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Flowers Foods, Inc. (FLO - Free Report) reported fourth-quarter fiscal 2022 results, with the top and bottom lines increasing year over year. Earnings came in line with the Zacks Consensus Estimate, while sales missed the same.
The company is on track to counter the inflationary environment by implementing price increases, improving the profitability of lower-margin products and enhancing its branded portfolio through innovation.
Q4 Highlights
Adjusted earnings per share (EPS) of 23 cents came in line with the Zacks Consensus Estimate and our estimate. The bottom line increased from 20 cents reported in the year-ago quarter.
Sales increased 10.1% year over year to $1,082.7 million. The top line missed the Zacks Consensus Estimate of $1,100.8 million and our estimate of $1,092.4 million. The pricing/mix remained favorable by 16.7%, while volumes fell by 6.6%.
Branded retail sales grew 7.6% to $698.8 million, mainly on improved prices undertaken to counter inflationary pressures. These were somewhat offset by volume declines. Other sales rose 14.9% to $383.9 million on favorable pricing and a solid volume in store-branded products. These were somewhat offset by soft foodservice volumes.
Flowers Foods, Inc. Price, Consensus and EPS Surprise
Materials, supplies, labor and other production costs (excluding depreciation and amortization) escalated by 110 basis points (bps) to 53.2% on rising input cost inflation.
Selling, distribution and administrative (SD&A) expenses came in at 37.9% of sales, down 110 bps courtesy of reduced incentive compensation, distributor distribution fees as a percent of sales, rent expenses and increased gain on sale of assets. These were somewhat offset by increased bad debt expenses and logistics costs. Adjusted SD&A expenses contracted 100 bps to 37.9% of sales.
Adjusted EBITDA advanced 8.5% to $96.2 million. The adjusted EBITDA margin was 8.9%, which contracted 10 bps.
Image Source: Zacks Investment Research
Financial Aspects
The Zacks Rank #3 (Hold) company ended the reported quarter with cash and cash equivalents of $165.1 million and long-term debt of $891.8 million. Stockholders’ equity amounted to $1,443.3 million.
For fiscal 2022, cash flow from operating activities came in at $360.9 million and capital expenditures amounted to $169.1 million. The company paid dividends worth $186.5 million.
In the second quarter of fiscal 2022, the company increased its share repurchase authorization by 20 million shares. For fiscal 2022, it repurchased $34.6 million shares. The company had 24.4 million shares remaining under the current share repurchase plan.
Meanwhile, capital expenditures are projected in the range of $140-$150 million for fiscal 2023.
Fiscal 2023 Guidance
For fiscal 2023, the adjusted EPS is envisioned in the range of $1.20-$1.30.
For fiscal 2022, the company expects sales in the range of $5.176 $5.242 billion, suggesting a rise of 7.7-9.1% year over year. Adjusted EBITDA is likely to come in the range of $513-$543 million.
The company’s shares have dropped 1.9% in the past three months compared with the industry’s 1.2% decline.
Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggests growth of 7.2% and 12.7%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests an increase of 19.6% and 90.4%, respectively, from the year-ago reported number.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2 (Buy). MDLZ has a trailing four-quarter earnings surprise of 7.5%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial-year sales and earnings suggests growth of 9% and 7.5%, respectively, from the corresponding year-ago reported figures.
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Flowers Foods (FLO) Q4 Earnings Meet Estimates, Sales Rise Y/Y
Flowers Foods, Inc. (FLO - Free Report) reported fourth-quarter fiscal 2022 results, with the top and bottom lines increasing year over year. Earnings came in line with the Zacks Consensus Estimate, while sales missed the same.
The company is on track to counter the inflationary environment by implementing price increases, improving the profitability of lower-margin products and enhancing its branded portfolio through innovation.
Q4 Highlights
Adjusted earnings per share (EPS) of 23 cents came in line with the Zacks Consensus Estimate and our estimate. The bottom line increased from 20 cents reported in the year-ago quarter.
Sales increased 10.1% year over year to $1,082.7 million. The top line missed the Zacks Consensus Estimate of $1,100.8 million and our estimate of $1,092.4 million. The pricing/mix remained favorable by 16.7%, while volumes fell by 6.6%.
Branded retail sales grew 7.6% to $698.8 million, mainly on improved prices undertaken to counter inflationary pressures. These were somewhat offset by volume declines. Other sales rose 14.9% to $383.9 million on favorable pricing and a solid volume in store-branded products. These were somewhat offset by soft foodservice volumes.
Flowers Foods, Inc. Price, Consensus and EPS Surprise
Flowers Foods, Inc. price-consensus-eps-surprise-chart | Flowers Foods, Inc. Quote
Costs & Margins
Materials, supplies, labor and other production costs (excluding depreciation and amortization) escalated by 110 basis points (bps) to 53.2% on rising input cost inflation.
Selling, distribution and administrative (SD&A) expenses came in at 37.9% of sales, down 110 bps courtesy of reduced incentive compensation, distributor distribution fees as a percent of sales, rent expenses and increased gain on sale of assets. These were somewhat offset by increased bad debt expenses and logistics costs. Adjusted SD&A expenses contracted 100 bps to 37.9% of sales.
Adjusted EBITDA advanced 8.5% to $96.2 million. The adjusted EBITDA margin was 8.9%, which contracted 10 bps.
Image Source: Zacks Investment Research
Financial Aspects
The Zacks Rank #3 (Hold) company ended the reported quarter with cash and cash equivalents of $165.1 million and long-term debt of $891.8 million. Stockholders’ equity amounted to $1,443.3 million.
For fiscal 2022, cash flow from operating activities came in at $360.9 million and capital expenditures amounted to $169.1 million. The company paid dividends worth $186.5 million.
In the second quarter of fiscal 2022, the company increased its share repurchase authorization by 20 million shares. For fiscal 2022, it repurchased $34.6 million shares. The company had 24.4 million shares remaining under the current share repurchase plan.
Meanwhile, capital expenditures are projected in the range of $140-$150 million for fiscal 2023.
Fiscal 2023 Guidance
For fiscal 2023, the adjusted EPS is envisioned in the range of $1.20-$1.30.
For fiscal 2022, the company expects sales in the range of $5.176 $5.242 billion, suggesting a rise of 7.7-9.1% year over year. Adjusted EBITDA is likely to come in the range of $513-$543 million.
The company’s shares have dropped 1.9% in the past three months compared with the industry’s 1.2% decline.
Solid Food Picks
Some better-ranked stocks are Conagra Brands (CAG - Free Report) , Lamb Weston (LW - Free Report) and Mondelez International, Inc. (MDLZ - Free Report) .
Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggests growth of 7.2% and 12.7%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests an increase of 19.6% and 90.4%, respectively, from the year-ago reported number.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2 (Buy). MDLZ has a trailing four-quarter earnings surprise of 7.5%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial-year sales and earnings suggests growth of 9% and 7.5%, respectively, from the corresponding year-ago reported figures.