Flowers Foods (FLO) Q4 2004 earnings summary

Executive summary

• FY04 sales rose 6.8% to $1.551B in a 52-week year versus 53 weeks in FY03; income from continuing operations reached $54.3M, or $1.21 diluted EPS.

• Cash from operations was $123.1M; investment in capacity, acquisitions, dividends, and repurchases continued.

Financial highlights

• Operating income was $82.3M versus $77.9M; net income was $50.8M versus $14.7M, reflecting a much smaller discontinued-operations loss.

• Sales growth reflected 3.0% pricing, 2.5% volume, price and mix contribution, and 0.4% mix; the prior-year extra week reduced reported volume comparisons.

• Gross margin was $771.9M, up 5.3%, while margin declined to 49.8% from 50.4% on ingredient, packaging, labor, utility, and Denton start-up costs.

• Net income per diluted share was $1.13 versus $0.32; continuing-operations diluted EPS was $1.21 versus $1.15.

Outlook and guidance

• Denton bread-line installation was underway, with production expected in summer 2005; additional lines were under consideration as the bun line neared capacity.

• PBS sales were estimated at $415.0M by FY05 year-end, compared with $374.5M in FY04.

• Geographic DSD expansion into adjoining states was planned to continue; management cited a 100–150-mile extension target.

• FY05 pension expense was expected to be ~$6.0M; after a $25.0M contribution in January 2005, no further FY05 contribution was planned.