recently reported first-quarter 2012 adjusted earnings of 28 cents
per share, in line with the Zacks Consensus Estimate but down 15.2%
from the year-ago level of 33 cents. The year-over-year decline in
earnings was due to input cost pressure.
Total revenue perked up 12.0% year over year to $898.2 million,
thanks to higher volume, favorable net/price mix and positive
contribution from the acquisition of Tasty Baking Co. completed
The company operates under two segments Direct Store Delivery
(DSD) and Warehouse and drives 80% of its revenue from the DSD
segment. During the quarter, sales of the DSD segment increased
14.0% year over year to $737.3 million. Warehouse revenue jumped
3.8% to $160.9 million.
Gross margin plunged 190 bps year over year to 46.7%, due to
higher ingredient and packaging costs. Selling, distribution and
administrative expenses as a percentage of sales dipped 60 bps to
36.8%, benefiting from higher sales prices and lesser
workforce-related costs. However, operating margin contracted 100
bps to 6.6% due to non-recurring expenses associated with the
bakery closure and the Tasty acquisition.
Operating margin of the DSD segment fell 120 bps to 8.7% and the
same at Warehouse segment dipped 130 bps to 6.0%.
During the quarter, Flowers Foods also unveiled its plans to
expand itsOxford, Pennsylvania, bakery for bread production.
The company ended the quarter with cash flow from operations of
$60.1 million, cash and cash equivalent of $186.1 million and share
holders' equity of $781.6 million. During the quarter, the company
repurchased approximately 70,742 shares for $1.4 million.
In April, Packaged bakery Foods Company also issued senior
notes, worth $400 million that will carry interest of 4.375% and
are due to mature in 2022.
The company has trimmed its earnings outlook for 2012 due to
higher costs and interest expense. U.S. baker Flower Foods now
expects earnings to rise 3.5% to 8%, less than its earlier growth
projection of 7% to 12%.
The company remains focused on expansion by acquisition, adding
new bakeries and entering new markets. Additionally, continuous
enhancement of shareholder value also augurs well. In a faltering
economy, the company is streamlining operations and cutting less
productive overhead in order to realize cost savings. However,
input cost inflation and stiff competition continues to remain
Flowers Foods, which competes with
Campbell Soup Co.
), carries a Zacks #3 Rank, implying a short-term Hold rating.
Besides, we are also maintaining our long-term Neutral
recommendation on the stock.
CAMPBELL SOUP (CPB): Free Stock Analysis Report
FLOWERS FOODS (FLO): Free Stock Analysis Report
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