Keebler's Strong Financials Bolster Majority Stakeholder Flowers
Keebler Foods Co. and Flowers Industries reported positive fiscal first-quarter results today in separate but related announcements today. Record net sales and net income characterized the top-line success at Keebler, while Flowers also reported increased sales and income.
"We are pleased to report excellent first quarter results for both Flowers Bakeries and Keebler Foods," said Amos R. McMullian, Flowers Industries' chairman and CEO.
Hollow-Tree, not Hollow Ring
Keebler, based in Elmhurst, IL, reported successful integration of strategic acquisitions, cost savings and a continued emphasis on branded growth. First quarter net sales increased to $855.9 million from $852.0 million in the same quarter last year. At the beginning of the quarter, Keebler completed the sale of its value brands business, which had contributed approximately $14.7 million to revenues during the first quarter last year, to Consolidated Biscuit Co.
The acquisition of Austin Quality Foods Inc. , completed March 6, contributed $24.5 million in revenues in the first quarter of 2000. Growth was somewhat offset in operating losses in Keebler's contract packing and private label businesses.
Net income for the 16 weeks ended April 22, 2000, was up 45% to $47.5 million from $32.7 million last year.
A strong growth in overall earnings, the company said, was due to a strategic realignment of supply chain, manufacturing and logistics productivity gains as well as cost reductions following the integration of acquired businesses.
Keebler CEO Sam K. Reed. Said, "Excellent execution enabled us to gain 5% in core branded volume in measured retail channels --outpacing healthy growth in the industry. This growth was achieved in both cookies and crackers." He said new products that introduced during 1999, including Snax Stix, Grab Bags, Harvest Bakery crackers and Wheatables Snack Mix, also "contributed incrementally to revenue during the first quarter this year."
"We started this year with strong sales and are focusing on our top brands, Keebler, Cheez-It, Famous Amos and Murray Sugar-Free, to continue the momentum for the future," Reed added, citing also the Austin business, which adds potential in the growing bite-size and single serve markets.
He also put in a plug for the Cookie Monster and Ernie—not Ernie the Elf, but the children's puppet—in praising the company's licensing deal with the Children's Television Workshop in launching a line of Sesame Street cookies and crackers later this fall.
The Foodservice and Girl Scout cookie divisions performed well, too, Keebler reported.
Keebler's Specialty Segment encompasses Foodservice sales, private label offerings, products custom-baked for other manufacturers and cookies manufactured for the Girl Scouts of America. First quarter revenues for this business were $252.8 million, down from $261.2 million in the prior year, reflecting a shift to create capacity for higher margin opportunities.
Growing Flowers
"The turnaround at Mrs. Smith's is progressing and we expect positive results from that business later in the year," said McMullian. Sales for the first fiscal quarter were a record $1.32 billion. Earnings per share were $.17 for the first quarter of 2000 compared to $.25 for the first quarter last year.
The Thomasville, GA, baking giant, which owns a n about-55% stake in Keebler, reported quarterly sales of $1.32 billion, an increase of 1.2% over the $1.3 billion recorded for the same period a year ago. Net income for the quarter was $16.8 million, or $.17 per share, compared to $24.8 million, or $.25 per share for the same period last year.
Flowers Bakeries, the company's fresh baked foods business, a sales increase 5.7% over last year's first quarter. Operating income for the quarter was $24.3 million, or 7.9% of sales, an improvement of $3.8 million over the same quarter last year.
During the quarter, Flowers Bakeries completed the acquisition of a bakery in Memphis from Kroger.
Keebler Foods' increases, described above, also helped Flowers.
Mrs. Smith Bakeries, Flowers Industries' frozen baked foods business, continued to address production problems that hurt 1999 financials, registering an operating loss of $9.9 million and sales drop of 2.9% from last year's first quarter. Reduced retail sales were blamed on lower promotional activity, while a strong foodservice sales tempered the loss.
"Mrs. Smith's should complete the production equipment repairs well before the seasonal holiday dessert production begins." McMullian said.
New site feature! Full financials for Keebler and Flowers, both traded on the New York Stock Exchange (KBL and FLO, respectively), can be tracked in the My Stocks area of a new site feature called My Bakery Online.