Thomasville, Georgia. – Margin growth led to strong revenue growth for Flowers Foods Inc. in the fourth quarter and fiscal year 2024.
“The financial results were mixed,” said A. Ryals McMullian, chairman and chief executive. “While the weaknesses in the category promoted lower sales than expected, the pressure was offset by increased margins, benefiting from efficiency initiatives and mitigation of input costs.
“It’s important to point to the context of growing dollars and units in 2024 on channels tracked across the brand’s bread portfolio,” he said. “We have now documented for a few quarters when consumers have moved from traditional bread to more differentiated premium items. For brand investments, we have included organic, keto, buns, rolls and more. I’m happy to report that it contains more gluten than offsets the softness of the traditional segment.”
Net income for the year ended December 28th doubled from $123.4 million, or 58 cents per diluted share per year ago to $1.17 per diluted share of common stock, to 248.1 million. It’s over dollars. Flowers are partially offset by increased labor-related costs and increased effective income tax rates, primarily through legal settlements and related costs, mitigation of material costs, optimization and cost reduction initiatives. This is thought to be primarily attributable to higher operating profits. Adjusted net income was $271.6 million, up 6% from $253.3 million, or $1.20 per diluted share, in fiscal year 2023 to $271.6 million, or $1.28 per diluted share.
Net income for the fourth quarter, covering the 12 weeks ended December 28th, rose 20.9% from $35.7 million ($35.7 million) a year ago, or 17 cents per diluted share, to 20.9% per diluted share. It has increased. Flower said the increase reflected higher operating profits, including a decline in assets, partially offset by a decline in sales. Adjusted net income rose 8.7% to $406.4 million or 22 cents per diluted share, or from $42.7 million the previous year, or 20 cents per diluted shares.
Flowers’ adjusted revenue per revenue for fiscal year 2024 was just above Wall Street’s $1.27 forecast, with the fourth quarter adjusted EPS in line with analyst consensus estimates.
“To increase margins even further, we focus on optimizing our supply chain to provide the highest level of service to our customers in the most cost-effective way,” says McMullian. “The initiative lies within the scope of rights to reduce production scrap, improve manufacturing efficiency, optimize transportation networks and the foundation of transportation equipment.
“In the same way, our procurement team has implemented several strategic procurement initiatives to reduce costs. One initiative is to reassign key product purchases to new suppliers at a low cost. Another uses the ERP system to route each spare part order to the supplier at the lowest cost of each ownership cost. The third program also includes a new, low-cost supplier. In addition to adding, we have significantly reduced renter costs by negotiating low rates from existing suppliers.”
Lower volumes reduce sales performance
Net sales for 2024 were effectively flat, up 0.2% from $5.09 billion in 2023 to $5.1 billion. Flowers said a 1.9% increase in pricing/mix and a 0.1% lift from the February 2023 acquisition of bread product maker Papapita Bakery. Volume decreases by 1.7%.
A significant drop in the last quarter contributed to the full year results. Net sales for the fourth quarter fell 1.6% to $11.1 billion, down 1.6% from $1.13 billion the previous year.
“The biggest headwinds we face from both a revenue and volume growth perspective are the significant weaknesses in the sweet baked goods category,” says McMullian. “But with the introduction of the iconic snack cakes, we are working straight to that headwind. Given the iconic wonder brand and our excellent quality, we are excited by the enthusiasm of retailers. Overall, we believe our portfolio is suitable to leverage the apparent secular changes in categories into items that are better than you at more premiums.”
McMullian explained that the cause of the weakness in the bread category is “difficult to separate.”
“Part of this is due to a variety of factors, including slowing the economy, GLP-1 (weight loss medication), and healthier appetite,” he said. “Many of the pressure focuses on traditional bread products such as sweet baked goods and white wheat bread. To overcome the headwinds of retail, we are branded to meet the evolving consumer needs. We are investing in and finding a pocket of growth in the slower category of bread. The categories are soft, but bread and rolls, breakfast and premium products are outperformed. And we have these It targets innovation in more promising areas. The investment is rewarding as each of our major bread brands has acquired a share of the units and dollars acquired in the fourth quarter or retained.”
Top brand “Outperform”
Flowers brand’s net retail sales were $3.26 billion at 0.1% in fiscal year 2024, with a 0.5% drop in volume, a 0.2% increase in pricing/mix and a 0.2% lift from Papa Pita. It has decreased. Brand retail sales for the fourth quarter fell 2% and 3.9% to $696.5 million with a 1.9% decline in pricing/mix.
“In contrast to the results of the category, where pressured consumers fell 1.8% in the quarter, our leading brands continued to outperform,” McMullian said. “DKB (Dave’s Killer Bread), Wonder and Canyon (Bakehouse) tracked 2.9%, 0.5% and an astounding 17.8% in the fourth quarter, respectively. And the markets most affected by the current environment Nature’s own unique focus on traditional bread, which is the area of the country, surpasses the category by just 1.6%. Nature’s own line of more perfectly made products increased the unit by 8.5%. Performance led to strong unit share performance, with DKB, Wonder and Canyon earning 10 basis points and gaining natural unique shares.
Dave’s Killer Pan performance “sees an increase in preference for differentiated, better products,” McMullian said, as premium-price organic brands have seen an increase in volume in all consumer revenue segments. It’s there.
“Over the year, unit sales were the most growing among low-income consumers, but that trend seemed to have turned back in the fourth quarter,” he said. “The strength of DKB shows that even pressured consumers are willing to pay for premium products that offer meaningful perceived value. And with its strong consumer perception, DKB is We were able to achieve record levels of household penetration in 2024, covering up even the pandemic-affected results of 2020.”
He also pointed out “exceptional consequences” by the gluten-free Canyon Bakehouse Bread brand.
“Brands that have been released from previous capacity limitations have helped with fresh marketing and promotional initiatives, and are experiencing new distribution and promotional growth,” he said. “We are also looking to continue this momentum and add new and innovative products to our brand lineup to leverage the strong consumer loyalty of Canyon.”
Nature’s uniqueness and DKB are one of the brands that benefit from the ongoing investment in innovation. For example, the natural keto product line has earned 410 basis points in unit share to “be number one in the subcategory.”
“We hope to build on that momentum with a robust timeline of trendy innovation targeting evolving consumer demand,” he said. “As consumers move towards healthier eating options, we are strengthening our natural unique keto lineup with the addition of hot dog breads and multigrain breads.”
DKB snack bars and protein bars are also distributed, and the flowers have high hopes for another new addition to the line.
“According to the healthier diet trends, we still launch the most unique products, the bite of DKB snacks says,” says McMullian.
Flowers also continue to meet consumer demand for more value.
“In this challenging economic environment, consumers are looking for low-cost options, and our new little bread fits perfectly with that bill,” says McMullian. “The small bread, which can be reached for just 12 oz, is more affordable and perfect for smaller households or anyone who wants multiple bread flavours and varieties without worrying about throwing away the slices.”
Non-retail sales are “challenged,” according to McMullian, but are spearheaded by “profitability prioritization” in the FoodService channel.
“We are replenishing our liberated capabilities with a higher margin of business and we believe there is a great opportunity to drive future growth,” he said.
Non-retail sales for 2024 increased by 0.8% to $1.844 billion with a 3.8% increase in pricing/mix, 1% acquisition benefit and a 3.1% decline. Sales increased 0.9% in the fourth quarter, reflecting a 5.8% increase and a 3.2% decrease in pricing/mix.
“Our foodservice volume had been reduced to some extent, mainly due to the deliberate exit and weakness in the category, but it still showed significant dollar growth,” McMullian said. “Our portfolio strategy has led to a significantly improved profit increase in the foodservice business.”
Focus on “Smart M&A”
Going forward, Flowers sees acquisitions as a priority in order to promote growth and diversify its portfolio.
“We see M&A capabilities as a key driver of future growth by changing more businesses towards a ‘growth-like’ nutrition profile,” says McMullian.
A January purchase from Simple Mills, the maker of crackers, cookies, bars and baking mixes, reflects the way flowers approach the opportunity to acquire, he said.
“This acquisition will increase exposure to better and attractive snack segments, diversify category exposure and increase growth and margin outlook,” he said. “This transaction is in line with a well-defined M&A strategy that is skewed for a compelling brand that complements our existing portfolio, and is skewed towards a better product. And in better areas, It leverages its proven ability to grow the brands it acquires.
“With home penetration far below competitors, Simple Mills has ample growth opportunities by narrowing the gap between total distribution points per store and legacy players on average items,” he adds. Ta. “These opportunities are abundant, even in the most mature categories of simple Mills.”
Over the 53 weeks of 2025, Flowers Project adjusted its diluted EPS from $1.11 to $1.24, increasing its net sales from $5.4 billion to $5.4 billion, increasing its net sales to 7.5%.
“Ultimately, our goal is to turn flowers into a faster, higher margin business that exacerbates shareholder value over the long term,” McMullian said. “Part of that process will be effective through M&As, such as the announced acquisition of Simple Mill. However, existing businesses will also need to be optimized.”
The 2025 outlook is “combining short-term headwinds from the challenging current economic environment, the potential impact of new tariffs and the actions we are taking to drive improved long-term performance.” It reflects. .
“Compared to the previous year, the results are expected to be stronger at the beginning of the year, and were helped by the portability of new business victory and savings initiatives and ease of product costs,” he said. “The back half outlook incorporates these profit wraps, increased product cost headwinds and continued, challenging categories trends.”
Kinsey called the overall category performance “the biggest swing factor of guidance.”
“We expect the volatility of key categories in recent weeks, which has driven lower than expected sales, will challenge full-year results,” he said. “We envision a set of scenarios that predict weaknesses in the ongoing category of bread and cakes.”
