Flowers Foods Inc. (FLO), a maker of bakery products, on Thursday reported a 27 percent decline in profit for the fourth quarter as higher input costs hurt margins and offset an increase in sales. Both earnings and revenue missed analysts' estimates.
Looking ahead, the Thomasville, Georgia-based company forecasts earnings per share for fiscal year 2012 to increase, but below analysts' expectations. The company said it remains cautious about the near-term due to input cost pressures, the ongoing marketplace competitiveness, and relatively weak consumer demand. Shares of the company declined more than 4 percent in after-hours trading.
Flower Foods' fourth-quarter net income was $23.04 million or $0.17 per share, down from $31.44 million or $0.23 in the prior-year quarter.
Adjusted earnings per share declined to $0.17 from $0.23 per share in the prior-year period. On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.21 per share. Analysts' estimates typically exclude special items.
Sales for the quarter rose 14 percent to $653.57 million from $573.13 million in the year-ago quarter, but missed analysts' consensus estimate of $654.99 million.
The increase in sales reflects net price/mix of 3.8 percent, contributions from the Tasty acquisition of 9.6 percent, and volume increases of 0.6 percent.
However, gross margin as a percentage of sales declined 220 basis points to 45.9 percent from 48.1 percent in the year-ago period, pressured by higher input costs.
Direct-store-delivery or DSD sales rose 17.7 percent and accounted for about 82 percent of sales. Warehouse sales decreased 0.5 percent, but accounted for 18 percent of sales.
For fiscal year 2011, Flower Foods net income declined to $123.43 million or $0.90 per share from $137.05 million or $0.99 per share in the previous year.
Excluding one-time costs of $7.5 million, net of tax, relating to the acquisition of Tasty and the closure of a manufacturing facility in the first quarter, earnings per share for the year declined to $0.96 from $0.99 in the prior year.
Sales for the year grew 7.8 percent to $2.77 billion from $2.57 billion last year.
Analysts expected the company to earn $1.00 per share on revenues of $2.78 billion.
Looking ahead to fiscal year 2012, Flower Foods forecasts earnings per share growth of 7 to 12 percent from adjusted 2011 earnings per share of $0.96, and sales growth of 7 to 9 percent. This implies earnings in a range of $1.03 to $1.08 per share on sales of $2.96 billion to $3.02 billion.
Analysts expect the company to earn $1.11 per share on revenues of $2.98 billion for fiscal 2012.
Deese said, "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."
The company said its board of directors will consider the dividend at its regularly scheduled meeting and any action taken will be announced following that meeting.
FLO closed Thursday's trading at $19.60, up $0.32 or 1.66 percent on 674,310 shares. In after-hours, the stock declined $0.91 or 4.64 percent to $18.69.
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