Flowers Foods Q2 Earnings Beat Estimates, FY25 Forecast Trimmed

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]