FLO - Earnings call transcript Q2 2024

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Operator

Good morning, and thank you for standing by. Welcome to the Flowers Foods' Second Quarter 2024 Results Conference Call. Please be advised that today's event is being recorded.

I would now like to hand the conference over to your opening speaker today, J.T. Rieck, Executive Vice President of Finance and Investor Relations. ahead. go Please

J. Rieck

all and also opportunity Shannon, our I everyone this Q&A that hope remarks Relations our Thank After call. an website. review good audio our the today's were presentation slide to view we to earlier earnings had on and Investor will you, session, the morning. posted post release, prepared of listen replay

forward-looking that this Q&A statements make about in may the note Please we performance. company's session,

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

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

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

me Ryals are our Ryals, I'll and Chairman you. it CEO; CFO. and today Joining to over turn Steve Kinsey, McMullian,

A. McMullian

I'm and in with Good Okay. pleased our very J.T. quarter. top solid the morning, Thanks, results line everybody. bottom

Our compared and leading label our share, have cost as quarter top enhancing boosting private category, forward. our savings and brands time, the profitability enabling in our better first margins strategy structure, volumes the our to same our portfolio and go our leverage initiatives are businesses. is to At outperforming away-from-home the we improved gaining market and significantly growing us performance line

aligning encouraging brand category. differentiated is to brands. that of consumer. in share many We're performance manifesting seek portfolio any the with the are leading consumers in environment clearly strong largest some that our recognizing the further dollar products, gain in and resulting Consumers for inflationary increase desire our increasingly investing our differentiation The to of value, unit brand's the looking company itself differentiation, but and are is

to our our forward confidence throughout results XXXX. and further guidance. our with annual bolsters in We're progress Our look to deliver we'll continuing line drive that working improvements, performance quarterly I

open to we're Shannon, that, with it ready questions. up so And for

Operator

Our with question line from Robert comes first Instructions] the of Dickerson [Operator Jefferies.

Robert Dickerson

promotional question -- you same a said Great. clearly, bit you both unit Happy guess, lot, the Friday. The like and Ryals, the bit remarks it more. prepared bread. And looks sound little more. just a little around at promoted but environment. time, like you're you a have It doesn't share a I dollar did in taking

of some promoted I'm just the through the beginning activity guidance get the a promotional feel you allowed that you half promotional some I since bit for maybe year, like year, more. little So increase curious, as has the risk, right? of in back the And

You're also taking share.

as usually, maybe like more. others notice curious, -- today, you just more I'm So and feel start we yes risk bit little to because share, taking then there's you're sit could if here promote maybe they a like

A. McMullian

still And prudent Yes, beginning look, the indicated guidance we prepared I the question. it think for of Thanks in now. Rob. through sure, We suppose go are that's and in out Yes, it's the and it remarks to our year, for that we that possible. as called I out we risk even at call the year. the accounting embedded

bit the that are consumer all we of seeking differentiation, consumer And is whereas not alongside ago, consumers the more were a not. long noted, value. we As too responding know to -- they promotions, is

for grocery from shift, report that and spectrums, out week. we've several we now quarters kind too. that's to this And been I income retailer calling We're the think of that across club dollar. mass seeing a large in saw channel

up, Having remain well are while that to it's only think things it I pre-pandemic. still promotions and that, said to pretty watch relates still be up, as that prudent sum are to we bit little and outlook. below a So continue cautious our rational all

you got a have to you'd promotional before levels. go kind XXXX So ways to of

Robert Dickerson

as an like improvement improved was of the if sounds shift July called we've it the out to data then you're don't that way of thinking And kind was August. momentum provide these color I of you back-to-school? through maybe months, seek see let's quarter, in to through ongoing, you of bit. that some and actually summer end and seen, enough. say, in little a about kind what increasing home what seen how mean, you trends, got middle of Fair as of of back started any the Okay. through at value, kind even to any into there's kind I know kind you've the to

A. McMullian

Yes.

of pretty little that challenged. bit I volumes portfolio. of large food service chains. these you know, component quick a have results been think our be at Folks And a seen QSR-oriented have significant part a of the as that's a and we that significant news. food is some in it's -- have also business, And obviously, we but inflation, food fast a is So serve, the it restaurants since lot of affects service

on to side, flip But the the tends retail benefit business. that

so that, kind -- through a of next we at quarters. see how of do the of that's And somewhat the for business the branded least, our I as move We'll retail economy think couple does. tailwind next

Operator

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

Davis Holcombe

Chappell. Bill This Holcombe is Davis on for

where like can the If could a us kind look of wondering there's we guess, there? you the it get is Just What of any unpack directionally, of way exits that I if impact business flattish from does volume up? quantification of kind volume? help on kind

A. McMullian

overall, branded that branded positive Sure. particularly, side. on But to and on Yes. the were granular that the at side level. out you don't [indiscernible] of a when look We retail very in volumes the they break on quarter,

down some the in weighed business. -- was by way cake weakness down that somewhat rather Now

goods You've seen category. sweet the baked across that

due And then as that in have addition talked quarters that we've the several about of for said, QSR the been strategic we the business, to as to volumes weak, rest a bit now. for foodservice weakness, exits

in QX. roll to exits off it's important remember strategic However, that those

almost us quarter. virtually have mentioned impact no through We're last they as So in we QX. on them,

see impact less And that. from you'll so much forward, going

Davis Holcombe

like is also rollout was I for going And could for get and kind Excellent. I everything the of if the us you help that. like protein just bar the guess, distribution, a DKB, feel how wondering

a bit Just color more little there.

A. McMullian

Yes, startup sure. is it's goes on how this pleased Overall, for several merchandising. Look, DSD us. It's the It form said business It's warehouse. a well we're times new. doing. trucks. a before, as -- with of to not really we're distributed different I've the bread brand It's

of working that X Right snack are SKUs, protein got X have bars number our a got We've out. now, presence. we to shelf we're coming the expand the We've and limited bars.

our where we've retailers category. doing within we're shelf really doing XX we're So the large in our And top better. well. presence is well, velocities At well got accounts, top getting the

from overall, our we've stubbed of a However, there's of great couple at we under product innovation that's great the a brand got and next we're curve Bites looking part an confident the full coming where we're and mention later this standpoint, about places Snack year. going. then a think But execution additional and been it is very pipeline year umbrella, correcting learning where we toe of this to with and the Not distribution that.

pleased. overall, So we're

Operator

comes question Stephens. with line from next Salera Our of Jim the

James Salera

from at through to I we business mentioned the if puts pressure -- impacts the and netting against on plus, the Canyon shift wanted and you at benefit that... think all about exits on run Ryals, the look but the DKB business, results like and could at if from those maybe QSR strong see if a which seems takes home food take we then

A. McMullian

the we at some beginning of interrupt over question really bad question? you. Can audio because to Sorry had you start your your

James Salera

no problem. that Yes, Is better?

A. McMullian

like It Yes. it seems is.

James Salera

could XQ? maybe against the Okay. pressure from of then Perfect. Yes. food If business at Canyon we all about together, in in net if shifted a benefit And XQ the I volumes that the from about rolling asking QSR. thinking home. of we we obviously,, with you then some was could and impacts DKB, just strong think mentioned see positive exit the that into results

A. McMullian

Yes.

for think about new I a last Jim, definitely assumption, have particularly coming that business, we reasonable We that's on. all with quarter. talked that XQ, the

then the yes, the think -- a we in impact of was QX. almost So enjoy you mean, there retail continue pretty have Branded strategic from then of QX. distinct can brands If an roll-off I frankly, the actually exits. And to that's good were momentum with I that a positive QX. possibility. all we mentioned, will in more in

So a possibility. reasonable, yes, reasonable I think that's

James Salera

of if maybe might then remarks, the restructuring maybe how changes And us see about some relative structure? the -- capabilities up on shelf? you Can we could previous that Great. just talk on when/how detail to some your in you team. you just Okay. And show that give the prepared mentioned retail

A. McMullian

brought and and just a of Terry time. experience started as at got to give us Officer. few channel-specific execution the mean ago, from little -- but Growth other significant weeks we I He we Meredith approach level. you was Thomas here I the things insights retail [ a lacked at his Terry some and bit just time Chief to places. not strategy the one ] on Yes. think on had of And Unilever a

bit the think it, before, to a going us channels. are to of Whereas the it's these spread where I shorthand most. And little of that's approach peanut all areas -- restructurings it's going one benefit to a butter to

so tremendous our deeply mass, Now is might club snack even opportunity as you're it specifically you're at be. And specifically us in underpenetrated dollar, convenience out that because whatever roll for looking a we're at looking we channel. items,

Operator

from [Operator Co. Instructions] with comes question next the Sturdivant line Our Mitchell & Pinheiro of

Mitchell Pinheiro

is of there? talked headway curious like Because And that? regions. So growth can And curious is it and lot curious, -- what's of you part if white some just your see making the your big that a And driving there's a sustainable in in I'm extraordinary space. South of about it's geographic you underpenetrated you sort while of sustainable. it's a strength growth have Southwest, story it's

A. McMullian

certainly think we Well, so.

up do the bit even the a look within in our able if mature more And to promotional rightly gains find pockets, our for There's tougher a grow. most activity. saturated is we're seeing the But A with to what Dave's is market has the That's you in still South, loaf. growth Keto the the grow. certain market of areas break geographies bit you concentration us. continues in As South. primary frankly. largest share Nature's and competitors, little out, and Own then to South, Basically, that been pointed at category it, pretty we've X share little been market.

breakfast, sandwich rolls South. Keto, even in So that's buns and the that's that's

on DKB been look less overall has time. really to $XX the and been you Now question Northeast, underpenetrated your and nationwide been think we haven't markets, sustainable. that that's long, Dave's absolutely $XX there even a more there, for I at only in $XX, share a When there directly dollar

you marketing know, campaign, -- as lot leas,t, our yet. a But national of a have at don't not we

for markets we got we've to room and already roll at campaign. advertising probably focus our out that continue which Northwest as our enter Midwest, we'll the go and So We importantly, of out that's started West, one most to forward. to in grow still Upper

So do lot a got of look to have not of only to where share reasons our look to, innovation to, got to get the we these fair underpenetrated to we've also we've runway grow but M&A category.

Mitchell Pinheiro

Then on something Steve, that Is obviously, remarks, in about lot ingredient you a prepared Okay. moderating the talked visibility the amount. have cost. -- there margins. with you of packaging and

the Is just You're to we're going increases, visibility moderating with going not see we pretty set declines? remainder something for are of that year much but see this to there.

R. Kinsey

pleased done really at we've obviously, of performance where well, you we with mean, kind are. look when I the Yes. we're year-to-date, and margin

with We mean the We of actually first we moderating changed. the half hasn't X continue is market, the X the costs. strategy ahead to see understand months regard hedge. so structure. say did I benefit the cost We to largest to our

margin benefit we we're somewhat. while year. benefit decline the expect still half half, in -- improvement to in back But a the decent forecasting will that begin So do for the overall,

Mitchell Pinheiro

And I M&A. one just question just then last guess Okay. on

things a like -- the You've M&A? of curious anticipate a you just in are behind you see been Is waiting we that to ERP they of pipeline lot whether mutually exclusive? you get sort or look I'm quiet. of before that little sort -- to California are -- and not and force, unrelated the might -- a Or do and what like,

A. McMullian

interested when mean some the along, No, in reiterate we're building in. time very could what market. it's I'll for again, We proactive relationships. And us. know for the We're to I be we're we're comes out there go. coming. know opportunity right We M&A what ready

mean, do core In some categories. think or there's there's opportunity some noted so commercial seems when and some market healthier but we're to over advanced the I quickly and execute I M&A months done adjacent more I ahead. in be quarter. to -- opportunities getting can come that cases, over been last so, big last the The we've able comes think And the week the even in we again, announced deals work along. those right both diligence last as X

on So we're that, Mitch. bullish

Operator

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

Stephen Robert Powers

you question, you're just we how dipped volume half. kind versus reported we portfolio the first on week-to-week, of all But a pricing category thinking actions. a the in in as data go has most year So more pricing about through it versus your -- like the of the own branded retail like cycled back price mix across looks price little pricing the bit -- that track the kind for ago of negative. recently color Obviously, kind outlook

-- with as difference? promotional pricing the half, can probably premiumization think in back trend, flow negative case you through making through runs So is hold base the you package kind investments up pricing volume you targeted do the some as the 'XX? we to have and mix Or channel those as that that's you -- make got negative you reported despite of go back price neutral half mix the

A. McMullian

Yes.

take it. So let's

up of it bit. little a I on pricing in. all the is side, mean break Let's branded our

well you Nature's at, down. $X.XX was in price because environment. had look a had the talked by did the when a Steve, Own we've about, average Canyon -- that as great quarter. DKB our given up the we not But quarter. driven quarter, also great that's mix Now data

So is rest we I year. trend, this, that us continue a If the positive Steve, trend, you the that can be should expect that to benefit and of comment bit. we can mix too. mix a move if And for continue on driving we through as that would

R. Kinsey

said, pricing all You're Ryals in. our branded is obviously, as right. I mean of

slight environment well also cost seen and the You've the kind as of some promotions.

And continue by the So well. a as quarter, and we Ryals of mix as positive things if of big said, might is volume out as part business, well see play brands back perform some with new the half. think, to fourth some the we

Stephen Robert Powers

Okay.

when as resumes? California just later? we sooner that's how the distribution the -- rollout. we as think out what's bakery base And How great. on on through I bakery middle hold of that relates plan the the that it Obviously, quickly look sort Okay, ERP transition. transition, pending or rollout about Is that? do to or guess for case of 'XX

R. Kinsey

quarter we're bakery to And trying is Today, strong -- to the work but pretty this plan obviously now through change. those plan or let then think late original rollouts our from California, to good anticipating know. I overall to things next year. pick first up on come shift, anything we're perspective, year not an of we'll targets. right stay a back the Obviously, But try to cost you thing is as

well. as standpoint that from critical that's So

Stephen Robert Powers

Okay.

your answer from what So the happen fully resumption purchases distribution, could was. That's what the gleaning complete? are before I'm right

R. Kinsey

back Yes, pick of QX next no than year. later [indiscernible] the to goal up, is

Operator

questions showing I at no call closing like back the further this now to Ryals for remarks. time. I'm would McMullian to turn And over currently

A. McMullian

joining Thanks, interest today again And speaking taking Okay. Shannon. always, we for We time as care. appreciate us for in Take our your everybody, you Thanks, company. look questions. quarter. next forward with to and

Operator

call. conference participation. concludes for you today's your This Thank

disconnect. now may You

Flowers Foods (FLO) 16 Aug 242024 Q2 Earnings call transcript