Flowers Foods Q4 Earnings Beat Estimates, Sales Advance 11%

Core Insights - Flowers Foods, Inc. (FLO) reported fourth-quarter fiscal 2025 results with adjusted earnings per share exceeding estimates, concluding the fiscal year at the high end of guidance due to strong brand performance and efficiency initiatives [1][11] Financial Performance - Adjusted diluted earnings per share for the quarter was 22 cents, flat year over year, surpassing the Zacks Consensus Estimate of 16 cents, benefiting from an extra week in the fiscal year [2][11] - Net sales increased by 11% year over year to $1,232.9 million, slightly above the Zacks Consensus Estimate of $1,232 million, driven by the additional week, Simple Mills acquisition, and favorable price/mix, despite volume declines in certain categories [3][11] - Branded retail sales rose 16.6% to $811.6 million, while other sales, including store-branded retail and foodservice, increased by 1.6% to $421.3 million [4] Cost and Margin Analysis - Gross margin, excluding depreciation and amortization, declined by 30 basis points year over year to 48.5%, primarily due to increased outside purchases related to the Simple Mills business model [5] - Selling, distribution, and administrative expenses were 39.9% of net sales, down 10 basis points from the prior year, with adjusted SD&A improving 60 basis points to 39% of sales due to efficiency initiatives [6] EBITDA and Debt Position - Adjusted EBITDA increased by 14.7% year over year to $117.4 million, representing 9.5% of net sales, with the Simple Mills acquisition contributing $57.5 million in net sales [7] - At the end of fiscal 2025, Flowers Foods had cash and cash equivalents of $12.1 million and long-term debt of $1.76 billion, with net debt to trailing 12-month adjusted EBITDA at approximately 3.3 times [8] Cash Flow and Shareholder Returns - Cash flow from operating activities for fiscal 2025 increased to $446.2 million, with capital expenditures totaling $127.1 million and dividends paid to shareholders amounting to $209.3 million [9] Fiscal 2026 Outlook - For fiscal 2026, Flowers Foods expects net sales between $5.163 billion and $5.267 billion, indicating a potential decline of 1.8% to an increase of 0.2% year over year, with adjusted EBITDA projected between $465 million and $495 million [13] - Management indicated that the guidance reflects one less week of operations, continued category headwinds, and inflationary pressures, describing 2026 as an investment and transition year focused on brand optimization and supply-chain enhancements [14]