Core Insights - Flowers Foods, Inc. (Symbol: FLO) is currently yielding above 7% based on its quarterly dividend of $0.99, with shares trading as low as $13.78 [1] - Historically, dividends have contributed significantly to total stock market returns, exemplified by the iShares Russell 3000 ETF (IWV) which showed a 0.6% decrease in share price over 12 years but provided $10.77 per share in dividends, resulting in a total return of 13.15% [1] - The sustainability of the 7% yield from Flowers Foods, Inc. is contingent on the company's profitability and historical dividend trends [2] Company Overview - Flowers Foods, Inc. is a member of the Russell 3000, indicating its status as one of the largest companies in the U.S. stock markets [1] - The predictability of dividend amounts is generally low and closely tied to the company's profitability [2]

Group 1 - Flowers Foods, Inc. (FLO) has been added to the Zacks Rank 5 (Strong Sell) List due to a 3.6% downward revision in the consensus estimate for its current year earnings over the last 60 days [1] - Fomento Economico Mexicano (FMX) is also on the Zacks Rank 5 (Strong Sell) List, with a significant 24.8% downward revision in the consensus estimate for its current year earnings over the last 60 days [1] - J.Jill, Inc. (JILL) has been included in the Zacks Rank 5 (Strong Sell) List, reflecting a 6.1% downward revision in the consensus estimate for its current year earnings over the last 60 days [2]

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Question-and-Answer SessionSo first off, maybe Ryals, we've heard a lot about the last couple of days, right, about the challenges currently facing sort of the consumer. You operate in a bit of a unique category. So I'm interested in hearing your perspective as -- just far as what you're seeing from the consumer sort of at this stage?A. McMullianCEO & Chairman of Board Yes. I mean, really, more broadly, nothing really different than what everybody else is seeing. The consumer is still pressured, concerned a ...

Financial Data and Key Metrics Changes - The overall bread category has declined by approximately 2.5% to 3% [11] - Traditional loaf segment, including honey wheats and white breads, has seen a decline of 5% to 6% [12] - The company has lowered its underlying guidance for both top and bottom lines for 2025 due to challenges in the first half of the year [36][38] Business Line Data and Key Metrics Changes - The company is innovating around its product portfolio, particularly in keto products and brands like Dave's Killer Bread, which continue to perform well [12][34] - Small loaves are gaining traction, with an increase from three SKUs to six, catering to consumer preferences for reduced consumption [46] Market Data and Key Metrics Changes - The company is experiencing pressure from economic uncertainty and inflation, impacting consumer behavior [4][6] - The competitive landscape has seen new low-price competitors entering the market, prompting the company to address this with value offerings [23][24] Company Strategy and Development Direction - The company aims to innovate and reposition its product offerings to counteract the decline in traditional bread categories [14][18] - There is a focus on expanding distribution in underpenetrated markets, particularly in the Midwest and Northeast [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current challenges but expresses confidence in the company's ability to navigate through them, citing strong brand positions [79][80] - The company is committed to maintaining margins while being mindful of consumer price sensitivity in the current economic climate [32][66] Other Important Information - The integration of Simple Mills has gone smoothly, with expectations for growth driven by innovation and distribution expansion [33][35] - The company is undergoing an ERP transition, with plans to ramp up rollouts in the second half of the year [60][63] Q&A Session Summary Question: What are the long-term expectations for the bread category? - Management believes the bread category will evolve, with a shift towards more differentiated items and a decline in traditional soft varieties [15][18] Question: How is the company addressing new low-price competitors? - The company is responding with value offerings and believes that as the economic environment improves, the situation will stabilize [24][25] Question: What is the outlook for brand support and advertising? - The company plans to continue increasing brand support to drive awareness and household penetration, balancing advertising and promotional efforts [65][66] Question: What are the capital allocation priorities post-Simple Mills acquisition? - The focus is on deleveraging while maintaining a strong cash flow position, with the board evaluating the dividend on a quarterly basis [68][71]

Financial Data and Key Metrics Changes - The overall bread category has declined by approximately 2.5% to 3% [12] - Traditional loaf segment, including honey wheats and white breads, has seen a decline of 5% to 6% [12] - The company has lowered its underlying 2025 guidance for both top and bottom lines due to challenges in the category and a less robust performance than expected in the first half [37][39] Business Line Data and Key Metrics Changes - The company is experiencing growth in its keto product line and brands like Dave's Killer Bread and Canyon [12] - The integration of Simple Mills has gone smoothly, with the brand performing in line with expectations despite tariff impacts [34][36] - Small loaves are performing well, with an increase in SKUs from three to six, catering to consumer preferences for reduced carb consumption and less waste [46][47] Market Data and Key Metrics Changes - The company is focusing on expanding distribution in the Midwest and Northeast, which are identified as growth markets [28] - The competitive landscape has seen new low-price competitors entering the market, prompting the company to address this with value offerings [25][26] Company Strategy and Development Direction - The company aims to innovate around the declining traditional bread segment by introducing differentiated products that meet consumer demands [15][19] - There is a strategic focus on better-for-you snacks and products, with significant innovation planned for 2026 [35][40] - The company is also exploring new shelf set tests with retailers to better organize product offerings [20][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current economic pressures on consumers, including inflation and job market concerns, which are impacting sales [4][6] - The company believes that while the bread category is challenged, it has historically navigated through such challenges and remains optimistic about future growth [80][81] - Management emphasizes the importance of brand strength and innovation to adapt to changing consumer preferences [83][84] Other Important Information - The company is undergoing an ERP transition, with plans to ramp up rollouts in the second half of the year [63][66] - Input costs are expected to rise in the second half, particularly for palm oil, eggs, and cocoa, which will impact margins [61][62] - The company is focused on deleveraging following the Simple Mills acquisition, with a high payout ratio being evaluated on a quarterly basis [72][75] Q&A Session Summary Question: What are the long-term expectations for the bread category? - Management expects the bread category to evolve, with a shift towards more differentiated items and a decline in traditional soft varieties [15][19] Question: How is the integration of Simple Mills progressing? - The integration has been smooth, with the brand performing well and expected to drive growth through innovation and distribution expansion [34][36] Question: What is the company's strategy regarding new low-price competitors? - The company is addressing the entry of low-price competitors by enhancing value offerings and leveraging brand strength [25][26] Question: How does the company plan to manage rising input costs? - The company will explore various strategies, including pricing adjustments, to maintain margins amid rising costs [33][61] Question: What is the outlook for advertising and marketing support? - The company plans to continue increasing brand support to drive awareness and household penetration, balancing advertising and promotional efforts [68][71]

NET wers BARCLAYS GLOBAL CONSUMER STAPLES CONFERENCE September 3-4, 2025 Statements contained in this presentation and certain other written or oral statements made from time to time by Flowers Foods, Inc. (the "company", "Flowers Foods", "Flowers", "us", "we", or "our") and its representatives that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to current expectations regarding our business and ou ...

Core Viewpoint - Flowers Foods, Inc. reported weaker-than-expected second-quarter sales and issued its second consecutive guidance cut, leading analysts to lower forecasts and highlight ongoing challenges in the category [1][3] Financial Performance - The company reported an adjusted EPS of 30 cents, meeting consensus, but sales of $1.242 billion fell short of Wall Street estimates. Net income decreased nearly 13%, and adjusted EBITDA declined by 4% [5] - Flowers Foods cut its full-year EPS outlook to $1.00–$1.10 and lowered its sales guidance to $5.021–$5.083 billion, both below market expectations [6] Analyst Insights - Truist Securities analyst Bill Chappell reduced his 12-month price forecast to $15 from $20, reiterating a Hold rating, and lowered sales and earnings estimates through fiscal year 2027 due to inconsistent execution and increasing private label competition [1][2] - DA Davidson analyst Brian Holland expressed caution, noting that the back-to-back guidance cuts reflect rising consumer and competitive pressures that have not been mitigated by innovation or acquisitions [3][4] - Holland projected fiscal year 2025 EBITDA of $512–$538 million and sales of $5.239–$5.308 billion, both reduced from previous forecasts, highlighting execution risks and reliance on packaged bakery products [4]

Core Insights - Flowers Foods, Inc. reported second-quarter fiscal 2025 results with year-over-year sales growth but missed the Zacks Consensus Estimate, while earnings per share (EPS) declined year over year but exceeded consensus expectations [1][2][10] Financial Performance - Adjusted EPS for the quarter was 30 cents, beating the Zacks Consensus Estimate of 29 cents, but down from 36 cents in the same quarter last year [2] - Total sales reached $1,242.8 million, missing the Zacks Consensus Estimate of $1,269 million, representing a 1.5% increase year over year [3] - Branded retail sales increased by 5% to $826.7 million, driven by the Simple Mills acquisition, although offset by unfavorable price/mix and lower volumes [4] - Other sales decreased by 4.9% to $416.1 million, impacted by softer volumes in store-branded retail and non-retail sales [5] Cost and Margin Analysis - Production costs increased by 110 basis points to 51.2% of net sales, influenced by higher outside product purchases and lower production volumes [6] - Selling, distribution, and administrative (SD&A) expenses were 38.1% of sales, down 40 basis points due to lower distribution fees, despite higher workforce-related expenses [7] - Adjusted EBITDA decreased by 4% to $137.7 million, with an adjusted EBITDA margin of 11.1%, down 60 basis points [8] Financial Snapshot - As of the end of the fiscal second quarter, cash and cash equivalents were nearly $11 million, with long-term debt at $1,749.2 million and stockholders' equity at $1,427.8 million [9] - Cash flow from operating activities totaled $130.8 million, with capital expenditures of $30.8 million and dividends paid amounting to $52.4 million [9] Outlook - For fiscal 2025, management revised net sales expectations to a range of $5.239-$5.308 billion, indicating a 2.7% to 4% year-over-year increase, down from previous guidance [10] - Adjusted EBITDA is projected to be between $512-$538 million, revised from earlier estimates of $534-$562 million [11] - Adjusted EPS is now expected to be in the range of $1.00-$1.10, down from the previous forecast of $1.05-$1.15 [11]

Financial Data and Key Metrics Changes - The company is experiencing a transition due to a challenging economic environment and shifting consumer trends, which have pressured end markets and hampered recent results [6][7] - Management expects benefits from executing their portfolio strategy and developing a pipeline of innovation, indicating confidence in long-term growth [7] Business Line Data and Key Metrics Changes - The competitive environment has intensified, particularly in the traditional loaf area, with lower-priced entrants affecting results [12][13] - The company is addressing the value shopper segment with new product lines and has seen good performance in premium differentiated products [12][13] - The foodservice business has been refilled with higher-margin products, significantly improving profitability [58] Market Data and Key Metrics Changes - The market remains bifurcated, with strong performance in both premium differentiated products and value offerings, particularly in mass and club channels [12][13] - The company has noted continued weakness in the away-from-home foodservice business [14] Company Strategy and Development Direction - The company is committed to innovation to navigate the transition in consumer preferences, particularly moving away from traditional loaf products [30][31] - Management emphasizes the importance of maintaining brand strength and innovation as key strategies to address competitive pressures [36][72] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that the transition will take time and requires patience, viewing it as a generational shift in the category [51][53] - There is optimism that the category will eventually stabilize, although the timeline is uncertain [52][53] Other Important Information - The company is focused on debt paydown and is cautious about M&A activities in the near term, although it remains a strategic priority [61] - The company has plans to address the weakness in large brands like Nature's Own while continuing to invest in its leading brands [55] Q&A Session Summary Question: Competitive intensity and pricing pressures - Management noted that the promotional environment is elevated but stable, with a focus on differentiated products to drive trial and awareness [12][13] Question: Tariff outlook and capital allocation - Management expects tariffs to decrease significantly and will continue to evaluate capital allocation based on performance and cash flow [18][19] Question: Nature's Own brand performance - Management confirmed that they are committed to investing in Nature's Own and other mainstream loaf products, using a mix of promotional support and marketing [65][66] Question: Innovation and Simple Mills - Management indicated that Simple Mills will continue to innovate aggressively and is performing well despite challenges [43][48] Question: Transition timeline and gross margin management - Management stated that the transition will take time, but there are levers to maintain gross margins despite volume pressures [57] Question: M&A appetite - Management indicated a cautious approach to M&A in the near term, focusing on debt reduction while monitoring market opportunities [61] Question: Retailer changes and shelf space allocation - Management observed that retailers are increasingly focusing on organic products and small loaf segments, reflecting changing consumer trends [73][74]