Milling & Baking News - February 16, 2016 - 49

Flowers optimistic about new year;
financials trigger share tumble
THOMASVILLE, GA. - After a challenging year in 2015, Flowers Foods,
Inc. is expecting accelerating earnings
growth in 2016. In trading on the New
York Stock Exchange Feb. 11 after the
company's financials were issued,
Flowers shares dropped 20%.
Net income of Flowers Foods in the
year ended Jan. 2 was $189,191,000,
equal to 89c per share on the common
stock, up 8% from $175,739,000, or
82c per share, in the prior year. Sales
were $3,778,505,000, up 0.7% from
$3,748,973,0000. Adjusted for special
items, Flowers earnings were up 2.2%
and sales were up 1.2%.
The 2015 earnings per share fell
significantly shy of guidance the company issued almost half way through
the fourth quarter. On Nov. 11, 2015,
Flowers revised its full-year earnings
guidance to 96c to 98c per share, down
from 96c to $1.01 the company had offered as guidance earlier in 2015.
For 2016, Flowers is projecting
sales growth of 5.5% to 8% versus
2015 and earnings-per-share growth
of 6.5% to 13%.
"We are not satisfied with our performance in the fourth quarter," said
Allen L. Shiver, president and chief
executive officer. "Even so, for the
full year we delivered record adjusted
e.p.s., and we took important steps to

position Flowers for opportunities in
2016 and beyond. While we continued to make significant progress on
our strategic initiatives, our earnings
in the fourth quarter were impacted
by sales that were below plan. In line
with channel data for the total store,
the pace of Flowers' retail sales in
the fourth quarter slowed relative to

trends we observed in the first three
quarters. Due to the lower-than-anticipated sales, our earnings for the
quarter were negatively impacted by
approximately 3c per share. Additionally, certain costs originally planned
for the firs quarter of 2016 were incurred in the fourth quarter of 2015,
impacting e.p.s. by 1c."
For the year, adjusted EBITDA of the
D.S.D. Segment was $422.7 million, up
3.7% from $407.4 million in 2014. Sales
were $3,179.3 million, up 0.8% from
$3,155.6 million. Branded sales during
the year were up 2% while store brand
sales were down 6%.
In the fourth quarter, D.S.D. Segment EBITDA was $80.5 million, down
10% from $89.7 million in the fourth
quarter of 2014. Sales were $714.9 million, down 3.7%.
Looking at D.S.D. Segment results in

ADM earnings decline 18% in
fiscal year; sales down 17%
CHICAGO - Adverse market conditions that affected many parts of
the business across much of 2015
continued in the fourth quarter,
leading to lower full-year results
at Archer Daniels Midland Co. Net
income at Archer Daniels Midland
Co. in the year ended Dec. 31, 2015,
totaled $1,849 million, equal to $2.98
per share on the common stock,
down 18% from $2,248 million, or
$3.43 per share, in fiscal 2014.
Fiscal 2015 revenues of $67,702
million were down 17% from
$81,201 million in fiscal 2014.
Following the earnings release,
shares of ADM fell nearly 9% on the
New York Stock Exchange.
Juan Luciano, chief executive officer of ADM, cautioned in a Feb. 2
conference call with analysts that
the company remains uncertain as
bakingbusiness.com / world-grain.com

to when the macro and business
conditions will improve, returning the company's earnings base to
more normalized levels.
"We continue to focus on what
we can control to grow earnings and create value for our
colleagues, our customers,
and our shareholders,"
he said.
Operating
profit
for
ADM's Agricultural Services segment was $714 million in fiscal 2015, down
32% from $1,043 million
in fiscal 2014. Within Agricultural
Services, operating profit for merchandising and handling fell to $305
million from $511 million.
Also within Agricultural Services, operating profit for transportation fell to $135 million from $187

Financial Results

the fourth quarter, volume was down
0.3%. Dave's Killer Bread accounted
for 3.8% of sales, but an additional
week the prior year had a 7.2% negative impact in 2015. Excluding these
factors, branded sales grew slightly.
White and soft variety bread, mostly
Nature's Own and Wonder, enjoyed
gains, while sandwich buns and rolls
and sandwich round sales eroded.
"New product introductions and
further expansion in our direct-store
delivery markets drove increased sales
of Tastykake products," Flowers said.
EBITDA margins tightened because
of higher workforce-related costs and
lower efficiencies (due to below-plan
sales) as well as increases in outside purchases of products, mostly due to capacity constraints for Dave's Killer Bread.
In the fourth quarter, Flowers net
income was $32,246,000, or 15c per
share, up 15% from $28,010,000, or 13c.
Net sales were $858,363,000, down 2%.
"While we did not meet our fourthquarter objective, F.Y. 15 was a strong
year for Flowers," Mr. Shiver said.
"Looking ahead, recently completed
acquisitions, which are a core part of
our growth strategy, are expected to
contribute between 5.2% and 5.7% to
sales growth in 2016. And with our
strong brands we are working to grow
share in expansion markets, while
remaining a low-cost producer. The
team remains keenly focused on executing our growth strategies and delivering shareholder value." MBN
million, while operating profit for
milling and other rose to $244 million from $203 million. Mr. Luciano said a number of factors affected results, including a lack of
global dislocations and a strong
U.S. dollar versus the weakening
currencies of other major cropgrowing areas.
In ADM's Corn Processing
segment, fiscal 2015 operating profit fell to $648
million from $1,148 million. Within Corn Processing, operating profit for
sweeteners and starches
increased to $457 million
from $430 million. Operating profit for bioproducts within Corn Processing in fiscal
2015 plunged to $149 million from
$711 million.
During the conference call, Mr.
Luciano said ADM will continue its
efforts to reduce costs at its corn dry
mills, and to that end has launched
Milling & Baking News XFebruary 16, 2016 / 49

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Milling & Baking News - February 16, 2016

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