Flowers Foods (FLO) Q2 2026 Prepared Remarks earnings summary

Executive summary

• Net sales for the second quarter of 2026 decreased 4.0% year-over-year to $1.193 billion, driven by lower volumes in both Branded Retail and Other segments, despite favorable price/mix adjustments and contributions from acquisitions.

• Net income declined 30.3% to $40.7 million, with adjusted net income down 30.5% to $44.1 million, reflecting a challenging consumer environment, higher costs, and increased marketing and restructuring expenses.

• Adjusted EBITDA fell 19.2% to $111.3 million, representing 9.3% of net sales, a 180-basis point decrease from the prior year.

• Management is accelerating initiatives to improve competitiveness, including brand relaunches, cost structure realignment, and innovation, with early momentum from new business wins and product launches.

• The relaunch of the flagship Nature's Own brand is underway, receiving positive early feedback and expected to drive future growth.

Financial highlights

• Branded Retail net sales decreased 3.8% to $794.6 million, with a 3.8% increase in price/mix offset by a 7.6% volume decline; Other net sales fell 4.4% to $398.3 million, mainly from discontinued business and lower store-branded sales.

• Gross margin (excluding depreciation/amortization) was 48.4% of sales, down 40 basis points year-over-year.

• Adjusted EBITDA margin for the quarter was 9.3%, down from 11.1% in the prior year.

• GAAP diluted EPS was $0.19, down $0.09 year-over-year; adjusted diluted EPS was $0.21, also down $0.09.

• Cash from operations year-to-date was $241.5 million; capital expenditures $44.5 million; $81 million returned to shareholders via dividends.

Outlook and guidance

• Full-year 2026 guidance revised: net sales expected between $5.070 billion and $5.142 billion, adjusted EBITDA between $453 million and $481 million, and adjusted diluted EPS between $0.75 and $0.85.

• Guidance reflects ongoing macroeconomic and competitive headwinds, promotional environment, and normalization of bonus compensation.

• Capital expenditures projected at $115–$125 million, including $4–$8 million for ERP upgrade; $25–30 million expected to be expensed in Fiscal 2026.

• Additional cost actions and organizational realignment are expected to yield $9 million in savings for 2026 and $20 million annualized, with $6 million in one-time costs.

• Outlook assumes current macroeconomic and competitive conditions persist, with contributions from new business wins and Nature's Own relaunch.