THOMASVILLE, GA. — A busy quarter that included the acquisitions of ButterKrust Bakery and Holsum Bakery Inc. culminated with a second-quarter earnings gain of 8% at Flowers Foods, Inc. Net income in the second quarter ended July 12 totaled $23,949,000, equal to 26c per share on the common stock, up from $22,190,000, or 24c per share, in the same period a year ago. Net income in the most recent quarter included a gain of $700,000 related to the closing of a snack facility in Atlanta.
Net sales for the quarter rose 13% to $540,656,000, up from $477,838,000. Branded retail sales increased nearly 16% in the quarter, driven by Nature’s Own soft variety and premium bread, Nature’s Own Whitewheat bread and regional white bread brands.
In updating guidance for the year, Flowers said its earnings in 2008 would be in the range of $109.2 million to $114.7 million, up from earlier guidance of $106.6 million to $113.6 million. Flowers also raised its outlook for sales to $2.4 billion to $2.425 billion, up from $2.22 billion to $2.271 billion.
"Sales for the quarter showed growth across all categories, with our retail brands performing very well," said George E. Deese, chairman, president and chief executive officer. "Our team continues to be successful in introducing new products, expanding our geographic reach, and maintaining brand loyalty while driving through price increases. As previously announced, our steepest commodity cost increases for the year hit during the second quarter and had a short-term impact on margins. However, as evidenced by our updated guidance, we expect to deliver good results for the full year."
Mr. Deese also spoke highly of the company’s just completed acquisitions of Holsum Bakery and ButterKrust Bakery, which combined are expected to add approximately $220 million in annualized sales.
"Holsum will drive Flowers’ market expansion in Arizona, Nevada, and parts of California with a broad spectrum of outstanding products and brands," Mr. Deese said. "Holsum operates two highly efficient bakeries, has an experienced and talented team, and operating strategies similar to Flowers’ strategies. ButterKrust has a fine team and a state-of-the-art bakery with available production capacity to relieve capacity pressures in our bakeries that serve the rapidly growing Florida market. We expect both companies to strengthen Flowers Foods and help create value for shareholders over the long term."
In the six months ended July 12, net income totaled $59,732,000, or 65c per share, up 18% from $50,683,000, or 55c per share, in the same period a year ago. Net sales rose 12% to $1,217,363,000.
Despite the gains, the quarterly results failed to meet many analysts’ expectations, leading to declines in early trading on the New York Stock Exchange. After closing at $31.97 on Aug. 13, Flowers’ shares fell as much as 19%, to $25.97, in early trading on Aug. 14.