Milling & Baking News Corporate Profiles - October 2012 - (Page 88)

Company Overview Flowers Foods, Inc. Seeking growth, management keeps foot to the pedal Chief executive ofﬁcer – George E. Deese I n a difficult operating environment such as exists in wholesale baking, it could be expected a company’s management would take a step back and “batten down the hatches” in order to weather the storm. Flowers Foods, Inc. is taking nearly the opposite approach in the environment. While the company’s earnings have slipped amid intense competitive pressures and rising costs, Flowers has moved at a rapid pace in its efforts to reach long-term goals for geographic expansion. The most recent move occurred in July 2012 when the company completed an acquisition of Lepage Bakeries, Inc., of Auburn, Maine. The purchase, which included two baking plants in Maine and one in Vermont, gives Flowers a firm foothold in New England and New York. Thomasville, Ga.-based Flowers said it expected Lepage, which bakes a variety of bread and rolls, to accelerate Flowers’ penetration in the Northeast of its Nature’s Own bread brand. The Lepage acquisition followed by 15 months another major move by Flowers in the Northeast — its acquisition of Tasty Baking Co., Philadelphia. Flowers said Tasty, which baked and marketed snack cakes under the Tastykake brand, would grow the number of consumers reached by Flowers’ products by 24 million. The company’s products are sold mostly in Delaware, Maryland, New Jersey, New York, Ohio, Pennsylvania and Virginia. Flowers has an objective of serving 75% of the U.S. population by 2016. The Tasty acquisition alone brought the company to 61% from 53% before the transaction. The Lepage acquisition and other geographic expansion nudged Flowers to 70%, closer still to its 2016 target. Flowers is the second largest U.S. baking company, but even as it pursues ambitious geographic growth, the company remains far smaller than Bimbo Bakeries USA. In the most recent quarter, B.B.U. generated sales of $1.6 billion, versus $682 million at Flowers Foods. While Lepage and Tasty each represent the acquisition of an old, established northeastern baking company, the differences between the transactions are stark. Flowers paid $165 million for Tasty Baking, a company with annual sales of roughly $170 million. For Lepage, Flowers paid $370 million for a company with annual sales of $166 million. In acquiring publically-traded Tasty, Flowers acquired a company that had struggled for years trying to profitably expand its business. A major reworking of the company’s production base in Philadelphia failed to achieve a rapid turnaround the company had sought. While Lepage was a privately held company, George E. Deese, chairman and chief executive officer of Flowers, suggested the company was anything but struggling at the time Flowers made the acquisition. “They have the latest in technologies,” Mr. Deese said in early September at the Barclays Back to School Conference in Boston. “They offer fine quality products, and they have an experienced team. Their operating margin is among the highest in the industry. In other words, Lepage is best in class in the baking industry, and 2011 global sales — $2.8 billion Top brands – Nature’s Own Tastykake Cobblestone Mill Mrs. Freshley’s 88 \ October 2012 Milling & Baking News • Food Business News • Baking & Snack • Meat & Poultry Corporate Proﬁles

Table of Contents for the Digital Edition of Milling & Baking News Corporate Profiles - October 2012

Milling & Baking News Corporate Profiles - October 2012