THOMASVILLE, GA. — Net income at Flowers Foods, Inc. in the year ended Dec. 31, 2011, was $123,428,000, equal to 90c per share on the common stock, down 10% from $137,047,000, or 99c per share, in fiscal 2010. Excluding one-time costs of $7.5 million related to the acquisition of Tasty Baking and the closing of a manufacturing facility, e.p.s. in the most recent year was 96c.
Sales in the year were $2,773,356,000, up 8% from $2,573,769,000 in fiscal 2010. Flowers said the increase was attributable to favorable pricing/mix of 3.7 percentage points and contribution from the Tasty Baking acquisition of 5 points, partially offset by smaller volume of 0.9 points.
Flowers said sales of its Nature’s Own brand reached approximately $935 million in fiscal 2011, driven by growth in core and expansion markets.
For the fourth quarter ended Dec. 31, net income was $23,038,000, or 17c per share, down 27% from $31,438,000, or 23c per share. Sales rose 14% to $653,566,000 from $573,133,000.
“Given ongoing challenges in the marketplace, we are pleased to report strong sales growth driven by the Tasty acquisition and our direct-store delivery (D.S.D.) segment,” said George E. Deese, chairman and chief executive officer. “For the fourth consecutive quarter, the D.S.D. segment achieved improved volume trends, reflecting the strength of the Nature’s Own brand and continued growth in new markets, which offset lower sales of regional white breads.
“Tasty exceeded our sales and earnings expectations. In the warehouse segment, higher input costs that were not offset by pricing, lighter-than-expected volumes, and sales mix significantly impacted results. For the quarter and year, higher input costs and sales mix changes in both the D.S.D. and warehouse segments put pressure on earnings and gross margin.
“We remain cautious about the near-term given the input cost pressures we face in the first half of 2012, the ongoing marketplace competitiveness and relatively weak consumer demand. However, the confidence we have in our core business is reflected in our 2012 guidance, and we expect further opportunities as the industry continues to consolidate.”
Gross margin as a per cent of sales for fiscal 2011 was 46.9%, which compared with 47.7% in fiscal 2010. The decrease was due primarily to an increase in ingredient and packaging costs as a per cent of sales, partially offset by higher prices 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, sugar, shortening/oil and cocoa.
Selling, distribution and administrative costs as a per cent of sales for the year were 36.7% compared with 36.4% in fiscal 2010. Flowers attributed the increase of 30 basis points as a per cent of sales to one-time pre-tax costs of $6.2 million associated with the Tasty acquisition and $2 million in costs associated with the closing of a manufacturing facility.
Operating margin as a per cent of sales for fiscal 2011 was 6.8%, which compared with 8% in fiscal 2010. EBITDA as a per cent of sales for the year was 10.2%, which compared with 11.3% for fiscal 2010.
Steve Kinsey, executive vice-president and chief financial officer, said Flowers expects sales growth of 7% to 9% and earnings-per-share growth of 7% to 12% during fiscal 2012.