Flowers Meals, Inc. (NYSE:FLO) This fall 2022 Earnings Name Transcript February 10, 2023

Operator: Good day and thanks for standing by. Welcome to the Flowers Meals Fourth Quarter and Fiscal Yr 2022 Outcomes Convention Name. Please be suggested that immediately’s convention is being recorded. I’d now like at hand the convention over to your speaker immediately, J. T. Rieck, Government Vice President of Finance and Investor Relations. Please go forward.

J. T. Rieck: Thanks, Tanya and good morning. I hope everybody had the chance to evaluate our earnings launch, take heed to our ready remarks and examine the slide presentation that had been all posted yesterday night on our Investor Relations web site. After immediately’s Q&A session, we may also put up an audio replay of this name. Please notice that on this Q&A session, we could make forward-looking statements in regards to the firm’s efficiency. Though we imagine these statements to be affordable, they’re topic to dangers and uncertainties that would trigger precise outcomes to vary materially. Along with what you hear in these remarks, vital components referring to Flowers Meals’ enterprise are totally detailed in our SEC filings. We additionally present non-GAAP monetary measures for which disclosure and reconciliations are offered within the earnings launch and on the finish of the slide presentation on our web site.

Photograph by Mink Mingle on Unsplash

Becoming a member of me immediately are Ryals McMullian, President and CEO; and Steve Kinsey, our CFO. Ryals, I’ll flip it over to you.

Ryals McMullian: Thanks, J. T. Good morning, all people. Thanks for becoming a member of the fourth quarter name. I’m actually happy with our accomplishments in 2022 and would as soon as once more wish to thank our Flowers staff for his or her laborious work in making that efficiency doable. Regardless of the difficult macroeconomic setting, we generated file gross sales, we superior our innovation pipeline and we made vital progress with our digital and provide chain initiatives. And we count on to construct on that progress this yr in 2023. We might be making extra investments in digital and provide chain in addition to advertising and marketing assist for the DKB bar launch. Though these investments, alongside continued inflationary pressures, will influence our near-term outcomes, I’m assured by enhancing our already robust basis we’re positioning the corporate for future long-term success. So with that, Tanya, we’re able to take questions.

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Q&A Session

Operator: Definitely. Our first query will come from Invoice Chappell of Truist. Your line is open.

Invoice Chappell: Thanks. Good morning.

Ryals McMullian: Good morning, Invoice.

Invoice Chappell: Ryals, might you give us a bit of extra shade on this sort of stepped up advertising and marketing behind the snack bars? I assume it had been rising and been in check market has been doing nicely, however we didn’t actually have a form of a quantification of how large it’s or how large is it anticipated to be this yr? And possibly you could possibly speak about what and when is being invested behind the model form of what sort of influence that’s having on gross margin or on earnings particularly versus simply form of total model spend or advertising and marketing step up? Thanks.

Ryals McMullian: Positive. So Invoice, as you already know, we’re starting the nationwide rollout as we converse. So it can ramp up as manufacturing builds up and as we acquire shelf area and retailers all year long. So, it is going to be a construct all year long. And many of the assist behind that’s going to be advertising and marketing assist, digital spend, show execution, all these sorts of issues you actually need to activate a brand new product. DKB is a recognized amount, however clearly, this can be a new area for DKB. And so we’re being very intentional in regards to the investments we put behind the introduction of the brand new snack line, so largely advertising and marketing assist. And once more, it is going to be a construct all year long. So far as magnitude goes, we’re not going to reveal that individually. However as we acquire traction in the course of the yr, we will begin to offer you guys extra shade on how the merchandise are performing total within the market.

Invoice Chappell: Bought it. However I assume trying on the preliminary steering, which is under form of the place we had been and granted you hadn’t given steering earlier than, I imply, is this sort of a $0.05 headwind to earnings? Is it a $0.10 headwind to earnings? Simply making an attempt to grasp how a lot of that versus different market dynamics going into the steering.

Ryals McMullian: You imply the advertising and marketing assist itself for the bars, what sort of headwinds is it?

Invoice Chappell: Right. Right.

Ryals McMullian: I imply, possibly $0.02 or $0.03, most likely, $0.02 to $0.03.

Invoice Chappell: Okay, now that helps.

Ryals McMullian: Sure.

Invoice Chappell: After which simply second taking a look at form of the personal label tendencies you talked about in your ready remarks, I imply, is there an expectation now that pricing is form of normalized for personal label on the one mass buyer that it’s steady as we transfer by this yr that it truly improves? You imply, by way of branded share improves, what’s form of your outlook for share as we transfer over these subsequent couple of quarters?

Ryals McMullian: Sure. So the pricing dynamics have began €“ the retail pricing dynamics, I ought to say, for personal label and mass have began to return up some, which is an efficient growth. I feel it’s too early to name the play as to what the general personal label efficiency might be in €˜23. In direction of the tip of final yr, as we noticed personal label form of construct the second half of the yr gaining share, it did kind of plateau on the finish of the yr. And kind of by our first interval that we simply accomplished this yr, that very same dynamic is at play. So, it’s form of to be decided and naturally, that’s form of factored into our steering vary. That’s one among our watch-outs for the yr as how these €“ how is the patron total and the way does that translate into personal label efficiency.