Flowers Foods income flat in third quarter

by Staff
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THOMASVILLE, GA. — One-time costs related to the Tasty Baking acquisition negatively impacted income at Flowers Foods, but income was still nearly flat during the third quarter.

For the quarter ended Oct. 8, the company had income of $31,019,000, equal to 23c per share on the common stock, down narrowly from $31,166,000, also equal to 23c per share, in the third quarter of fiscal 2010. Sales for the quarter were $675,369,000, up 13% from $597,894,000 during the same quarter of the previous year.

“Flowers Foods achieved strong sales growth in the quarter and delivered solid earnings despite the challenges presented by ongoing economic uncertainty,” said George E. Deese, chairman and chief executive officer. “Our sales growth was driven by a combination of pricing/mix and the contribution from the Tasty acquisition. Earnings were driven by continued strong performance in the D.S.D. segment, although cost increases and sales mix pressured gross margin. In the warehouse segment, margins were negatively impacted as significantly higher ingredient costs were not fully offset by pricing and by the previously announced shift in certain planned volume to the fourth quarter.

“I am pleased that our integration of Tasty is progressing as scheduled and meeting our expectations. During the quarter, we rolled out Tastykake products in our D.S.D. markets across the Southeast and we will continue moving the brand into other Flowers markets.”

Gross margin as a per cent of sales for the second quarter was 45.9%, which compared with 47.1% in last year’s third quarter. The decrease was due primarily to an increase in ingredient and packaging costs as a per cent of sales, partially offset by increases and decreases in workforce-related costs as a per cent of sales, Flowers said.

Meanwhile, the increase in ingredient costs was primarily attributable to flour, sweeteners, shortening and cocoa.

Selling, distribution and administrative costs as a per cent of sales for the quarter were 35.4% compared with 36% in the same quarter last year. Flowers attributed the increase of 60 basis points as a per cent of sales to lower workforce-related costs as a per cent of sales.

Operating margin as a per cent of sales for the quarter was 7.1%, which compared with 7.8% in last year’s third quarter. EBITDA as a per cent of sales for the second quarter was 10.5%, which compared with 11.1% for the same quarter last year.

For the nine months ended Oct. 8, the company had income of $100,390,000, or 73c per share, down 5% from $105,609,000, or 76c per share, during the same period of the previous year. Sales for the period were $2,119,790,000, up 6% from $2,000,636,000 during the same period of the previous year.

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