Flowers shares long-term plans for acquired Hostess plants
March 27, 2014
by Eric Schroeder
NEW YORK — Slow and steady is the strategy Thomasville, Ga.-based Flowers Foods Inc. has adopted for the reopening of plants acquired as part of its purchase of certain Hostess bread assets last year.
During an annual analyst day event held March 20 at the New York Stock Exchange, Bradley K. Alexander described a plan that has Flowers opening between five and seven bakeries over the next five years. Mr. Alexander is president of Flowers Bakeries/D.S.D. Segment.
Flowers acquired 20 idled baking plants and other “bread assets” from Hostess Brands in July 2013 for $355 million. The first of the bakeries to reopen was in Henderson, Nev., in late November 2013. Built in 2004, the Henderson facility is the newest of the facilities acquired by Flowers from Hostess. The plant produces Nature’s Own for markets in southern Nevada and parts of California.
“It was a successful start-up and an important part of our solution for production capacity for California,” Mr. Alexander said.
More recently, Flowers on March 24 said it will open a bakery in Knoxville, Tenn., in late May. The plant, which was one of several that were upgraded by Hostess in the early 2000s, will operate with one bread line and will be renamed Flowers Baking Co. of Knoxville. The bakery initially will employ about 60, but the number is expected to increase to more than 100 as more production shifts are added, Flowers said.
During the analyst day presentation, Mr. Alexander said the Knoxville bakery will “help support capacity needs in that market.”
“Our growth in this area has been strong,” he said.
In the next two years timeframe — 2015-16 — Mr. Alexander said Flowers expects to open two to three bakeries to support its sales growth, with another two to three bakeries set to open in 2017-18.
But not all the former Hostess plants will be reopened. Mr. Alexander said Flowers has listed 9 bakeries and 21 depots for sale.
“We have contracts pending on several of those properties, and several transactions for sale of the depots are already completed,” he said. “On an annual basis, our carry-in costs would be reduced by about $10 million when the 9 bakeries and the depots are sold. Depending on the time of the sales transaction, we could see improvement in 2014 of as much as $5 million. We have inventoried all equipment and parts for the possible use in our other bakeries.”
Mr. Alexander did not disclose the locations of the bakeries that are expected to be opened or of those that are currently for sale.