Flowers sees E.P.S. gain from accelerated repurchase

by Josh Sosland
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Flowers Foods products - Nature's Own bread, Tastykake Kandy Kakes, Cobblestone Bread Co. bread
Flowers Foods said it has entered into an accelerated share repurchase agreement with Deutsche Bank AG.

THOMASVILLE, GA. – An accelerated share  repurchase (A.S.R.) of $120 million of Flowers Foods, Inc. common stock is expected by the company to have an annualized accretive impact on earnings of up to 3c per share.

Flowers on March 16 said it has entered into an accelerated share repurchase agreement with Deutsche Bank AG.

Shares of Thomasville-based Flowers have been under pressure in recent months, giving the company greater buying power in its repurchase program.

The share price declines followed an earnings guidance cut in November and a subsequent financial report in February that showed fourth-quarter profitability falling shy of even the November revisions.

Theoretically, $120 million would purchase about 6.6 million shares of Flowers stock at recent trading levels on the New York Stock Exchange, versus 4.4 million at the 52-week high of $27.26, reached in November. Under the Deutsche Bank agreement, 5.6 million shares will be delivered immediately.

“The final number of shares repurchased will be based on Flowers’ daily volume-weighted stock price over the life of the transaction, less a negotiated discount,” Flowers said.

The purchases will be financed through borrowings on existing Flowers credit facilities and using cash balances. The purchases are part of the existing Flowers share repurchase program, which was raised by 7.1 million shares in November 2014. Since the beginning of January, the company has repurchased approximately 400,000 shares, versus 300,000 in all of 2015. As of March 16 (before the A.S.R.), the balance of the current repurchase authorization stood at 13.3 million shares.

Allen L. Shiver, president and chief executive officer, said the A.S.R. program demonstrates underlying strength at the company.

Allen Shiver, Flowers Foods
Allen L. Shiver, president and c.e.o. of Flowers Foods

“The accelerated share repurchase is a further expression of confidence in Flowers’ cash flow, long-term prospects and ability to generate additional shareholder value,” he said. “Our trusted brands, experienced team,and efficient bakeries have increased our operating cash flow over the past three years by over $100 million, supporting investments in our business and generating strong free cash flow. As evidenced by recent dividend announcements and today’s A.S.R., the company is committed to enhancing total shareholder return over the long term.”

In the final quarter of 2015, diluted weighted average shares outstanding at Flowers were 214,621,000.
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