Flowers Foods, Inc. reported results for its 12 and 52 weeks ended Dec. 29, 2012. Sales for the quarter increased 14.7 percent to $749.4 million and for the year sales increased 9.8 percent to $3.05 billion. Diluted earnings per share (EPS) for the quarter were $0.28, up 64.7 percent. For the year, diluted EPS was up 8.9 percent to $0.98; adjusted for one-time charges in both years, 2012 diluted EPS was $1.03, up 7.3 percent compared to $0.96 in 2011. Other highlights include: the Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, excluding one-time charges, was 11.5 percent for the quarter and 10.9 percent for the year. The company's operating margin (EBIT), excluding one-time charges, improved to 8.0 percent in the quarter and was up slightly for the year. The gross margin for the quarter and year were 47.9 percent and 46.9 percent, respectively. Volume increased 10.3 percent in the quarter and 2.1 percent for the year and net price/mix for the quarter was negative 2.0 percent and positive 1.5 percent for the year. Acquisitions contributed 6.4 percent of the quarter’s sales and 6.2 percent of 2012 total sales.
George E. Deese, Flowers Foods’ chairman and chief executive officer, said, in a prepared statement, “The year 2012 was eventful for Flowers Foods and for our industry. We cycled our acquisition of Tasty Baking in the second quarter, acquired Lepage Bakeries in the third quarter, and announced an agreement to acquire the rights to Sara Lee and Earthgrains brands in California in the fourth quarter. In mid-November, our industry experienced another major change when Hostess Brands exited the marketplace. Our team rallied to meet the needs of new and existing customers as they felt the impact of Hostess’ sudden departure. Our fourth quarter results show the benefit to sales and earnings that resulted from our team’s outstanding efforts to serve our customers.
“The marketplace remains in flux as the industry awaits the outcome of Hostess’ bankruptcy proceedings and the resulting auctions of assets. We are delaying offering specific guidance for 2013 until we have more clarity regarding the Hostess situation as well as our pending transaction for the Sara Lee and Earthgrains brands in California,” he continued. “Our team continues to execute well on our operating strategies and we do anticipate that sales and earnings for 2013 will meet or exceed our long-term objectives for 5 percent to 10 percent sales growth and double-digit earnings per share growth, excluding one-time charges,” Deese said.
On Jan. 11, 2013, the company announced an agreement with Hostess to be the stalking horse bidder in the bankruptcy process for certain Hostess bread bakeries and bread brands. A competitive auction is scheduled for Feb. 28, 2013, followed by a sale order hearing on March 5, 2013. If Flowers’ bids are ultimately approved by the court, the transactions will remain subject to regulatory clearance. In November 2012, Flowers and Grupo Bimbo, S.A.B. de C.V. announced the U. S. Department of Justice had approved an agreement whereby Flowers would acquire certain assets and trademarks from BBU, Bimbo’s American subsidiary, primarily the Sara Lee and Earthgrains brands for sliced breads, buns, and rolls in the state of California. The transaction is set for completion on February 23, 2013 with respect to Southern California followed by a staged roll-out of the acquired brands in the remainder of the state. On January 29, 2013, Grupo Bimbo filed a motion with the U. S. District Court for the District of Columbia seeking to temporarily suspend the transaction. A hearing on this matter is scheduled for February 13, 2013.
