Thomasville, Ga.-based Flowers Foods, producer and marketer of packaged bakery foods, has announced net income of US$6m, or US$0.2 per share, for its Q2 2002 ended 13 July, compared with US$3.7m, or US$0.12 per share, year on year.
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EBITDA was US$31.9m, up 4.6% from US$30.5m in the same period last year.
Q2 sales were US$378.3m, up 2.7% from US$368.5m year on year reflecting a 6.3% improvement at Mrs. Smith’s, prompted by increased foodservice sales, and a 1% increase at Flowers Bakeries, due primarily to last year’s acquisition of a bakery in Virginia.
EBITDA at Flowers Bakeries improved 12.5% due to reduced costs and a favorable shift in product mix. Mrs. Smith’s EBITDA declined 33.3% due to production issues at the Spartanburg, SC, plant.
Chairman and CEO Amos R. McMullian said: “We are steadily making progress throughout the company. Indications are that the H2 should be improved over last year.”
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By GlobalDataOn 31 May, the company announced a restructuring and the elimination of administrative positions at Mrs. Smith’s. These changes resulted in non-recurring costs in the Q2 of about US$1.3m. The changes should improve Flowers’ annualised EBITDA by about US$13m.
The restructuring, which was effective at the beginning of the Q3, divided the company into three operating groups-Flowers Bakeries, Mrs. Smith’s, and Flowers Snack. Flowers Bakeries, with annual sales of over US$1.1bn, will continue to produce and market fresh breads and rolls for distribution through direct store delivery. Mrs. Smith’s, with annual sales of over US$400m, will focus on the frozen baked product category. Flowers Snack, with sales of about US$150m, will focus on the snack cake business that was previously part of Mrs. Smith’s Bakeries.
The company has lowered its annual sales estimate to US$1.675bn for 2002 and expects EBITDA of US$130m to US$135m and earnings per share (EPS) for the year of US$0.8 to US$0.9. This EPS range does not reflect any impairment charge, which could approximate US$20m to US$30m, related to FAS 142 “Goodwill and Other Intangible Costs.” Flowers expects to complete the goodwill impairment test and record the charge this year.
Consolidated statement of income
(US$000’s omitted, except per share data)
For the 12-Week Period Ended
13 July 2002 14 July 2001
Sales $378,340 $368,461
Materials, supplies, labour and other
production costs 203,832 195,518
Gross margin 174,508 172,943
Selling, marketing and
administrative expenses 142,570 142,493
Depreciation and amortisation 16,655 17,340
Insurance proceeds, net 0 (684)
Severance and other closure charges 1,311 3,135
Income from operations before
interest and taxes (EBIT) 13,972 10,659
Interest expense, net 4,137 5,653
Income before taxes (EBT) 9,835 5,006
Income tax expense 3,786 1,304
Net income $6,049 $3,702
Net income per share $0.20 $0.12
Diluted weighted average shares
outstanding 30,433 30,219
