THOMASVILLE, GA. — Net income of Flowers Foods, Inc. in the year ended Dec. 30, 2006, was $81,043,000, equal to $1.31 per share on the common stock, up 32% from $61,231,000, or 96c per share, in fiscal 2005. Net income for 2006 includes a gain from discontinued operations of $6.7 million, or 11c per share. Net income for 2005 included a charge for discontinued operations of $1.6 million, or 3c per share, related to the final settlement of issues associated with the Mrs. Smith’s frozen dessert business, which was sold in 2003.
Sales were $1,888,654,000, up 10% from $1,715,869,000.
"Flowers Foods delivered record results for the fourth quarter and the full year, even as we faced higher input costs and continued to invest in our operations," said George E. Deese, chairman, chief executive and president. "Our earnings performance is evidence that our business model is sound. Our brands are strong, our bakeries efficient, and our direct-store-delivery network is providing extraordinary service. We remain focused on creating value for our shareholders as we continue to execute our strategies. As 2007 unfolds, we expect another year of solid performance."
In the fourth quarter, Flowers posted income of $15,836,000 on sales of $438,178,000, up from $11,732,000 on sales of $396,524,000, respectively, in the same period a year ago.
During the fourth quarter, Flowers said it received insurance proceeds relating to Hurricane Katrina of $800,000, or 1c per share. For the year, income from continuing operations includes $4.5 million, or approximately 5c per share, of insurance proceeds. In all, Flowers said costs incurred during 2006 related to the hurricane were $1.7 million, or 2c per share. The company said it now has settled all claims and does not expect to file any additional claims related to the 2005 hurricanes.
The sales increase of 10% for fiscal 2006 reflects favorable pricing of 7%, favorable mix shifts of 3% and increased volume of 0.2%. The Bakeries Group experienced sales growth of 12% behind volume growth of 6%, increased pricing of 6%, and improved product mix of 0.3%. For the full year, Derst Baking, which was acquired in February 2006, contributed $44.8 million of sales, which is reflected in the Bakeries Group unit volume increase.
The Specialty Group experienced 2006 fiscal sales growth of 4%. The growth was driven by favorable pricing of 8% and a favorable mix shift of 5%, which more than offset a 10% unit volume decrease.
Flowers Bakeries Group earnings before interest and taxes in the year were $126,183,000, up 18% from $106,833,000 in fiscal 2005. Sales were $1,512,889,000, up 12%.
In the fourth quarter of fiscal 2006, Flowers Bakeries EBIT was $25,712,000, up 4% from $24,792,000. Sales were $350,820,000, up 11%.
Flowers Specialty Group EBIT in the full year was $18,544,000, down 15% from $21,742,000. Sales were $375,765,000, up 4%.
In the fourth quarter, Flowers Specialty Group EBIT was $5,676,000, up 150% from $2,267,000 in the same period last year. Sales were $87,358,000, up 7%.
Flowers said its gross margin as a percentage of sales was stable for the year, but eased to 49% from 49.5% in the fourth quarter, as increases in production costs, primarily flour and sweeteners, were partially offset by pricing gains.
For the year, selling, marketing and administrative costs as a percentage of sales were 40.2% compared with 40.6% in fiscal 2006.
During fiscal 2006, Flowers invested $63.6 million in share repurchases, or 2.3 million shares at an average price of $27.35. Since the inception of the stock repurchase plan through the end of fiscal 2006, the company has acquired 11.8 million shares of its common stock for $247.1 million. The plan authorizes the company to repurchase up to 15.3 million shares of common stock.
Flowers updated its guidance for fiscal 2007 and now said it expects sales to be $1.983 billion to $2.040 billion, an increase of 5% to 8%. Net income from continuing operations are expected to be 4% to 4.4% of sales, or $81 million to $87 million, as compared with $74.9 million in fiscal 2006. Earnings per share from continuing operations are expected to be $1.33 to $1.43, Flowers said.