Flowers Foods (FLO) Q1 2026 Prepared Remarks earnings summary

Executive summary

• Net sales rose 1.1% year-over-year to $1.572 billion, driven by the Simple Mills acquisition and favorable pricing/mix, offsetting volume declines and higher operating costs.

• Net income fell 20.6% to $42.1 million, with adjusted net income down 17.4% to $60.9 million, reflecting a challenging consumer environment and higher interest expense.

• Disciplined cost management and strategic review of the brand portfolio, supply chain, and financial strategy sharpened focus on core brands and supply chain capabilities.

• Relaunch of Nature's Own with simpler ingredients and a national marketing campaign, now the largest Non-GMO Project Verified loaf nationally.

• Dividend reset to $0.50 per share annually to enhance financial flexibility, support deleveraging, and prioritize debt reduction.

Financial highlights

• Q1 2026 net sales were $1.572 billion, up 1.1% year-over-year, driven by price/mix (+2.1%) and Simple Mills acquisition (+2.3%), partially offset by volume decline (-3.3%).

• Branded Retail net sales increased 3.4% to $1.045 billion, driven by price/mix and acquisition, despite a 4.2% volume decline; Other net sales decreased 3.1% to $526.2 million.

• Adjusted EBITDA was $159.0 million, down 1.8% year-over-year, with margin at 10.1% of sales (down 30 basis points).

• GAAP diluted EPS was $0.20, down $0.05; adjusted diluted EPS was $0.29, down $0.06 year-over-year.

• Cash flow from operations was $107.9 million, down $27.8 million; capex was $20.6 million, down $4.9 million; dividends paid totaled $54.4 million.

Outlook and guidance

• Fiscal 2026 net sales expected between $5.163 billion and $5.267 billion, a change of -1.8% to 0.2% year-over-year.

• Adjusted EBITDA projected at $465 million to $495 million; adjusted diluted EPS forecasted at $0.80 to $0.90.

• Guidance reflects category headwinds, promotional environment, cost savings initiatives, and normalization of bonus compensation.

• Capital expenditures expected at $115 million to $125 million, including $4 million–$8 million for ERP upgrade; effective tax rate around 26%.

• Expect continued pressure on top-line due to category trends and consumer headwinds, but confident in long-term growth strategy.