Flowers Foods, Inc,producer of Nature's Own, Wonder, Tastykake, and other bakery foods, reported financial results for the company's fourth quarter and year ended January 2, 2016 and provided guidance for fiscal 2016.
Reported results reflect that the fourth quarter of fiscal 2014 was a 13-week quarter and fiscal 2014 was a 53-week year. The fourth quarter of fiscal 2015 was a 12-week quarter and fiscal 2015 was a 52-week year. The company's fiscal 2016 will also be a 52-week year.
Fiscal 2015 Summary:
Compared to the prior fiscal year -
Sales increased 0.8% to $3.779 billion.Excluding acquisitions and the extra week last year, sales increased 1.2%.Adjusted for items affecting comparability, net income per diluted common share (EPS) increased 2.2% to $0.92.Adjusted for items affecting comparability, earnings before interest, taxes, depreciation and amortization (EBITDA) increased 2.7% to $440.7 million.Dividend increased 17.0% to $0.5675 per share.
Fourth Quarter Summary:
Compared to the prior year fourth quarter -
Sales decreased 2.2% to $858.4 million.Excluding acquisitions and the extra week last year, sales increased 0.5%.Adjusted for items affecting comparability, EPS decreased 20.0% to $0.16.Adjusted for items affecting comparability, EBITDA decreased 6.7% to $86.7 million.Dividend increased 9.4% to $0.145 per share.
President and CEO Allen Shiver said, "We are not satisfied with our performance in the fourth quarter. Even so, for the full year we delivered record adjusted EPS and we took important steps to position Flowers for opportunities in 2016 and beyond.
"While we continued to make significant progress on our strategic initiatives, our earnings in the fourth quarter were impacted by sales that were below plan. In line with channel data for the total store, the pace of Flowers' retail sales in the fourth quarter slowed relative to trends we observed in the first three quarters. Due to the lower than anticipated sales, our earnings for the quarter were negatively impacted by approximately $0.03 per share. Additionally, certain costs originally planned for the first quarter of 2016 were incurred in the fourth quarter of 2015, impacting EPS by $0.01.
"It would be a mistake not to recognize the team's accomplishments during the year on several initiatives integral to Flowers' long-term strategy to grow in underdeveloped categories and geographies.
"First, with our acquisitions of Dave's Killer Bread and Alpine Valley Bread, we grew Flowers' share in the fast-growing organic segment of the specialty premium category, extended our geographic reach, and broadened our retailer relationships.
"Second, our investments in growth, including the successful opening of our bakery in Lenexa, Kan., enhanced our ability to serve the Midwest with Flowers' strong brands and position us to sustain our expansion market growth.
"Third, to keep up with the ever-changing consumer landscape, we have not only offered new items, such as our Cobblestone Bread Company "Right Sized" breads, but also carefully evaluated our product assortment, improving our merchandising and promotional strategies. We remain focused on trade promotion effectiveness and efficiency," Shiver said.
In fiscal 2015, Flowers generated operating cash flow of $327.3 million, which we used to make capital expenditures of $93.8 million, make debt repayments of $143.2 million (excluding withdrawals for recently completed acquisitions), increase our dividend per share by 17.0% year-over-year, and repurchase 0.3 million shares for $6.9 million.
Shiver concluded, "While we did not meet our fourth quarter objectives, fiscal 2015 was a strong year for Flowers. Looking ahead, recently completed acquisitions, which are a core part of our growth strategy, are expected to contribute between 5.2% and 5.7% to sales growth in 2016. And with our strong brands we are working to grow share in expansion markets while remaining a low-cost producer. The team remains keenly focused on executing our growth strategies and delivering shareholder value."
