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Flowers Foods, Inc. (FLO - Free Report) reported mixed first-quarter fiscal 2023 results, with the top line increasing year over year and the bottom line declining. Earnings surpassed the Zacks Consensus Estimate, while sales missed the same. Management lowered its guidance for fiscal 2023.
The company countered the inflationary environment by implementing price increases, while its product mix returned to a more normalized level. In the quarter, private-label category sales were strong, although its growth rate moderated.
Q1 Highlights
Adjusted earnings per share (EPS) of 38 cents beat the Zacks Consensus Estimate of 36 cents. However, the bottom line declined from 44 cents reported in the year-ago quarter.
Sales increased 6.9% year over year to $1,534.5 million. The top line missed the Zacks Consensus Estimate of $1,566 million. The pricing/mix remained favorable by 13.6%, while volumes fell 7.3%. Contributions from the Papa Pita buyout, to the tune of 0.6% also aided top-line growth.
Branded retail sales grew 2.5% to $979.3 million, mainly on improved prices undertaken to counter inflationary pressures. These were somewhat offset by volume declines. Other sales rose 15.6% to $555.1 million on favorable pricing, although it was partially offset by volume declines.
Image Source: Zacks Investment Research
Costs & Margins
Materials, supplies, labor and other production costs (excluding depreciation and amortization) escalated by 170 basis points (bps) to 52.2% of sales on rising input cost inflation.
Selling, distribution and administrative (SD&A) expenses came in at 38.6% of sales, in line with the year-ago period’s levels, courtesy of sales rise in excess of wage inflation, reduced incentive compensation and lower distributor distribution fees as a percent of sales. These were somewhat offset by increased marketing expenses and acquisition-related costs.
Adjusted SD&A expenses were 38% of sales, in line with the year-ago period’s levels. Adjusted EBITDA declined 8.7% to $151.1 million. The adjusted EBITDA margin was 9.8%, which contracted 170 bps.
Financial Aspects
The Zacks Rank #4 (Sell) company ended the quarter with cash and cash equivalents of $27.7 million and long-term debt of $1,063.2 million. Stockholders’ equity amounted to $1,461.6 million.
For first-quarter fiscal 2023, cash flow from operating activities came in at $58 million and capital expenditures amounted to $34 million. The company paid dividends worth $49.1 million.
During the quarter, the company paid dividends worth $49.1 million. Capital expenditures are projected in the range of $140-$150 million for fiscal 2023.
Flowers Foods, Inc. Price, Consensus and EPS Surprise
Management lowered its guidance for fiscal 2023. The company expects sales in the range of $5.086- $5.141 billion, suggesting a rise of 5.8-7.0% year over year. The company projected sales in the band of $5.176-$5.242 billion, suggesting a rise of 7.7-9.1% year over year.
Adjusted EBITDA is likely to be in the range of $494-$528 million compared with the earlier view of around $513-$543 million.
For fiscal 2023, the adjusted EPS is envisioned in the range of $1.15-$1.25 compared with the estimate of $1.20-$1.30 projected earlier.
The company’s shares have inched up 1.8% in the past three months compared with the industry’s 6.4% increase.
Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 13.2%, 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 7.1% and 16.5%, 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 47.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal year sales and earnings suggests an increase of 29.6% and 116.8%, respectively, from the year-ago reported number.
Nomad Foods, which manufactures, markets, and sells a range of frozen food products, sports a Zacks Rank 1. NOMD has a trailing four-quarter earnings surprise of 8.5%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial year sales suggests growth of 8%, while earnings suggest a decline of 3.4%, from the corresponding year-ago reported figures.
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Flowers Foods (FLO) Lowers Guidance Despite Q1 Earnings Beat
Flowers Foods, Inc. (FLO - Free Report) reported mixed first-quarter fiscal 2023 results, with the top line increasing year over year and the bottom line declining. Earnings surpassed the Zacks Consensus Estimate, while sales missed the same. Management lowered its guidance for fiscal 2023.
The company countered the inflationary environment by implementing price increases, while its product mix returned to a more normalized level. In the quarter, private-label category sales were strong, although its growth rate moderated.
Q1 Highlights
Adjusted earnings per share (EPS) of 38 cents beat the Zacks Consensus Estimate of 36 cents. However, the bottom line declined from 44 cents reported in the year-ago quarter.
Sales increased 6.9% year over year to $1,534.5 million. The top line missed the Zacks Consensus Estimate of $1,566 million. The pricing/mix remained favorable by 13.6%, while volumes fell 7.3%. Contributions from the Papa Pita buyout, to the tune of 0.6% also aided top-line growth.
Branded retail sales grew 2.5% to $979.3 million, mainly on improved prices undertaken to counter inflationary pressures. These were somewhat offset by volume declines. Other sales rose 15.6% to $555.1 million on favorable pricing, although it was partially offset by volume declines.
Image Source: Zacks Investment Research
Costs & Margins
Materials, supplies, labor and other production costs (excluding depreciation and amortization) escalated by 170 basis points (bps) to 52.2% of sales on rising input cost inflation.
Selling, distribution and administrative (SD&A) expenses came in at 38.6% of sales, in line with the year-ago period’s levels, courtesy of sales rise in excess of wage inflation, reduced incentive compensation and lower distributor distribution fees as a percent of sales. These were somewhat offset by increased marketing expenses and acquisition-related costs.
Adjusted SD&A expenses were 38% of sales, in line with the year-ago period’s levels. Adjusted EBITDA declined 8.7% to $151.1 million. The adjusted EBITDA margin was 9.8%, which contracted 170 bps.
Financial Aspects
The Zacks Rank #4 (Sell) company ended the quarter with cash and cash equivalents of $27.7 million and long-term debt of $1,063.2 million. Stockholders’ equity amounted to $1,461.6 million.
For first-quarter fiscal 2023, cash flow from operating activities came in at $58 million and capital expenditures amounted to $34 million. The company paid dividends worth $49.1 million.
During the quarter, the company paid dividends worth $49.1 million. Capital expenditures are projected in the range of $140-$150 million for fiscal 2023.
Flowers Foods, Inc. Price, Consensus and EPS Surprise
Flowers Foods, Inc. price-consensus-eps-surprise-chart | Flowers Foods, Inc. Quote
Fiscal 2023 Guidance
Management lowered its guidance for fiscal 2023. The company expects sales in the range of $5.086- $5.141 billion, suggesting a rise of 5.8-7.0% year over year. The company projected sales in the band of $5.176-$5.242 billion, suggesting a rise of 7.7-9.1% year over year.
Adjusted EBITDA is likely to be in the range of $494-$528 million compared with the earlier view of around $513-$543 million.
For fiscal 2023, the adjusted EPS is envisioned in the range of $1.15-$1.25 compared with the estimate of $1.20-$1.30 projected earlier.
The company’s shares have inched up 1.8% in the past three months compared with the industry’s 6.4% increase.
Solid Food Picks
Some better-ranked stocks are Conagra Brands (CAG - Free Report) , Lamb Weston (LW - Free Report) and Nomad Foods Limited (NOMD - 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 13.2%, 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 7.1% and 16.5%, 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 47.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal year sales and earnings suggests an increase of 29.6% and 116.8%, respectively, from the year-ago reported number.
Nomad Foods, which manufactures, markets, and sells a range of frozen food products, sports a Zacks Rank 1. NOMD has a trailing four-quarter earnings surprise of 8.5%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial year sales suggests growth of 8%, while earnings suggest a decline of 3.4%, from the corresponding year-ago reported figures.