Flowers Foods, Inc. FLO reported first-quarter fiscal 2026 results, wherein both top and bottom lines beat the Zacks Consensus Estimate. While net sales increased, earnings decreased from the year-ago period’s actuals.
Flowers Foods’ Quarterly Performance: Key Insights
Flowers Foods posted adjusted earnings of 29 cents per share, beating the Zacks Consensus Estimate of 28 cents. However, the bottom line deteriorated 17.1% from 35 cents reported in the year-ago quarter.
Flowers Foods, Inc. Price, Consensus and EPS Surprise
Flowers Foods, Inc. price-consensus-eps-surprise-chart | Flowers Foods, Inc. Quote
Net sales increased 1.1% year over year to $1,571.6 million, surpassing the Zacks Consensus Estimate of $1,563 million. The year-over-year growth was driven by a 2.1% increase in pricing/mix and a 2.3% contribution from the Simple Mills acquisition, partially offset by lower volumes. Volume declined 3.3%, primarily reflecting weakness in branded traditional loaf and store-branded cake and loaf categories, partially offset by growth in snacking, branded keto and vending.
Branded retail sales rose 3.4% to $1,045 million, supported by favorable pricing/mix and contribution from acquisition, partially offset by lower volumes. Pricing/mix increased 4%, volume declined 4.2% and the acquisition contributed 3.6%.
Other net sales decreased 3.1% to $526.2 million, reflecting inflationary pressure on consumer spending and the execution of margin optimization strategies. Pricing/mix declined 1.2%, while volume decreased 1.9%.
Decoding FLO’s Costs & Margin Performance
Gross margin, excluding depreciation and amortization as a percentage of net sales, was 49.4%, a decrease of 50 basis points compared with the prior year. The decline was primarily caused by reduced operating leverage resulting from lower volumes and higher outside product purchases associated with Simple Mills, partially offset by lower ingredient costs related to the acquisition.
Selling, distribution and administrative expenses were 40.9% of net sales, up 10 basis points from the prior-year period. Excluding matters affecting comparability, adjusted SD&A decreased 20 basis points to 39.3% of sales, due to lower marketing expenses and reduced distributor fees as a percentage of sales, reflecting the addition of Simple Mills and its warehouse distribution model.
Adjusted EBITDA decreased 1.8% year over year to $159 million, representing 10.1% of net sales, a decrease of 30 basis points.
FLO’s Financial Snapshot
FLO ended its fiscal first quarter with cash and cash equivalents of $11.5 million and long-term debt of $1,723.8 million. Stockholders’ equity at the quarter’s end was $1,302.4 million.
In the fiscal first quarter, cash flow from operating activities totaled $107.9 million and capital expenditures were $20.6 million.
Fiscal 2026 Outlook by FLO
For fiscal 2026, management expects net sales in the range of $5.163-$5.267 billion, indicating net sales growth between a decline of 1.8% and an increase of 0.2% year over year.
Adjusted EBITDA is projected to be between $465 million and $495 million, while adjusted EPS is expected in the range of 80-90 cents.
Capital expenditures are expected in the range of $115-$125 million.
This Zacks Rank #3 (Hold) stock has dipped 30.8% in the past three months compared to the industry’s decline of 13.8%.
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Stocks to Consider
The Chefs' Warehouse, Inc. CHEF distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. At present, CHEF sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Chefs' Warehouse’s current fiscal-year sales and earnings implies growth of 8.3% and 24.7%, respectively, from the year-ago reported figures. CHEF delivered a trailing four-quarter earnings surprise of 28.9%, on average.
Darling Ingredients Inc. DAR develops, produces and sells sustainable natural ingredients from edible and inedible bio-nutrients. It currently has a Zacks Rank #2 (Buy). DAR delivered a trailing four-quarter earnings surprise of 16.1%, on average.
The Zacks Consensus Estimate for Darling Ingredients’ current fiscal-year sales and earnings indicates growth of 12.3% and 588.2%, respectively, from the prior-year reported levels.
Smithfield Foods, Inc. SFD produces packaged meats and fresh pork in the United States and internationally. It carries a Zacks Rank #2 at present. SFD delivered a trailing four-quarter earnings surprise of 12%, on average.
The Zacks Consensus Estimate for Smithfield Foods’ current fiscal-year sales and earnings indicates growth of 1.3% and 7.5%, respectively, from the prior-year reported levels.
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This article originally published on Zacks Investment Research (zacks.com).