Flowers Foods (FLO) Q2 2025 Prepared Remarks earnings summary

Executive summary

• Net sales rose 1.5% year-over-year to $1.243 billion, driven by the Simple Mills acquisition and portfolio repositioning toward higher-margin branded retail products, now 67% of sales, up from 64% year-over-year.

• Net income fell 12.8% to $58.4 million, with adjusted EBITDA down 4.0% to $137.7 million and margin at 11.1% of sales; diluted EPS was $0.28, down $0.04 year-over-year.

• Bread category volumes declined 3%, with traditional loaf down 6% year-over-year, while branded organic and keto products outperformed.

• Simple Mills contributed $61.4 million in net sales and $10.9 million to adjusted EBITDA, but posted a net loss; integration is progressing well.

• Strategic focus remains on innovation, team development, margin improvement, and smart M&A.

Financial highlights

• Net sales increased 1.5% year-over-year; Simple Mills contributed 5.1% to growth.

• Price/mix declined 1.2%, volume declined 2.4%, mainly due to traditional loaf bread.

• Gross margin (excl. D&A) fell 110 basis points to 48.8% due to higher co-manufacturing costs and lower production volumes.

• GAAP diluted EPS was $0.28, down $0.04; adjusted diluted EPS was $0.30, down $0.06 year-over-year.

• Year-to-date operating cash flow rose $98 million to $267 million; capex decreased to $56 million; dividends paid increased to $105 million.

Outlook and guidance

• Fiscal 2025 net sales forecast: $5.239–$5.308 billion; adjusted EBITDA: $512–$538 million; adjusted EPS: $1.00–$1.10 (including Simple Mills).

• Excluding Simple Mills: sales $5.021–$5.083 billion, adjusted EBITDA $482–$505 million, adjusted EPS $1.08–$1.17.

• 53rd week expected to contribute $70–$80 million to net sales and $5–$7 million to adjusted EBITDA.

• Second half expected to benefit from shelf space gains and cost savings, but offset by commodity and tariff headwinds.

• 92% of key raw materials covered for 2025; inflationary headwinds and tariffs incorporated into guidance.