Flowers Foods Q1 2026 Prepared Remarks Earnings Report

Flowers Foods EPS Results

• Actual EPS: $0.29
• Consensus EPS: $0.28
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.35

Flowers Foods Revenue Results

• Actual Revenue: $1.57 billion
• Expected Revenue: $1.58 billion
• Beat/Miss: Missed by -$7.32 million
• YoY Revenue Growth: +1.10%

Flowers Foods Announcement Details

• Quarter: Q1 2026 Prepared Remarks
• Date: 5/21/2026
• Time: After Market Closes
• Conference Call Date: Thursday, May 21, 2026
• Conference Call Time: 4:00PM ET

Flowers Foods (NYSE:FLO) is a U.S.-based producer and distributor of packaged bakery foods. The company makes breads, buns, rolls, snack cakes, tortillas and related baked goods for retail, foodservice and other commercial customers.

Its portfolio includes nationally recognized brands such as Nature’s Own, Dave’s Killer Bread, Wonder, Tastykake, Canyon Bakehouse and Mrs. Freshley’s. Flowers Foods also supplies baked goods through regional and local brands, serving grocery stores, mass merchants, club retailers, restaurants and foodservice distributors.

Founded in 1919 and headquartered in Thomasville, Georgia, Flowers Foods operates bakeries and distribution facilities across the United States. The company’s products are sold nationwide through retail and foodservice channels. Flowers Foods is led by President and Chief Executive Officer Ryals McMullian.

Flowers Foods Q1 2026 Prepared Remarks Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Flowers Foods said first-quarter execution and cost discipline helped deliver bottom-line results ahead of market expectations, even though comparable sales fell 1.2% on softer trends.
• Negative Sentiment: Traditional loaf volumes remained pressured by heavy promotions, consumer trade-down, and macro weakness, with management saying the category is still soft and near-term top-line trends remain cautious.
• Positive Sentiment: The company highlighted strong momentum in better-for-you and snacking brands, including Nature’s Own Keto, Dave’s Killer Bread, Canyon Bakehouse, and especially Simple Mills, which posted 9% retail sales growth and is expected to accelerate through 2026.
• Positive Sentiment: Management emphasized the Nature’s Own relaunch with fewer, simpler ingredients and a major marketing push, calling it a key step in strengthening the brand’s position in the better-for-you segment.
• Negative Sentiment: Flowers cut its annual dividend to $0.50 per share to reduce leverage and interest expense, and it ended the quarter at 3.2x net leverage, though management expects the move to improve financial flexibility and fund growth investments.

Presentation

[J.T. Rieck, EVP of Finance and Investor Relations at Flowers Foods]

Hello everyone. This is J.T. Rieck, EVP of Finance and Investor Relations. Welcome to the pre-recorded discussion of Flowers Foods first quarter of 2026 results. We will host a live Q&A session Friday, May 22nd at 8:30 A.M. Eastern. Further details about the live call, along with our earnings release, a transcript of these recorded remarks, and a related slide presentation are posted on the investor section of flowersfoods.com. Before we get started, keep in mind that the information presented here may include forward-looking statements about the company's performance. Although we believe these statements to be reasonable, they are subject to risks and uncertainties that could cause actual results to differ materially. In addition to what you hear in these remarks, important factors relating to Flowers Foods business are fully detailed in our SEC filings. Providing remarks today are Ryals McMullian, Chairman, CEO, and Anthony Scaglione, our CFO.

[J.T. Rieck, EVP of Finance and Investor Relations at Flowers Foods]

Ryals, I'll turn it over to you.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

Thanks, J.T., and thanks to everyone for joining us today. In the first quarter, with disciplined cost management, the team executed well to offset softer top-line trends and navigate challenging market dynamics to deliver bottom-line results ahead of market expectations. Reported sales growth included an incremental contribution from Simple Mills. On a comparable basis, sales declined 1.2% versus prior year. While near-term conditions remain pressured, we are confident in our ability to navigate the current environment given the strength of our brand portfolio, our expanding presence in better-for-you categories, our scaled supply chain and DSD network, and a balance sheet that we are actively strengthening. The comprehensive review of our brand portfolio, supply chain, and financial strategy announced last quarter continues to gain momentum. This work has sharpened our focus on a clear set of strategic imperatives.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

These are prioritizing our strongest brands, making targeted investments to reignite growth, and realigning capital allocation to strengthen our balance sheet while increasing flexibility to pursue future growth opportunities. A key proof point of this progress is the relaunch of Nature's Own, now featuring fewer, simpler ingredients. This milestone represents a significant achievement for both our team and our customers. With this relaunch, Nature's Own becomes the largest Non-GMO Project Verified loaf product in the market, a first at a national scale, and reinforces our leadership in the better-for-you segment. We've identified and are advancing targeted initiatives to drive efficiencies across our supply chain operations while taking actions to further strengthen our balance sheet. Collectively, these efforts are positioning the business to deliver more consistent, sustainable growth and improve profitability over the long term.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

Now let me provide more details of our performance and our brand categories in the quarter. A key strategic priority is sharpening our focus on our portfolio of leading differentiated brands to unlock growth opportunities in an otherwise soft category. This focus is delivering encouraging results, particularly in premium loaf, buns and rolls, breakfast, cake, and snacks, which are helping to offset continued softness in the traditional loaf category where we underperformed in both dollars and units. Shifts in marketing investment, ongoing macroeconomic pressure on consumers, and an intensely promotional pricing environment impacted our market share in the traditional loaf segment in the quarter. Elevated consumer costs combined with heightened promotional activity have driven increased trade-down behavior toward lower-priced offerings and value brands. While the category remains pressured, we don't view the current promotional environment as sustainable over the long term.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

In fact, in select markets, we're beginning to see early signs of improvement as pricing gaps have narrowed and our relative competitiveness has strengthened. Importantly, we're acting through several initiatives that we believe will strengthen our competitive position and improve performance over time. First, we are excited about the relaunch of Nature's Own, supported by a broad integrated marketing campaign designed to reinforce the brand's differentiated value proposition and deepen consumer engagement. The relaunch also includes half loaves, aligning more closely with evolving consumer preferences around fewer and simpler ingredients, freshness, portion size, and affordability. In addition, we sharpened price points within our Wonder Bread portfolio to help narrow pricing gaps in key areas of the category. While near-term pressures remain, we believe these actions position us to improve our trajectory over time. Let me provide a little additional context on the Nature's Own relaunch.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

This marks the first major relaunch of our flagship brand in well over a decade and represents the next step in its long history of innovation since its introduction in 1977. Grounded in extensive consumer insights, the relaunch further strengthens Nature's Own position in the better-for-you segment with simpler ingredients and Non-GMO Project Verified products. These enhancements better align the brand with the evolving needs of today's consumers while further differentiating us from the competition. Supporting the relaunch, this week we announced a nationwide 360-degree marketing campaign featuring actor and former WWE star John Cena as the brand's Breaducator. The campaign highlights the brand's refreshed positioning around simpler ingredients, Non-GMO Project Verified products, and other better-for-you attributes that increasingly resonate with health-conscious consumers.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

John's broad appeal and strong favorability make him a highly effective ambassador to communicate these benefits in a compelling and accessible way while naturally reinforcing themes of strength, wellness, and healthier living. His longstanding relationship with the Make-A-Wish Foundation also aligns closely with Flowers' values and our own commitments to supporting that organization, further enhancing the authenticity and purpose behind the partnership. We designed this campaign to engage consumers across the entire path to purchase and clearly communicate the product's key attributes at shelf. The early response from our retail customers and DSD partners is encouraging. We believe these efforts will further reinforce Nature's Own's leadership position in the category. We also continue to strengthen our position in the category with leading brands in the organic, gluten-free, and keto segments.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

In organics, Dave's Killer Bread remains the number one brand and sustained market share with strong momentum in the breakfast segment, driven by our recent DKB Mini Bagels launch. Canyon Bakehouse also maintained its share position in the category and continues to be the number one choice for consumers looking for great taste and a gluten-free option. Nature's Own Keto remains the leading brand in this growing segment and delivered strong growth this quarter, gaining 180 basis points of unit share and 250 basis points of dollar share. As consumers look to supplement their consumption with keto or protein options, we are strategically positioning to meet those needs with our offerings. Our comprehensive review affirms our opportunity within snacks, where building on our Better For You snacking platform, anchored by Simple Mills and Dave's Killer Bread, remains a strategic priority.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

Simple Mills delivered growth ahead of our expectations in the quarter, supported by broad-based momentum across the portfolio, strong underlying consumer demand, and positive initial response to this year's innovation launches. Retail sales increased 9%, driven by strength in the cookies and crackers categories, reinforcing the resilience and appeal of the brand. Cookies grew 43% and crackers grew 3% in the quarter, both outpacing their respective categories and maintaining the number two position. This performance was driven by a combination of distribution expansion and velocity gains across both food and mass channels. Importantly, our recent innovation launches are performing at or above expectations, providing additional confidence in the sustainability of Simple Mills' growth trajectory, which we are forecasting to accelerate in the balance of 2026 as the innovation items gain momentum.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

Suffice it to say, we're pleased with the strong momentum at Simple Mills and confident in the brand's long-term growth opportunity. Our Dave's Killer Bread organic snack bars continue to perform well in the nutritional snack bar subcategory, driving increases in both units and dollars versus last year and holding share. Additionally, DKB's Amped-Up Protein Bars are resonating with consumers seeking higher protein options and functional benefits. In the breakfast segment, we continue to build momentum in the quarter, delivering 20 basis points of unit share gains and 40 basis points of dollar share gains. This performance extends the strong track record of both Wonder and Dave's Killer Bread and reinforces our confidence in our ability to drive continued share gains over time. In sandwich buns and rolls, Wonder experienced a modest decline in unit share, down approximately 30 basis points versus last year.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

However, this was largely offset by strong performance from Nature's Own and Dave's Killer Bread, both of which delivered gains in unit and dollar share during the quarter. Strengthening our connection with both customers and consumers is key to sustaining the relevance of our brands. One way we're doing this is through purpose-driven, community-focused partnerships. We're proud to support the U.S. military, and through our Deploy the Joy shopper campaign, we expect to contribute more than $3 million to the USO by the end of this year since launching the partnership in 2018. This demonstrates our strong commitment to the communities we serve while deepening emotional engagement with our brands. Turning now to our cake business, which is showing improved performance driven by the launch of our Wonder cake products last year. With incredibly strong brand recognition, Wonder's line of cake products has continued to revitalize performance in the category.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

In the first quarter, while cake category sales declined 1.4%, Flowers' cake sales grew 6%, driven by Wonder unit share increasing 120 basis points. Profitability in our cake business improved meaningfully year to date, driven by disciplined pricing, mix shifts towards higher-margin branded items, and ongoing operational efficiencies in our bakeries. We remain optimistic in the power of our brands and the innovative products we're bringing to market, the overall demand environment for the traditional loaf segment, which is approximately 38% of our branded portfolio, remains soft. Cost control is a top priority. The team made measurable progress in the first quarter and reduced SG&A as a percentage of sales. This improvement was driven by enterprise-wide cost actions, including effective management of input costs, optimization of marketing expenses, and a good overall expense management across corporate departments.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

As I have emphasized, in addition to our cost savings efforts, we are continuing to invest in the business and in the successful execution of our portfolio strategy. Increasing the mix of higher-margin branded retail products is a critical driver of long-term growth and margin expansion. Our portfolio review reaffirmed the strength of our brand leadership and reinforced our confidence in our strategy to extend that leadership over time. At the same time, we recognize the continued challenges in the consumer environment and remain disciplined in how we prioritize and deploy investments. This brings me to capital allocation. As we noted on our previous call, a key component of our comprehensive review was an evaluation of our capital structure, balance sheet, and financial flexibility through the lens of our growth agenda and long-term shareholder value creation.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

To execute our strategy from a position of strength, we're resetting our dividend to an annual rate of $0.50 per share. This action allows us to reduce leverage and interest expense, enhance financial flexibility, and create capacity to invest behind our leading brands and capabilities to drive above-category growth. As we increase available capital to reinvest in the business, we will take a disciplined and balanced approach to capital allocation, prioritizing high-return investments while continuing to return capital to shareholders. Importantly, we remain committed to maintaining a sustainable dividend as a core component of our overall shareholder value proposition. Now, Anthony will cover the details of the quarter, and then I'll close with comments on how we're thinking about our long-term strategy and our outlook for the current business environment. Anthony?

[Anthony Scaglione, CFO at Flowers Foods]

Thank you, Ryals. As Ryals discussed earlier, our comprehensive review of our brand portfolio, operations, and financial strategy is sharpening our focus on where and how we compete, how we serve our customers, and how we allocate capital to maximize our long-term potential. While it's still early in this process, we are encouraged by the progress we are making. Last quarter, we made a decision to deprioritize two regional brands to focus on higher value opportunities, and our review is ongoing as we continue to actively evaluate and optimize our portfolio to support long-term value creation. Operationally, we have realigned our DSD reporting structure and are continuing to review additional opportunities to strengthen P&L alignment across the business. At the same time, we are exploring targeted applications of AI tools to enhance decision-making, drive productivity, and unlock deeper, more actionable insights into our performance.

[Anthony Scaglione, CFO at Flowers Foods]

Another key component of our comprehensive review is ensuring we have the financial flexibility to adequately fund our most promising growth initiatives while allocating capital in a disciplined manner to enhance long-term shareholder value. With that in mind, I'd like to provide additional context around the dividend decision and how it supports our balance sheet objectives and near-term capital priorities. As Ryals mentioned, we are resetting the dividend to an annualized rate of $0.50 per share. This action is expected to free up meaningful cash flow, which we intend to primarily direct toward debt reduction in the near term as we continue to manage our investment-grade profile. At quarter end, net leverage was 3.2x adjusted EBITDA. Our objective is to reduce leverage to below 3x on a sustainable basis, and we expect the dividend reset to be an important lever in achieving that goal.

[Anthony Scaglione, CFO at Flowers Foods]

Importantly, this action goes beyond improving leverage metrics. It creates incremental capacity to invest behind our most promising brands and growth initiatives while enhancing overall financial flexibility. At the same time, it allows us to maintain an attractive current yield for shareholders during this period of strategic transformation. Our capital allocation framework remains anchored in a few key priorities: reducing debt, investing in our core brands, modernizing our supply chain, and supporting our longer-term portfolio transformation. As we move forward, we will continue to concentrate resources on the brands and categories with the strongest potential to drive growth and share gains while ensuring we effectively meet consumer needs across a range of price points and value tiers. Now turning to our Q1 2026 results. Net sales increased 1.1% from the prior year period. Price mix increased 210 basis points, benefiting from pricing taken at the end of last year.

[Anthony Scaglione, CFO at Flowers Foods]

Volume declined 3.3%, largely due to pressures in branded traditional loaf and store-branded cake and loaf. That softness was partially offset by growth in snacking, branded Keto, and vending. Breaking this down further, branded retail sales rose 3.4%, driven by positive price mix and a contribution from the Simple Mills acquisition, partially offset by lower volume. Other net sales decreased 3.1% on lower volume in store-branded retail sales, partially offset by improved non-retail sales. Gross margin as a percentage of sales, excluding depreciation and amortization, was 49.4%, a 50 basis point decrease to last year. This decrease was driven by reduced operating leverage due to lower volumes and increased outside purchases of products related to Simple Mills, partially offset by lower ingredient costs also associated with Simple Mills.

[Anthony Scaglione, CFO at Flowers Foods]

On a GAAP basis, SG&A expenses as a percentage of sales were 40.9%, a 10 basis point decrease over the prior year period. The slight decrease was due to lower distributor fees as we converted to an employee-based model in California and the addition of Simple Mills, partially offset by higher workforce-related costs from the California transition, as well as the impact of overall incentive compensation compared to prior year. Greater legal settlements and restructuring-related implementation costs were also a factor, partially offset by the prior year acquisition costs. On an adjusted basis, SG&A was 39.3% of net sales, a 20 basis point decrease. The reduction was driven by lower marketing and lower distributor fees as a percentage of sales from the addition of Simple Mills, given its warehouse distribution model.

[Anthony Scaglione, CFO at Flowers Foods]

The organization has also stayed vigilant on costs. This remains a key focus area as we navigate the balance of the year. GAAP diluted EPS for the quarter was $0.20, a $0.05 decrease over the prior year period. Excluding the items affecting comparability detailed in our release, adjusted diluted EPS in the quarter was $0.29, compared to $0.35 in the prior year period. Turning now to our balance sheet and cash flow. As I discussed earlier, we are committed to maintaining a strong balance sheet as we continue to navigate a challenging macro environment. This financial strength remains a priority, and we have taken recent steps to improve our balance sheet, securing a new $400 million delayed draw facility to fund the maturity of our bonds coming due in October of 2026, completely de-risking that maturity.

[Anthony Scaglione, CFO at Flowers Foods]

Turning to cash flow, we generated cash flow from operating activities of $108 million in the first quarter, a decrease of $28 million over the prior year period. Capital expenditures were $21 million in the quarter, a decrease of $5 million, and dividends paid were $54 million in the quarter. Having spent time reviewing the maintenance and growth initiatives, we expect total capital expenditures in 2026 in the range of $115 million-$125 million. For the balance of 2026, we are reiterating our guidance. Our team remains focused on disciplined execution, controlling what is within our control, and delivering against our strategic and financial objectives while maintaining an appropriate level of caution given the external environment. From a macro perspective, we continue to closely monitor the impact of inflation on consumer behavior, as well as cost-related pressures across the business.

[Anthony Scaglione, CFO at Flowers Foods]

This includes potential impacts to import costs from tariffs, where we are collaborating with suppliers to mitigate increases. We are also monitoring key input costs such as diesel fuel, edible oils, and packaging resin, and we are actively offsetting some of these pressures through productivity and other cost management initiatives. That said, we are pleased by the continued evolution of our product portfolio, which is increasingly positioned to deliver value across a broad range of price points and consumer needs. We remain committed to investing behind our brands to enhance value and relevance, highlighted by the recent relaunch and reformulation of Nature's Own. Overall, while we are encouraged by the progress we are making against our comprehensive review, we remain cautious on the near-term top-line outlook, given category trends and ongoing pressure on the consumer.

[Anthony Scaglione, CFO at Flowers Foods]

At the same time, we are confident in our ability to remain disciplined on cost and to take the necessary actions to further evolve our operating model, strengthen execution, and position the business to deliver improved performance over time. Thank you. Now I'll turn it back to Ryals.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

Thank you, Anthony. Now I'd like to provide some perspective on our long-term strategic direction and how we are positioning the business to navigate the current environment and drive sustainable value. A key insight from our comprehensive review is the need to further sharpen our focus, strengthening our core brands, enhancing demand generation and supply chain capabilities required to outperform in the market, and maintain discipline in how and where we allocate capital. Our commitment to investing behind our strongest brands is already evident in the relaunch of Nature's Own. At the same time, we're working to reshape the breads, buns, and rolls category by leaning into faster-growing, better-for-you segments. We continue to build on our leadership in specialty offerings, including our position as the number one keto bread brand nationally, while expanding our presence in functional innovation through the national launch of protein breads and buns.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

These products align with evolving consumer preferences and represent important drivers of future growth. To further strengthen demand generation, we are advancing our revenue growth management capabilities and leveraging the scale and reach of our DSD and IDP networks in close partnership with our customers. At the same time, we remain focused on disciplined cost management and operational efficiency to deliver consistent performance in a challenging environment. Finally, our disciplined approach to capital allocation and cost management is enhancing financial flexibility and enabling us to invest in the highest return opportunities. To drive productivity, we will continue to evaluate and optimize our cost structure and organizational alignment considering current category dynamics, particularly in light of the rapidly developing capabilities enabled by AI. Before I close, I'd like to provide perspective on the current operating environment.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

While we're pleased with our execution across the P&L this quarter, top-line trends remain under pressure, and we are approaching the near term with an appropriate level of caution. That said, we continue to see areas of resilience and growth within our portfolio. Performance remains relatively strong in snacking and other adjacent categories, as well as in products with clear points of differentiation. These trends reinforce our strategy to pivot towards faster-growing segments while continuing to support our core business. From a consumer standpoint, many of the dynamics we highlighted last quarter persist. Inflationary pressures continue to impact household budgets, driving increased price sensitivity and more selective purchasing behavior. We are seeing ongoing trade-offs across price tiers, as well as channel shifts towards club and other value-oriented outlets. At the same time, health and wellness trends continue to shape demand.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

Consumers are gravitating towards products with simpler ingredients and perceived functional benefits while moderating consumption in certain traditional center store categories. This reinforces our focus on innovation and renovation, including the transformation of Nature's Own with fewer, simpler ingredients and our continued expansion into better-for-you offerings. In response, we're maintaining a balanced and disciplined approach. We're actively managing pricing and promotional spending with a clear focus on return on investment while optimizing our marketing investments to prioritize the highest-impact opportunities. At the same time, we're maintaining tight control over costs, including commodities and overhead, to help mitigate top-line pressure. Looking ahead, we will continue to make progress on the comprehensive review. While we expect the environment to remain challenging in the near term, we are confident in our ability to navigate these dynamics.

[Ryals McMullian, Chairman and CEO at Flowers Foods]

Our strategic priorities, combined with disciplined cost management, position us to offset category pressures and drive sustainable, profitable growth over the long term. Finally, I want to thank our team for their continued focus and execution. Their commitment is critical as we navigate the current environment and build a stronger foundation for future growth. That concludes our prepared remarks.

Participants

Executives

• Anthony Scaglione, CFO
• J.T. Rieck, EVP of Finance and Investor Relations
• Ryals McMullian, Chairman and CEO