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.

• Adjusted EBITDA decreased 1.8% to $159.0 million, representing 10.1% of net sales.

• Comprehensive review of brand portfolio, supply chain, and financial strategy is ongoing, sharpening focus on core brands and targeted investments.

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

Financial highlights

• Branded retail net sales increased 3.4% to $1.045 billion, driven by pricing/mix and Simple Mills acquisition, despite a 4.2% volume decline; other net sales decreased 3.1%.

• Gross margin (excluding D&A) was 49.4%, down 50 basis points year-over-year due to lower volumes and increased outside purchases.

• GAAP diluted EPS was $0.20, down $0.05; adjusted diluted EPS was $0.29, down from $0.35 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 were $54.4 million.

• Interest expense increased 39.8% to $19.6 million due to debt issued for the Simple Mills acquisition.

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.

• Capital expenditures anticipated at $115 million to $125 million; effective tax rate around 26%.

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

• Near-term top-line outlook remains cautious due to soft category trends and inflationary pressures.