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FLOWERS FOODS INC (FLO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was mixed: revenue declined 1.4% to $1.554B on lower volume and price/mix, while Adjusted EBITDA grew 1.6% with margin up 30 bps to 10.4%; adjusted EPS was $0.35, down $0.03 YoY .
  • Results were below Wall Street: revenue $1.554B vs $1.600B consensus, adj. EPS $0.35 vs $0.373, and adj. EBITDA $162.0M vs $167.9M; guidance for FY2025 net sales, adj. EBITDA, and adj. EPS was lowered, citing category weakness and tariff risk (see Estimates and Guidance tables) .
  • Strategy execution continued: Flowers closed the Simple Mills acquisition (added $24.3M sales; modestly accretive to adj. EBITDA but dilutive to EPS in 2025) and leaned into innovation (DKB sandwich rolls; Nature’s Own small loaves; Wonder snack cakes) to target faster-growing, better-for-you adjacencies .
  • Management highlighted tariff headwinds (sugar, wheat gluten, palm oil, cocoa) and a weaker category, with recovery likely shifting toward 2026; promotions were increased selectively late in the quarter to drive trial on differentiated brands .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EBITDA and margin improved despite softer sales: adj. EBITDA +1.6% to $162.0M; margin +30 bps to 10.4% on moderating ingredient costs and mix actions .
  • Portfolio and innovation traction: management cited alignment with on-trend, better-for-you products (e.g., Nature’s Own Keto; DKB; Simple Mills) and new product launches (DKB sandwich rolls; Wonder snack cakes; Nature’s Own small loaves) to capture growth adjacencies .
  • Operating cash flow strengthened: cash from operations rose $30.5M YoY to $135.6M; capex declined $7.8M to $25.6M, supporting capital return and flexibility .

What Went Wrong

  • Volume and price/mix pressure: consolidated volume -2.7% and pricing/mix -0.3% outweighed Simple Mills’ +1.6% contribution; branded retail faced volume declines and unfavorable price/mix amid higher promotions .
  • EPS and revenue misses vs consensus alongside lowered FY guide: adj. EPS $0.35 vs $0.373 and revenue $1.554B vs $1.600B; FY 2025 net sales, adj. EBITDA, and adj. EPS ranges were reduced (see Guidance) .
  • Tariffs and macro headwinds: management built a conservative tariff scenario and pointed to broad consumer pressure; CFO expects the larger hit at gross margin despite SD&A savings efforts .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$1,576.8 $1,111.1 $1,554.2
Adjusted Diluted EPS ($)$0.38 $0.22 $0.35
Adjusted EBITDA ($USD Millions)$159.4 $102.4 $162.0
Adjusted EBITDA Margin (%)10.1% 9.2% 10.4%

Segment net sales

SegmentQ1 2024Q4 2024Q1 2025
Branded Retail ($MM)$1,015.1 $696.5 $1,011.3
Other ($MM)$561.7 $414.6 $543.0

KPIs (Q1 2025)

KPIQ1 2025
Pricing/Mix (contribution, consolidated)-0.3%
Volume (contribution, consolidated)-2.7%
Acquisition contribution+1.6%
Materials, supplies, labor & other production costs (% of sales)50.1% (-50 bps YoY)
SD&A (% of sales) / Adjusted SD&A40.8% (+110 bps YoY) / 39.5% (+20 bps YoY)
D&A ($MM)$49.3 (3.2% of sales)
Net Interest Expense ($MM)$14.0 (+$8.4 YoY)
Operating Cash Flow ($MM)$135.6 (+$30.5 YoY)
Capex ($MM)$25.6 (-$7.8 YoY)
Dividends Paid ($MM)$52.3 (+$1.2 YoY)

Estimates vs Actuals (Q1 2025)

MetricConsensusActual
Revenue ($MM)$1,599.7*$1,554.2
Adjusted Diluted EPS ($)$0.373*$0.35
Adjusted EBITDA ($MM)$167.9*$162.0

Values marked with * were retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Feb 7, 2025)Current Guidance (May 16, 2025)Change
Net Sales ($B)FY 2025 (53 wks)$5.403–$5.487 $5.297–$5.395 Lowered
Net Sales ex-Simple Mills ($B)FY 2025$5.180–$5.257 $5.079–$5.170 Lowered
Simple Mills contribution to Net Sales ($MM)FY 2025$223–$230 $218–$225 Lowered
53rd Week contribution to Net Sales ($MM)FY 2025$70–$80 $70–$80 Maintained
Adjusted EBITDA ($MM)FY 2025$560–$591 $534–$562 Lowered
Adj. EBITDA ex-Simple Mills ($MM)FY 2025$526–$554 $504–$529 Lowered
Simple Mills contribution to Adj. EBITDA ($MM)FY 2025$34–$37 $30–$33 Lowered
53rd Week contribution to Adj. EBITDA ($MM)FY 2025$5–$7 $5–$7 Maintained
Adjusted Diluted EPS ($)FY 2025$1.11–$1.24 $1.05–$1.15 Lowered
Adj. Diluted EPS ex-Simple Mills ($)FY 2025$1.18–$1.28 $1.13–$1.22 Lowered
Simple Mills impact to Adj. EPS ($)FY 2025($0.07)–($0.04) ($0.08)–($0.07) More dilutive
53rd Week contribution to Adj. EPS ($)FY 2025~$0.02 ~$0.02 Maintained
Depreciation & Amortization ($MM)FY 2025$175–$185 $170–$175 Lowered
Net Interest Expense ($MM)FY 2025$60–$65 $63–$68 Higher
Effective Tax Rate (%)FY 2025~25% ~25% Maintained
Diluted Shares (MM)FY 2025~212.3 ~212.3 Maintained
Capex ($MM)FY 2025$140–$150 $140–$150 Maintained
Dividend/Share (Quarterly)Ongoing$0.24 (declared 2/14/25) $0.2475 (declared 5/22/25) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24, Q4’24)Current Period (Q1’25)Trend
Category health / consumer pressureQ3: pressured consumer; branded bread outperformed; away-from-home profitability improved . Q4: branded retail pressured by promos; non-retail optimized .CEO: category declines worse than expected; recovery likely 2026 vs 2H25; middle (traditional loaf/white) most exposed .Deteriorated; recovery pushed out
Promotions strategyQ3/Q4: increased promotional activity pressured price/mix in branded retail .More selective promo late in quarter on differentiated brands (e.g., DKB) to drive trial; focus on ROI .Targeted, data-driven
Tariffs / input costsNot a major focus in Q3; Q4 outlook assumed typical commodity moderation .CFO: tariffs broadened beyond N. America exemptions; key exposures include sugar, wheat gluten, palm oil, cocoa; guidance modeled conservatively (10% initially, then 100% of forecasted rate) .New headwind; conservative stance
Innovation / adjacenciesQ3/Q4: portfolio strategy and away-from-home optimization; brand-led share gains .DKB sandwich rolls; Wonder snack cakes; Nature’s Own small loaves and Keto; Simple Mills added .Expanding into faster-growth pockets
Away-from-home / private labelQ3: away-from-home margin improved; volumes soft . Q4: non-retail optimized; volume declines in vending/institutional .Foodservice remains soft, but margins improved; private label unit share up modestly though units down; filling lost bid business with higher-margin wins .Mixed: margin better, volume soft
Network / operationsQ3: Baton Rouge closure costs .Closed an older fresh bread/bun/roll plant as part of ongoing supply chain optimization .Ongoing network optimization

Management Commentary

  • “While none of us here are satisfied with our absolute performance in the quarter, we did hold unit share in a category that faced greater-than-expected declines… we’re continuing to invest in on-trend innovation and targeting significant opportunities in faster-growing categories and adjacencies.” — Ryals McMullian, CEO .
  • “We’ve never been the most highly promoted player... we primarily use [promotions] to drive trial… enhanced trade promotion system capabilities [improve] ROI.” — CEO on promotion strategy .
  • “Category trends are a big consideration in our guidance change… tariffs impact input costs… the majority [of impact] would flow through gross margin; cost savings in SD&A to mitigate.” — Steve Kinsey, CFO .
  • “Tariffs now impact several imported ingredients… sugar, wheat gluten, palm oil, cocoa… we modeled a conservative path” — CFO on tariff exposure and modeling .
  • “We’ve added more small loaf SKUs to address smaller households and value needs; early returns are good.” — CEO on product strategy .

Q&A Highlights

  • Category recovery: Management now expects limited improvement in 2025; focus shifts to 2026 given Q1 category deterioration; Flowers aims to mitigate via space gains, new business, and differentiation in traditional loaves/white bread segments .
  • Promotions: Company leaned in selectively late in Q1 on differentiated brands (DKB) to drive trial, guided by improved trade promotion analytics; remains cautious on heavy promotions to avoid brand devaluation .
  • Tariffs: Guidance reflects a conservative tariff ramp on key ingredients; exposure includes imports from several countries (incl. China); largest impact at gross margin .
  • Channel dynamics: Foodservice volumes soft but margins improving post-restructuring; private label unit share modestly up even as units decline; pursuing higher-margin private label wins to backfill .
  • Network optimization: Closure of an older fresh bread/bun/roll plant consistent with ongoing supply chain initiatives .

Estimates Context

  • Q1 2025 missed consensus on all three key metrics: revenue $1,554.2M vs $1,599.7M*, adjusted EPS $0.35 vs $0.373*, and adjusted EBITDA $162.0M vs $167.9M*; FY 2025 net sales, adj. EBITDA, and adj. EPS guidance were lowered, incorporating weaker category trends and tariff headwinds (detail above) .
  • Estimate revisions: Given the lowered FY ranges (sales down ~1–2% vs prior, adj. EBITDA and EPS lower), consensus will likely come down across revenue, EBITDA and EPS to align with the updated guide and tariff assumptions .

Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term setup is tougher: category declines and tariff risk drove a guide-down across sales, EBITDA and EPS; management’s recovery timing now points more to 2026 than 2H25 .
  • Margin resilience matters: despite top-line pressure, Q1 adjusted EBITDA margin expanded 30 bps on moderating ingredients and portfolio actions; FY guide implies further gross margin pressure offset by SD&A savings .
  • Strategy is pivoting toward faster-growing adjacencies: Simple Mills, DKB snacking/sandwich rolls, Wonder snack cakes, and Nature’s Own small loaves/keto broaden category reach and target premium/better-for-you demand pockets .
  • Watch tariff developments and consumer trends: any moderation from the conservative tariff scenario or improvement in consumer health would be upside to the guide; conversely, prolonged pressure could weigh on margins and volumes .
  • Capital allocation remains supportive: operating cash flow improved; capex contained; dividend increased to $0.2475 quarterly, the 91st consecutive dividend—signaling confidence despite near-term choppiness .
  • Execution catalysts: shelf space gains, new business wins, continued cost savings, and innovation adoption are near-term drivers; track branded retail price/mix, non-retail optimization, and private label mix quality .
  • Stock reaction catalyst: the guide-down and tariff commentary are likely the primary narrative drivers in the near term; signs of category stabilization or clarity on tariff relief would be incremental positives .

Supporting Detail (Q1 Press Release Highlights)

  • Net sales $1.554B (-1.4% YoY); volume -2.7%, price/mix -0.3%, Simple Mills +1.6%; adjusted EPS $0.35 (-$0.03 YoY); adjusted EBITDA $162.0M (+1.6% YoY; margin 10.4%, +30 bps) .
  • Simple Mills in Q1: sales $24.3M; net loss $4.2M; +$3.6M to adj. EBITDA; -$0.02 to diluted EPS .
  • Cash flow from operations $135.6M (+$30.5M YoY); capex $25.6M (-$7.8M YoY); dividends $52.3M (+$1.2M YoY) .