Flowers Foods: Volumes Down, Income Up In ‘Mixed’ Q4 Results

After starting the year announcing its intention to add Simple Mills to its portfolio of brands, Flowers Foods reported “mixed” fourth-quarter and full-year 2024 earnings as it goes deeper in better-for-you (BFY) baked goods.

• Q4 net sales fell 1.6% to $1.1 billion. Full-year sales increased 0.2% to $5.1 billion.
• Across both Q4 and FY2024 volume dropped 2.5% and 1.7%, respectively.
• Adjusted EBITDA increased 6.3% to $102.4 million in Q4 and 7.3% to $538.5 million in FY2024.
• Outlook for FY2025 has net sales between $5.40 billion to $5.48 billion with adjusted EBITDA at $560 million to $591 million.

“Our financial guidance is cautious given the potential for tariffs, commodities volatility, higher promotional activity and continued weak consumer demand,” said Ryals McMullian in prepared remarks.

The company did not go into detail about its plans for Simple Mills due to the deal still going through customary regulatory approval and closing conditions, but “expects it to go through soon,” McMullian said. “We’re very, very bullish on this business and wouldn’t have paid the premium on it if we weren’t.”

Flowers’ leadership said it will take “a few months” to ramp up as Simple Mills is integrated into the distribution and innovation pipelines. The “ample growth opportunities” for Simple Mills across cookies, crackers, baking mixes and snack bars exemplify Flowers Foods’ focus on the BFY category where sales are growing.

In the earnings presentation, Flowers Foods called out Simple Mills’ “scaled, BFY snacking platform” as an opportunity to meet mainstream consumers efficiently. Simple Mills partial-year net sales were forecast between $233 million and $230 million.

The deal comes as Flowers sees consumer demand shift from traditional loaf breads and sweet baked goods to “differentiated and premium items.” Calling out Canyon Bakehouse and Dave’s Killer Bread specifically, the company is skewing investments and trade spend toward organics, keto, buns and rolls and gluten-free options to “offset the softness” in other areas of the portfolio, McMullian said.

Addressing the headwinds it faces with indulgent baked goods “straight on,” Flowers is also readying to launch Wonder snack cakes and bring further investment to Dave’s Killer Bread snack options.

Along with this emphasis on BFY options, Flowers leadership directly referenced the opportunity in GLP-1 drug users and how the company is “shaping its portfolio to meet that new consumer that is taking those medications,” said McMullian. “A lot of these people who are on GLP-1s will be searching for items just like Simple Mills.”

The company remains focused on profitability over volume growth and has prioritized its supply chain as a key area to be cost-efficient. Flowers has been implementing Initiatives to reduce production scrap, improve manufacturing and optimize its transportation network.

Company leadership teased that it might not be done with M&A opportunities and is exploring BFY and snacking brands to diversify the business’ “category exposure and margin prospects.”