Flowers Foods Q1 Earnings & Revenues Miss Estimates, FY25 View Lowered

Flowers Foods, Inc. FLO reported first-quarter fiscal 2025 results, wherein both top and bottom lines missed the Zacks Consensus Estimate. Both net sales and earnings experienced year-over-year declines. Management revised its full-year 2025 outlook, citing first-quarter performance, a challenging consumer environment and the anticipated impact of higher tariff costs.

Flowers Foods’ Quarterly Performance: Key Insights

Adjusted earnings per share (EPS) of 35 cents missed the Zacks Consensus Estimate of 38 cents. The bottom line also decreased from 38 cents reported in the year-ago quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Flowers Foods, Inc. Price, Consensus and EPS Surprise

Flowers Foods, Inc. price-consensus-eps-surprise-chart | Flowers Foods, Inc. Quote

Sales declined 1.4% year over year to $1,554 million. The top line missed the Zacks Consensus Estimate of $1,603 million. Price/mix declined 0.3%, impacted by increased promotional activity in branded retail. Volumes dropped 2.7%, mainly due to decreases in traditional loaf bread and cake. The Simple Mills acquisition added 1.6%. We estimated the price/mix to be up 1.4% and volumes to decline 1.1% in the first quarter.

Branded retail sales inched down 0.4% to $1,011 million, due to lower volumes and an unfavorable price/mix due to heightened promotional activity. These headwinds were partially offset by contributions from the Simple Mills acquisition. The pricing/mix inched down 0.9%, sales volume decreased 1.9% and the Simple Mills acquisition contributed 2.4%. We anticipated the price/mix and volumes to be down 1.1% each in the fiscal first quarter.

Other sales decrease 3.3% to $543 million, impacted by inflationary pressure on consumer spending and the execution of non-retail margin optimization strategies. While pricing/mix improved 0.4% and volume declined 3.7%. We estimated the price/mix to be up 6% and volumes to decline 1% in the fiscal first quarter.

Decoding FLO’s Costs & Margins Performance

Materials, supplies, labor and other production costs (exclusive of depreciation and amortization) contracted 50 basis points (bps) to 50.1% of sales on moderating ingredient expenses. This improvement was partially offset by lower production volumes, higher workforce-related expenses and increased outside product purchases.

Selling, distribution and administrative (SD&A) expenses were 40.8% of sales, up 110 bps. The increase in SD&A costs as a percentage of net sales was driven by higher workforce-related expenses, acquisition-related costs and vehicle rental fees. These were partially offset by lower distributor distribution fees, savings from cost-reduction initiatives implemented after the fiscal first quarter of the prior year and reduced incentive compensation. Adjusted SD&A expenses were 39.5% of sales, up 20 bps from the year-ago quarter. 

Adjusted EBITDA increased 1.6% to $162 million. The adjusted EBITDA margin was 10.4%, expanding 30 bps. We anticipated an adjusted EBITDA margin increase of 50 bps to 10.6% for the quarter under review.

FLO’s Financial Snapshot

FLO ended its fiscal first quarter with cash and cash equivalents of nearly $7.3 million and long-term debt of $1,790.4 million. Stockholders’ equity at the quarter end was $1,415.6 million.

In the fiscal first quarter, cash flow from operating activities totaled $135.6 million and capital expenditures were $25.6 million. The company paid out dividends worth $52.3 million during this time.

Sneak Peek Into Flowers Foods' Outlook

For fiscal 2025, management now expects net sales in the range of $5.297-$5.395 billion, indicating a 3.8% to 5.7% increase year over year. This forecast is revised from the previous guidance of $5.403-$5.487 billion, implying a 5.9% to 7.5% increase year over year.

Adjusted EBITDA is likely to be in the range of $534-$562 million compared with $560-$591 million projected earlier and $538.5 million recorded in fiscal 2024. 

For fiscal 2025, adjusted EPS is envisioned in the range of $1.05-$1.15 compared with the earlier view of $1.11-$1.24 and $1.28 delivered in fiscal 2024.

Management expects depreciation and amortization in the range of $170-$175 million, while net interest expenses are likely to be $63-$68 million. For fiscal 2025, capital expenditures are expected in the range of $140-$150 million.

This Zacks Rank #3 (Hold) stock has lost 6.6% in the past three months compared with the industry’s decline of 0.2%.

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The consensus estimate for Oatly Group’s current fiscal-year sales and earnings implies growth of 2.7% and 56.6%, respectively, from the year-ago figures.

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