FLO · Flowers Foods, Inc.

Flowers Foods reported Q1 2026 results that were in line with management's expectations but reflected ongoing macroeconomic headwinds. Net sales rose 1.1% to $1.572 billion, driven by the Simple Mills acquisition (2.3% contribution) and favorable pricing/mix (2.1%), which more than offset a 3.3% volume decline. Branded Retail sales grew 3.4% to $1.045 billion, while Other sales fell 3.1% to $526.2 million due to inflationary pressure on consumer spending and margin optimization strategies. Gross margin (excluding D&A) was 49.4% of sales, down 50 bps as higher outside product purchases and lower production volumes offset moderating ingredient costs. Adjusted SD&A improved 20 bps to 39.3% of sales. Net income declined 20.6% to $42.1 million, and adjusted net income fell 17.4% to $60.9 million, with adjusted diluted EPS of $0.29 versus $0.35 last year. Adjusted EBITDA decreased 1.8% to $159.0 million, representing a 10.1% margin. The company reset its quarterly dividend to $0.125 per share ($0.50 annualized) to prioritize debt reduction. Management reaffirmed full-year 2026 guidance: net sales of $5.163-$5.267 billion, adjusted EBITDA of $465-$495 million, and adjusted EPS of $0.80-$0.90. CEO Ryals McMullian noted disciplined cost management and progress on portfolio evolution, including the Nature's Own relaunch. The company's comprehensive review of brand portfolio, supply chain, and financial strategy is underway. Operating cash flow decreased to $107.9 million from $135.6 million, and capital expenditures were $20.6 million. The balance sheet showed cash of $11.5 million and long-term debt of $1.724 billion. Overall, the quarter reflected a challenging consumer environment, but management remains confident in its long-term strategy and reaffirmed guidance.