THOMASVILLE, GA. — Net income of Flowers Foods, Inc. in the year ended Jan. 3 was $119,233,000, equal to $1.28 per share on the common stock, up 26% from $94,615,000, or $1.02 per share. Net sales were $2,414,892,000, up 19% from $2,036,674,000 in 2007.
The wide earnings and sales gains in 2008 were capped by a particularly strong fourth quarter. Net income was $32,086,000, or 34c per share, up 50% from $21,431,000, or 23c per share. Net sales were $621,592,000, up 31%.
"Our strong fourth-quarter results completed an exceptional year for Flowers Foods despite a difficult economic environment," said George E. Deese, chairman, president and chief executive officer. "Our 2008 results show the strength of our business model, strategies, and, most importantly, our team. We delivered robust sales growth driven primarily by increased sales of Nature's Own and Whitewheat breads, recent acquisitions, and positive price/mix shift.
"Our earnings growth was driven by our ongoing efforts to improve our operating and distribution efficiencies as well as our investments in product innovation and quality improvements."
Results for the fourth quarter included a pre-tax impairment charge of $3.1 million related to plant closings. For the year, results included a $2.3 million gain for the sale of a manufacturing facility.
Gross margin in the fourth quarter was 48.3% of sales, versus 48.7% in the same quarter in 2007. A 13% increase in ingredient costs was cited, though the company said several factors mitigated the impact of higher commodity prices — pricing gains, lower packaging and labor costs as a per cent of sales and improved manufacturing efficiencies.
Expanding on an 18.6% sales increase in 2008, Flowers said 10.6 points derived from favorable pricing/mix, and 8 from unit volume gains, of which 5 were from acquisitions and 2 resulted from an additional week.
In a breakdown of results by segment, 2008 EBIT (earnings before interest and taxes) was $185,292,000 in the Direct-Store-Delivery segment, up 26% from $147,127,000 in 2007. Sales were $1,999,293,000, up 21%
For the fourth quarter, D.S.D. EBIT was $49,686,000, up 46% from $33,990,000. Sales were $523,827,000, up 35% from $388,341,000.
In the company’s Warehouse Delivery segment, EBIT in 2008 was $25,666,000, down 1% from $26,046,000 in 2007. Sales were $415,599,000, up 7%.
In the fourth quarter Warehouse Delivery EBIT was $6,400,000, up 24% from $5,175,000. Sales were $97,765,000, up 15%.
Commenting on expectations for the current year, Flowers predicted "another year of sustainable and dependable performance." The company noted that the year will include 52 weeks rather than the 53 in fiscal 2008.
Mr. Deese projected sales growth of 12.6% to 14.5% this year with acquisitions accounting for 7 or 7.5 points of the increase. Sales for the year were forecast at $2,720 million to $2,765 million. With an anticipated net margin of $4.7% to 5% of sales, net income was projected by the company at $127.8 million to $138.3 million. The range is greater than the $124.1 million to $135.3 million projected by the company in its initial 2009 guidance issued in November.
Also in November, the company estimated 2008 earnings of $113.6 million to $117.3 million, a figure topped with the final results announced of $119.2 million.
In early New York Stock Exchange trading Feb. 5 after the results were announced, shares of Flowers were up about 10%, to an intraday peak of $23.62.