Flowers Foods (FLO) Q4 2005 earnings summary

Executive summary

• FY2005 sales rose 10.6% to $1.716B; income from continuing operations increased 15.8% to $62.9M and net income rose 20.6% to $61.2M.

• Growth reflected branded-product mix, pricing and volume gains, geographic expansion and acquisitions; strong demand strained bakery capacity.

• Operations span fresh bakery products in regional markets and nationally distributed snack cakes and frozen bakery products.

Financial highlights

• Sales were $1,715.9M versus $1,551.3M in FY2004; mix and volume contributed 6.6%, while price increases contributed 4.0%.

• Income from operations was $99.3M versus $82.3M; income from continuing operations was $62.9M versus $54.3M.

• Net income was $61.2M versus $50.8M; diluted EPS was $0.96 versus $0.75, including discontinued-operation losses of $1.6M and $3.5M, respectively.

• Operating cash flow totaled $114.0M; cash and equivalents ended the year at $11.0M, down from $47.5M.

Outlook and guidance

• FY2006 capital expenditures were estimated at $58M–$63M; Newton, Villa Rica and Houston capacity additions were expected online in mid-2006.

• FY2006 pension income was expected to be $3.2M; no further pension contribution was planned after a $14.0M voluntary contribution in Q1 FY2006.

• SFAS 123R adoption was expected to add $5.6M of stock-based compensation expense in FY2006.

• New capacity was intended to support continued market expansion and organic growth in core markets.