Flowers Foods (FLO) Q4 2024 Prepared Remarks earnings summary

Executive summary

• Fourth quarter and full-year 2024 results were mixed, with category weakness impacting sales, but margin expansion offsetting the pressure due to efficiency initiatives and moderating input costs.

• Growth in branded bread portfolio dollars and units was achieved, with premium, organic, keto, buns, rolls, and gluten-free products outperforming traditional loaf and sweet baked goods.

• Net income for 2024 surged 101% to $248.1M, driven by higher operating income and lower impairment charges.

• Strategic priorities include team development, brand focus, margin improvement, and smart M&A, highlighted by the acquisition of Simple Mills.

• Foodservice volumes declined due to intentional exits and category weakness, but profitability improved through portfolio strategy.

Financial highlights

• Q4 2024 net sales decreased 1.6% year-over-year to $1.111B, with a 0.9% improvement in price mix offset by a 2.5% volume decline, mainly in cake and traditional loaf bread.

• Gross margin (excluding depreciation/amortization) rose 90 basis points to 48.8% year-over-year, aided by lower ingredient costs and business optimization.

• Adjusted EBITDA for Q4 grew 6.3% to $102.4M; adjusted EBITDA margin expanded 70 basis points to 9.2%.

• GAAP diluted EPS for Q4 was $0.20, up $0.03; adjusted diluted EPS was $0.22, up $0.02 year-over-year.

• Cash flow from operations increased $63 million to $413 million for fiscal 2024; capital expenditures were $132 million.

Outlook and guidance

• 2025 guidance (including Simple Mills): sales of $5.403–$5.487 billion, adjusted EBITDA of $560–$591 million, and adjusted EPS of $1.11–$1.24.

• Excluding Simple Mills: sales of $5.180–$5.257 billion, adjusted EBITDA of $526–$554 million, and adjusted EPS of $1.18–$1.28.

• 53rd week expected to add $70–$80M net sales, $5–$7M adjusted EBITDA, and ~$0.02 adjusted EPS.

• Stronger results expected earlier in the year, with headwinds anticipated in the back half due to commodity costs and category trends.

• Guidance reflects continued category weakness, inflationary pressures, and potential new tariffs.