Flowers Foods(FLO)2025-02-18 21:15Sales and Revenue Growth - The company expects to grow sales by 1% to 2% annually and EBITDA by 4% to 6% annually, excluding any future acquisitions[29]. - In Fiscal 2024, branded retail sales represented 63.9% of total sales, with Nature's Own generating estimated retail sales of $1.5 billion[40][45]. - Walmart/Sam's Club accounted for 22.4% of the company's sales in Fiscal 2024, highlighting the importance of major customer relationships[47]. - Net sales for Fiscal 2024 were $5,103,487, a 0.2% increase from $5,090,830 in Fiscal 2023[220]. - The company anticipates Fiscal 2025 sales growth driven by optimization of the non-retail business and new product innovation[225]. Acquisitions and Investments - The company completed the acquisition of Papa Pita on February 17, 2023, enhancing production capacity and distribution in the western U.S.[29][30]. - The company completed the acquisition of Papa Pita for $274.8 million in cash on February 17, 2023[245][251]. - The company entered into a $795.0 million Term Loan Facility for the Simple Mills Acquisition, which was later terminated in favor of issuing new notes[259]. - The company issued $500.0 million of 5.750% Senior Notes due 2035 and $300.0 million of 6.200% Senior Notes due 2055 to fund the Simple Mills Acquisition[264]. Product Development and Innovation - The company plans to roll out new products including DKB snack bites and Wonder branded cake products in Fiscal 2025[43][44]. - The company plans to launch the national rollout of DKB snack bites in Fiscal 2025[227]. Financial Performance - Income from operations rose to $348,292, representing a 101.5% increase compared to $172,870 in the previous year[219]. - Net income increased to $248,116, up 101.0% from $123,416 in Fiscal 2023[219]. - Comprehensive income increased to $254,325, up 107.5% from $122,563 in Fiscal 2023[219]. - The effective tax rate for Fiscal 2024 was 24.6%, up from 21.4% in the prior year[237]. Cost Management and Efficiency - Materials, supplies, labor, and other production costs as a percentage of sales decreased to 50.5% from 51.7%[229]. - Selling, distribution, and administrative expenses as a percentage of sales decreased to 39.2% from 41.6%[231]. - Ingredient and packaging costs were volatile in Fiscal 2024 and 2023, but reduced volatility is expected in Fiscal 2025, excluding potential tariff impacts[58]. - The company utilizes forward purchase agreements and other financial instruments to manage raw material price volatility, which could significantly affect earnings if availability decreases[58][194]. Employee and Community Engagement - The company employs approximately 10,200 employees and 4,100 long-term leased employees, with 830 employees covered by collective bargaining agreements[67]. - The company has committed to donating $3.4 million to the USO through 2026, having already donated $2.8 million through Fiscal 2024[71]. - The company has implemented various employee development programs, including a Learning Management System and annual performance reviews to support career progression[73]. Capital Expenditures and Liquidity - Capital expenditures for Fiscal 2024 were $132.1 million, including $6.0 million for the ERP upgrade, while the company anticipates capital expenditures of $140.0 million to $150.0 million for Fiscal 2025[245][251]. - Total available liquidity as of December 28, 2024, was $569.4 million, consisting of cash on hand and available balances under credit facilities[242]. - The company incurred costs of approximately $238 million related to the ERP system upgrade project, with an expected total cost of around $350 million[243]. Debt and Shareholder Returns - Dividends paid to shareholders increased to $203.0 million in Fiscal 2024 from $195.2 million in Fiscal 2023, reflecting a growth of approximately 4.6%[245][252]. - The company repurchased $22.7 million of its common stock in Fiscal 2024, down from $45.8 million in Fiscal 2023[245][252]. - A total of 1.0 million shares were repurchased at a cost of $22.7 million during Fiscal 2024, compared to 1.9 million shares at a cost of $45.8 million in Fiscal 2023[268]. - Long-term debt and right-of-use lease obligations totaled $1,276,109,000 as of December 28, 2024, down from $1,285,039,000 on December 30, 2023[253]. Compliance and Risk Management - The company is currently in substantial compliance with all material federal, state, and local laws and regulations affecting its operations[60][61]. - The company expects to face potential risks from global economic volatility, including inflation and supply chain disruptions, which could impact future cash flows[241]. - Changes in accounts payable were primarily driven by volatility in input costs and timing of capital spending, with a net change of $(59.6) million in Fiscal 2024[247][250].