FLO - Earnings call transcript Q3 2021

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Operator

Good morning, ladies and gentlemen. And welcome to the Flowers Foods Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

conference being this reminder, a call recorded. is As turn over to would now host conference to like I your the J.T. Rieck, Investor Senior Relations. and Vice President Finance

J.T. Rieck

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

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

Foods business fully our to on also non-GAAP and filings. our website. in in what provide the are We'll hear end SEC release earnings presentation addition provided measures at reconciliations remarks, are you the disclosure Flowers of for important the which financial these detailed In to in factors relating slide

Joining we're ready McMullian, me technical second Operator, we're the have please. Q&A, Q&A. feels our start ready we please. President Steve Operator, Kinsey, X It today some and start to CFO. the CEO, difficulties. are to Ryals

Operator

Can you hear me now?

J.T. Rieck

can. we Yes,

Operator

we compile you. [Operator Instructions] Q&A One moment roster. Thank the while

from Bill Your the line first Chappell question comes of with Truist.

Bill Chappell

morning. Good thanks. Hey,

Ryals McMullian

morning, Good Bill

Bill Chappell

where like faster country. it's quick rest back X. normal early the looks the tell when of and the variant. too like you terms moved really, talked to your normal But school Based pretty you're to commentary post Florida expose on about, in kind people stuff bit states Guys, of in not questions. to in than Delta little and work you well prepared remarks. reverting One Texas what back a of the that like they've

you're look and what terms tells for that you 'XX there of can to consumption. as seeing us we kind what tell in you So of

Ryals McMullian

to continue pretty call things well in lot looks these we onto to up, you been Nothing country. penetration, optimistic make, similarly, really repeat velocities retail the when how we're pleased to on say, the of brand further by And consumers. -- particularly us what call -based and helped seeing that really across region brand with normal have a has out hold it's also ultimately direction broad we point household All signs up. in held investments to return buyers continue the really to a in Bill, side. particular We've introduce increases the think about up, Sure. innovation overall, are the really except like. are

Bill Chappell

And it. you costs, cost, the of Got margin then, -- additional are pricing us, to the do can looking in terms dollars cover profit gross of may or terms to in comment do to margin remind cover you cover of you forward? looking you that kind look and

Ryals McMullian

Obviously, goal both. the ultimate would be protect to

thing. end ultimate Xth very, Now, the hives, the over drive of headlines, the that X%, is broad-based Yeah, the day, very consumer to inflation. all of XX-year month, were experiencing results, read straight at We've right? kind consumers going the

everything to gasoline from is products So, our up. going

our last what control. bit than a believe that inflationary it's the overall the a the in and the you there find would we a or I trade situation, we completely where -- could have that. whether little ultimately and these is to whether environment consumer you reasonable see down wait drop-off, think about certainly margin it say compression to react to end If how units’ So, short-term. issues day the will ourselves could the longer you be will there of at value assume transitory is or But not that, some are it's in temporary within

on can focused we we're control. what So,

make investments digital to investments make to will capabilities, to will margins. that overtime etc. in brands, in We lead continue our will our continue expanded we

Bill Chappell

of seeing kick one remarks case? the Got for and comment I years, to last the I the made comment. impression key maybe same it. the for activity then that why picking not why around you've targets color you was been would now up. know XX or M&A me, under didn't question And up the that is, more the you're talking is decades. it's And -- things I and start if that guess

Ryals McMullian

Sure.

by a earlier little in bit have some think year, driven maybe issues. may the it I been tax

in where that's to falls. bill It see invested some bill. like not that going the up looks ultimately we'll of Now, bill. the end get in

some driving of talk have we that thing. continue we categories, adjacent right, in that But been number years. have activity of more is that snacking targets still space, you're up, of ticked So a the that the of product in kind same it. to Bill, really And the more some could some to for

Bill Chappell

so great, for Okay, much thanks the color.

Ryals McMullian

Sure. Thanks, Bill.

Operator

next line Stephens. with from Your Bienvenu question comes of the Ben

Ben Bienvenu

Hey, thanks. everybody. Good morning,

Ryals McMullian

Ben. Hey,

Ben Bienvenu

continuing this continued cost retail I'm this now? I'm branded and is increases? retail. still still, some you Does an you just Really a of? the to increases. influence see shift is retail about -- Do at results think good ask even off equilibrium mix gross supporting if products? grow branded an And to talk branded degree you this store margins can what we could is where do that maybe sure to -- want seeing the you're strength we're equilibrium I curious think in So, that environment from we about pricing

Ryals McMullian

Great question. Ben. Yeah

response key as I point. And be that's to to it's think mean, a I in I Bill the all going ago, minute mentioning, was a about consumer.

and retail year took well. mean, to no actions a very-very branded kind little of off payments seen in pricing forward we've that the I next drop-off and we with all face all at thing. as with coming now, units up going even consumers far, branded July, the held so look into inflation stimulus units have And you that with

super-premium like right? be before it's recently most a of key X think to will business much topic could that or X seen willing situations points certainly which helps the kind is And variety to up year, yet Nature's offer two I private with kind for and thing. of from be between do how on that Bread held Own across time price period, Yeah, the relatively the in Dave's well. all through Two been Wonder, and next products this we just down. pricing way consumer some absorb. We've labels Killer of a

does be So, what consumer to they'll I continue, we're the like pleased environment. well-positioned about that think Obviously, be the very, we but it's trends able to we any really feel very up that well watching when and on from we're most do forward current the to keep if in all subside. impacts that more -- inflationary keep capabilities would it that absorb. pressing even it that and such ever eventually with But be we our will we also continue It makes stronger. than innovation, we does, will positioned our important this always developing

Ben Bienvenu

Understood. Perfect.

do the where your that light looks side how you end curve to much inflation? visibility at of we you of from point? the balance terms a have do what this Any have the On on early in are of of the the the like cost equation, think seeing are How and of tunnel that maybe cost vantage into you we year year? into thoughts next close

Ryals McMullian

visibility lot the are hence we and given of obviously, have the commodity full XXXX. do where forward for expense, buy, we fact year our know in we Sure. -- a We and

Steve Kinsey

for of the is been From in quarter. that Majority of perspective, about we've year. cadence talking inflation the coming it fourth this

XXXX, you we forward to will prepared we to as ramp gave expect to out we through of We next inflation. on to release remarks, guidance in is into when efforts looking significant mitigate year. that see And is look begin cost see can if market priced all that has as anyway at some that, levels said our the in give today, pretty we're the prepared meaningful we we're things curve pretty pricing obviously as well initiatives. to yesterday but see that But forward today, up, other guidance but the Ryals stay looking commented we as not inflation

Ralph could year. or on right all said will cycle through anticipate at not, the well slightly of most probably whether you just a XXXX this we it indications input cost go would or truly that depending inflation But -- it, the it's be as -- now, hold So, with another one-year and transitory are to a beyond make as least. side.

Ben Bienvenu

Okay.

of good. best so for and luck rest Sounds the of the the year. with thoughts Thanks much

Ryals McMullian

Ben you, Thank

Operator

Bank. Your comes Deutsche next question from of the Powers Steve with line

Steve Powers

branding this Hey, we thanks. on of otherwise. got back prepare demand Picking underscores inflation headwinds strategic towards and know up the really other and just and potentially about, ongoing Plus, pacing you've -pandemic already technology just remarks talking morning then investments of been you uncertainties variables. levels the and conversations around around the migration pre that what some we've

as that So, presentation, talk you just to drivers that to and could in I those hoping about your get on remarks, expectation with in prepared slides at the the -- least algorithm fiscal on 'XX. presentation I'm read confidence the elaborate long-term long-term context, Company that,

are to on next you've that got despite all like long-term just drivers part, what So you year? the maybe, unless visibility uncertainties, a targets was feel and that misread those these growth my lock confidence in

Ryals McMullian

already like behind lot but our we've of nationally, I few mean, into just growing of we Steve. that in but a have gained a clearly to think them, past consumers important lot alluded markets reiterate the we're years, also I share a penetrated. the Northeast under carry momentum where mean, the we I over very X We've to invested brands. Sir, XXXX. our We're one,

that new excited platform to significant now, the right we're us we poised other enable which We long-term base on activity Steve, about that growth. items, And as acquisition that stay which then long-term making along. All right, that of come using have you're sheet, year top-line we're together the are those testing on confidence capabilities a And in to us XXXX year. put the for have, next haul to course, of digital look ERP opportunity over will some we our quite our investments lot algorithm of some at should we're the of we continue right balance taking things long give will can and algorithm. drive stay a also forthcoming be innovation obviously

Steve Powers

navigate Okay, Obviously, there to gives help maybe of bakeries generally, challenges. that kind I'm different hoping have Great. And just and are footprint -- also I'm challenges. variable kind flexibility the slightly footprint. a of are your for into having you to are just thanks. perspective. color similar of but a I more is amount just footprint. board supply good But Are relatively this be assuming operating and conditions other that lot some flash labor of points -- different diverse can visibility there bakery But maybe of a from talk any your thinking chain there pretty would on great manufacturing on topic you across you how there a I'm things or guess you're about -- elaborate that where across particularly

Ryals McMullian

Sure. so than And But I our areas other of consistent had the the country. where now. mean, across well, generally a about issue somewhat labor less speaking, much Company. it's challenges have we country the we've do the region pretty are across few Not areas. pretty the consistent

think able impact have We through And facing. challenges that it's does challenge. our I just it pretty well, given But been manage all we're still to a the efficiency. that --

I bakery, have shorthanded new efficiency, would the to those -- of in a that a example, more to it kind thing. been operations got labor-intensive You've begin are has that you're intense but call your scrap, increases a your bakeries, with. lot cake make, lowers people you or more The in either bit of one for

It's token, -- same there. but packaging more You particularly a to well. you people, there, it by we've still bit in manage just acute through pretty the more been little able have

Steve Powers

color. Thank you That's much. Okay. great very

Ryals McMullian

Thank Sure. you.

Operator

Your Mitch line Pinheiro Sturdivant from with question & comes the next Company. of

Mitch Pinheiro

morning. Good

Ryals McMullian

Morning, Mitch.

Mitch Pinheiro

been your goods what has on cost of defined you for XXXX? have -- It rate inflation

Ryals McMullian

have that not specific they not not of hedge, We way measure, the launch given would -- obviously. we because

ramp. You're coming into XXXX, is the inflation see begin really to what you

half specific percentage. driven, but more we a given back haven't So

Just reasons. competitive maybe for

Mitch Pinheiro

Okay.

Ryals McMullian

haven't line, but could with would do in that that we pretty the disclosed input beyond math that. be costs, You acute much

Mitch Pinheiro

is than more consumer it allocated. the so to seen surging, hear hear But set your I love to brand market higher-quality the love and or like in Okay. Bread, looking gross, and doing products, that. for past what wondering I'd brand whether capitalize way I've more you're -- efforts. for a for I'd more a looking on a In looking to to When and looking initiative? about obviously Dave's is growth Killer shifted some and Is your premium and the being goods. more building this growth was in particular, of love I'd how spending the little digital by of it baked TV to you're branded hear to is is eCommerce you with diverse more driven

Ryals McMullian

Mitch, Sure, happy to.

look strategy, at growing You over a much branded can marketing just the portfolio the take last several spend at years we see support a and out our rate. how faster our branded business to

to in grow some X% the a a brands correct And is of the touched 'em sales our allocated that way. country your You DKB. with on of on more whether Own, growth already. want is being be where seeing now, of up you're mean, is why line lot aggressive lot about underpenetrated we're you're commercials our We it of of Canyon, intense in parts that's I like in the Ecommerce that. towards also category. It's which right been continue Nature's roughly Northeast to digital.

I bigger of on side, and digital insights. picture, that need the be the continue part other investing think bigger ecommerce also and is to a presence. to in we going consumer have we're to But

We in category. a have to to we deliver continue can our that consumers they the that such innovation want understand

spend in put that with the in go that of that it are of innovation you'll coming start see to out is I that that R&D. that think and items the And of some continued were we category, some Some bread newer going as way. investments not with forward into

Mitch Pinheiro

channels than out, bit to their product. rather understand about And either distribution have more love more you'd when what's just I'd comes a I to driving little there's to particular like there? Dave's to curious products, Obviously, be happening. strong growth products. driving for what's Killer more hear Bread, any -- call you DKB for was it new gains just organic demand the

Ryals McMullian

Sure. Yes.

We're there. the with best organics of Lynchburg on evolution. which the days Bringing it [Indiscernible] commanding for thing the the in continuing first has all the that The there. of last to in Northeast grow year growth other consistency. starts been huge to big because at of think it's out XX There a share best end part the us day, taping, are that all, has quality, volatility. reasons is a I support a are Dave's best puzzle for

them. We testing next There with continue products We're be new new more coming with now to will come out year. some Dave's. right products with

with about Nature's at of to is success strong one. a So, great brand penetration very increasing are both with before. because the categories across great that that obviously of and proud we're it, is ahead feel like all I brand still very different playing that think we experienced, to excited growth big it's current ton another Even in of you this Nature's but we look its of we've runway awareness enough begin which of a about. has household now categories, talked the I've categories When in of, the roughly half of then you Own, that Dave's Own. course, it compare to

Mitch Pinheiro

business work in your far side or update as that manufacturing And a just question. XXXX? on solved, progress any final of as is in -- cake are What the we it is lot still then

Ryals McMullian

improvement have Yes. yet, some we past though ahead Mitch, about. we're said with is this been as year. get progress we're progress, this on the great pace, I've still actually, but this calls, material. the but the has very of not to They're pleased pleased them, solved several But which ways year

Mitch Pinheiro

Okay. [Indiscernible] much. very Thank you

Ryals McMullian

Thank Mitch. you,

Operator

questions to conference would I'm like back showing turn Ryals McMullian. now no time. this further at to I the

Ryals McMullian

forward in much, quarter. and interest you very again to Company with takes next you everybody. look speaking care. Appreciate the Everybody Thank your we'll

Operator

your this conference. have participation today's day. wonderful a Thank you and for and Ladies concludes gentlemen,

now You disconnect. may

Flowers Foods (FLO) 12 Nov 212021 Q3 Earnings call transcript