Flowers Foods (FLO) Q4 2003 earnings summary

Executive summary

• FY03 sales reached $1.453B, up 9.4%; income from continuing operations was $52.8M, up 21.4%, and diluted continuing-operations EPS was $1.15, up 21.1%.

• Fiscal 2003 had 53 weeks versus 52 weeks in FY02; management attributed part of segment volume growth to the extra week.

• Focus remained on bakery foods, with growth across breads, buns and rolls, snack cakes and pastries; results exceeded the baked-foods industry, according to management.

Financial highlights

• Sales were $1,452.995M versus $1,328.607M in FY02; gross margin was $732.8M, up 8.3% YoY.

• Income from continuing operations before cumulative accounting effects was $52.804M versus $43.485M; diluted EPS on the same basis was $1.15 versus $0.95.

• Net income was $14.658M versus a $16.955M loss; FY03 included a $38.146M after-tax discontinued-operations loss, while FY02 also included a $23.078M cumulative accounting charge.

• Operating cash flow was $88.0M; capital expenditures were $43.6M, and year-end cash was $42.4M versus $69.8M a year earlier.

Outlook and guidance

• Plan to extend fresh DSD territory by 100–150 miles over three to five years, adding a bakery about every 18 months and using targeted acquisitions; Denton bakery was expected to start production in summer FY04.

• Planned annual capital expenditures of $45M–$50M, excluding new facilities; maintenance capex estimated at $35M annually.

• FY04 pension expense was estimated at $9.0M, with expected pension-plan cash contributions of $17.0M.

• FY04 pay-by-scan sales were estimated at $350M, compared with $248.4M in FY03.