer add-on just

you potential few next business potentially of your some share the your about this impact the this to or thoughts could So expense, over years? for

RyalsMcMullian

home, of parts that is I'm The happy in it. different. to or optimistic business think think people good that quite many other frankly, going some read, I'd I future work really our going you permanently. more in Ryan, things here the be I whatever doing there be. are I are, a good. companies to Yes, only have fundamental I doing a so to, some that might or been with consumed, the change Flowers it at mean, sandwiches at be be thing. and differently, lot And benefits as mindset think several shift good eating are And shift, We not it are more about same

we're innovation offerings positioned. and new for think that's to to our to to drive continue well very be really bring I growth. us with to future important Couple commitment to that continuing and the consumer, going exciting

optimistic. I'm really So frankly,

retain read labor continues across whether right people situation be situation, industry, otherwise, now. On or the tough the and negative a side, every attract we it's service to difficult difficult, as it's manufacturing to

been a have not it, market been done really the of continue throughout So period. job to managing challenge we've to is far we've But through this effectively serve has probably to unemployment good we view some the able vagaries both it a have easy. But it to we make short because it's how long re-look we'll more that and just we benefits. think approach to I at term than extended how changes labor in and term

country. work think is systemic I of a there's how this been in viewed change

Operator

Our next question is of line from Bienvenu with the Ben Stephens.

BenBienvenu

compensation Ryals, on of morning. I the Good side that, up Thanks. wanted on things. follow to

What's balance with And about respect in and considered of long year and compensation for benefits you process? that the and You about of compensation. your 'XX? combination are fiscal the today talked to in I'm talked then where you wondering you reviewing short a are term. guidance

how holistic this your kind being you're more Can mindset you're those you of and normal? how like of seeing about approach surgical. today kind with you to about relative dynamics? feel talk your And ameliorate to Sounds ability what and you

RyalsMcMullian

it a than think about standpoint I the wages 'XX, I for I wage just one issue. thing, because, for worry too more are wouldn't Sure, mean much that from it's

do that dynamics look you're at used companies What of you're make Now, that are We that against sure the food our well, government as bakeries warehouses, you the look now to changed. certainly, your again, in with but other at anyway, each at we'll our against competing at has manufacturing to Amazon, that, used change. periodically in, look look Tesla. whole we in competitive, And markets too. coming you're competing payments or set all competing government with peer the to

difficult. it makes pretty it So

mean environment because Working I this and at summertime, do unpleasant at important. a more biggest is labor our had different bakeries not extent, even to I taking factors can And those bakery I and in can overtime long. bakeries. it a before running But and to want what we're to about in different But with hot, the that life the cooling that one of overall systems, really what uniforms; situation some quality the because cetera, bakeries. believe sustain of right, think Baker's want only that the inside et look, I've remain and we in us, we're And be are the you it's scheduling we hard, really types could to can they now you're So particularly holistic a mentioned And compensation, don't be things. folks the working working looking the for shortage. we're is We're the at issues be by things improve the that's looking too And tough right job. increases of we've are hard. for is competitive.

scheduling to off, rather can looking or from what visits whatever be or predictable that this people are they doctor a more So we I'm that standpoint so more need help consecutive or do? daily glad can plan do it a is their things number and in don't at days mitigate predictive life schedule, give might childcare, because this, a we So I situation. that of to myriad temporary think that that we're to

BenBienvenu

that what's to it mix. that kind normal contributes new, help repeatable and Can makes kind price maybe dynamic of consumer is path you initiatives new you returns going on okay, have that glide talk just sustaining this Yes, with that to you dynamic? volumes efficiency around the understand what's of know the And how behavior? about or it associated that, us Is in Is happening promotional there? normal are thoughts? that sense. And better place, then Is there?

RyalsMcMullian

in it been - the price, anytime let steady. really pretty else. least something in pretty it's for And I changing year steady But start overall yes, that's call I'll five don't sure. would soon. I'll that promotional he the at Yes, Steve for category can chip retail lows. And And see while has I our has with now. demand been branded a and if environment

high those than do only internally much TPM our job also with have our that system a historically We at pursuing with promotions associated did a them. managing better and we return

so our internal supporting environment promotions of being of our both also efforts is efficient Steve, this, kind helping. the the you'd but are macro And more with add? anything

SteveKinsey

I Ryals' point last visibility. really No, and really be couple new of about back hard And I mean, promotional systems can't enough. think gives worked has we great QX, years, about mean, I like a some we've activity quite on pulled in implementing emphasized the us talked technology bit.

back really about inflation of lot it's half. price. So the comes A getting net in our

that's true show where up when So more would say. I pricing would

seen, of with kind promotional margin been really So equation. the we've been a that's pleased the and big the environment of and part levels we've

RyalsMcMullian

thing of we beginning right has increase with only up would And QX. a that at the pleased the increase. Ben, did it price with early price volume to how Yes, implement I been days, we've add is while it's really held

encouraging that's certainly. So

Operator

this continue. further are There at Ryals please time. no questions McMullian, Mr.

A -RyalsMcMullian

care, for in quarter. the we'll Okay. everybody. Well, your much thank look forward very to company. Take again speaking And next you with you interest everybody

Operator

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

disconnect. now day. a You Have may great

J.T. Rieck	Vice President of Investor Relations and Treasurer
Ryals McMullian	President and Chief Executive Officer
Steve Kinsey	Chief Financial Officer and Chief Accounting Officer
Bill Chappell	Truist
Mitchell Pinheiro	Sturdivant
Ryan Bell	Consumer Edge Research
Ben Bienvenu	Stephens

Flowers Foods (FLO) 13 Aug 212021 Q2 Earnings call transcript