Flowers Foods, Inc. Baking Up Sales of Packaged Bakery Foods

Flowers Foods, Inc. is the second-largest producer and marketer of packaged bakery foods in the U.S. By way of the Company’s DSD (Direct-Store Delivery) network, fresh breads, buns, rolls, snack cakes, and tortillas are available to about 85% of the U.S. population. Established in 1919, the Company is based in Thomasville, Georgia. Flowers Foods had sales of $3.8 Billion In Fiscal Year 2015.

Flowers Foods operates 49 highly efficient bakeries in 18 States. The Company’s leading DSD brand is Nature’s Own, which according to “Symphony IRI Total US Syndicated Fresh Bread and Rolls Category, Calendar Year 2015” is the #1 selling bread brand in the U.S. Other top brands according to Symphony IRI include Whitewheat, Wonder, Cobblestone Bread Co., and Tastykake.

Under the Dave’s Killer Bread, Alpine Valley Bread, and Barowsky’s Organic brands, Flowers Foods offers organic baked foods. The Company also offers its frozen bakery items and fresh snack cakes selling under the Mrs. Freshley’s and European Bakers brands. These products are delivered direct to customers’ warehouses and sell in retail, vending, and foodservice outlets across the U.S.

Flowers Foods’ top regional/franchised brands include Sunbeam, Merita, Home Pride, Butternut, Bunny, Captain John Derst’s, Evangeline Maid, ButterKrust, Mary Jane, Betsy Ross, Roman Meal, Country Kitchen, and Barowsky’s Organics.

Flowers Foods has strong brands, which had greater than $2.8 Billion sales at retail (Source: IRi MultiOutlet + Convenience, 52 weeks ending Q2 2016). The Company also has first-rate cash flows. For Q3 2016, its Cash from Operations was $91.2 Million.

Regarding its Product Mix, 75% of it is fresh breads, buns, and rolls. Fresh snack cakes make up 18% of its product mix. Frozen bread and rolls make up 6%, and mixes round out the product mix at 1%.

Pertaining to Distribution, 84% of it is DSD and 16% is Warehouse Delivery. Concerning Sales Channels, 57% is Branded Retail, 28% is Non-Retail and Other, and 15% is Store Branded Retail.

The Company’s market share in retail outlets for Fresh Packaged Breads is 14.9%; for Commercial Cake, it is 8.9%. Flowers Foods’ brands have a robust position in the organic bread market.

The Company’s business strategy is to capitalize on investments to boost efficiencies and reduce costs. One aspect it’s focusing on is investing in equipment to improve throughput and quality.

Last week, Flowers Foods reported financial results for its 12-week Q3 ended October 8, 2016. In comparison to the 2015 Q3, Sales rose 3.8% to $918.8 million. Acquisitions of Dave’s Killer Bread (DKB, until cycled September 12, 2016) and Alpine Valley Bread contributed 4.4% to the overall sales growth. Of the consolidated sales increase, acquisitions until cycled contributed 4.4%, pricing/mix rose 0.3%, and volume decreased 0.9%.

Flowers Foods’ Sales Guidance for 2016 is $3.930 Billion to $3.986 Billion. Its Dave’s Killer Bread (DKB) launch is producing growth. The Company is expanding its margins with capacity additions and process enhancements.

Its Project Centennial’s diagnostic phase is complete and Flowers Foods is developing an implementation plan to propel efficiencies and finance growth. Project Centennial is a wide-ranging, enterprise-wide business and operational review the Company launched in Q2 2016.

Mr. Allen L. Shiver, Flower Foods’ Chief Executive Officer, President, and Director said, “Over the longer-term, we expect to realize substantial benefits as we implement Project Centennial. Now more than ever, our entire Flowers team is driven to resume our long track record of steady growth and value creation.” (Seeking Alpha – Flowers Foods (FLO) Q3 2016 Results – Earnings Call Transcript).