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What changed in FLOWERS FOODS INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of FLOWERS FOODS INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+372 added−331 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-21)

Top changes in FLOWERS FOODS INC's 2025 10-K

372 paragraphs added · 331 removed · 262 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

66 edited+18 added−11 removed34 unchanged
Biggest changeFailure to comply with one or more regulatory requirements could result in a variety of sanctions, including monetary fines or compulsory withdrawal of products from store shelves. Advertising of our brands is subject to regulation by the Federal Trade Commission, and we are subject to certain health and safety regulations, including those issued under the Occupational Safety and Health Act.
Biggest changeUnder various statutes and regulations, these federal and state agencies prescribe requirements and establish standards for quality, purity, and labeling. Failure to comply with one or more regulatory requirements could result in a variety of sanctions, including monetary fines or compulsory withdrawal of products from store shelves.
We believe our strong balance sheet and cash flow generation enables us to execute our M&A strategy and, as discussed above, on February 17, 2023, we completed the purchase of Papa Pita, a manufacturer and distributor of bagels, tortillas, breads, buns, English muffins, and flat breads. Founded in 1983, Papa Pita operates one production facility in West Jordan, Utah.
We believe our strong balance sheet and cash flow generation enables us to execute our M&A strategy and, as discussed above, on February 17, 2023, we completed the purchase of Papa Pita, a manufacturer and distributor of bagels, tortillas, breads, buns, English muffins, and flat breads. Founded in 1983, Papa Pita operates one production 5 facility in West Jordan, Utah.
The company concluded it has one operating segment based on the nature of the products the company sells, its intertwined production and distribution model, the internal management structure and information that is regularly reviewed by the chief executive officer (“CEO”), who is the chief operating decision maker, for the purpose of assessing performance and allocating resources.
The company concluded it has one operating segment based on the nature of the products the company sells, its intertwined production and distribution model, the internal management structure and information that is regularly reviewed by the chief executive officer (“CEO”), who is the chief operating 6 decision maker, for the purpose of assessing performance and allocating resources.
In February 2023, we announced a restructuring of plant operation responsibilities from the sales function to the supply chain function to improve operational effectiveness, increase profitable sales, and better meet customer requirements. This restructuring has now transitioned to digitally enabling these key functions, driving accountability, and improving operational performance and sales execution.
In February 2023, we announced a restructuring of plant operation responsibilities from the sales function to the supply chain function to improve operational effectiveness, increase profitable sales, and better meet customer requirements. This restructuring has transitioned to digitally enabling these key functions, driving accountability, and improving operational performance and sales execution.
For example, Fiscal 2023, we acquired the Papa Pita Bakery business ("Papa Pita") expanding our production capacity, including for bagels, pitas, and flat breads, the majority of which Papa Pita previously co-manufactured for us, and increasing our direct-store-delivery distribution in the western U.S.
In Fiscal 2023, we acquired the Papa Pita Bakery business ("Papa Pita") expanding our production capacity, including for bagels, pitas, and flat breads, the majority of which Papa Pita previously co-manufactured for us, and increasing our direct-store-delivery distribution in the western U.S.
Flowers Foods is currently the second-largest company in the U.S. fresh baking industry based on market share as presented in the following chart (amounts may not compute due to rounding).
Flowers Foods is currently the second-largest company in the U.S. fresh baking industry based on dollar market share as presented in the following chart (amounts may not compute due to rounding).
Walmart/Sam’s Club was the only customer to account for 10% or more of our sales during Fiscal 2023, 2022, and 2021. Fresh baked foods’ customers include mass merchandisers, supermarkets and other retailers, restaurants, quick-serve chains, food wholesalers, institutions, dollar stores, and vending companies. We also sell returned and surplus product through a system of thrift stores.
Walmart/Sam’s Club was the only customer to account for 10% or more of our sales during Fiscal 2024, 2023, and 2022. Fresh baked foods’ customers include mass merchandisers, supermarkets and other retailers, restaurants, quick-serve chains, food wholesalers, institutions, dollar stores, and vending companies. We also sell returned and surplus product through a system of thrift stores.
The primary goals of these initiatives are to: (1) enable a more agile business model, empowering the organization by fundamentally redesigning core business 5 processes; (2) embed digital capabilities and transform the way we engage with our consumers, customers and employees; and (3) modernize and simplify our application and technology infrastructure landscape, inclusive of the upgrade of our ERP system.
The primary goals of these initiatives are: (1) enable a more agile business model, empowering the organization by fundamentally redesigning core business processes; (2) embed digital capabilities and transform the way we engage with our consumers, customers and employees; and (3) modernize and simplify our application and technology infrastructure landscape, inclusive of the upgrade of our ERP system.
Our principal products include breads, buns, rolls, snack items, bagels, English muffins, and tortillas and are sold under a variety of brand names, including Nature’s Own, Dave’s Killer Bread (“DKB”), Wonder, Canyon Bakehouse, Tastykake, and Mrs. Freshley’s. Our brands are among the best known in the baking industry.
Our principal products include breads, buns, rolls, snack items, bagels, English muffins, and tortillas and are sold under a variety of brand names, including Nature’s Own, Dave’s Killer Bread (“DKB”), Wonder, Canyon Bakehouse, Tastykake, and Mrs. Freshley’s. Our brands are among the best known in the U.S. baking industry.
In addition, Flowers is a long-time supporter of causes that support U.S. veterans and their families. Since 2018, through our Wonder and Tastykake brands, we have partnered with the USO to help provide a variety of programs that keep service members and their families connected.
In addition, Flowers is a long-time supporter of causes that support U.S. veterans and their families. Since 2018, through our Wonder and Tastykake brands, we have partnered with the United Service Organizations ("USO") to help provide a variety of programs that keep service members and their families connected.
The following corporate governance documents may be obtained free of charge through our website in the “CORPORATE GOVERNANCE” section of the “INVESTORS” tab or by sending a written request to Flowers Foods, Inc., 1919 Flowers Circle, Thomasville, GA 31757, Attention: Investor Relations. • Corporate Governance Guidelines • Finance Committee Charter • Audit Committee Charter • Nominating/Corporate Governance Committee Charter • Compensation and Human Capital Committee Charter • Political Contribution and Activity Policy • Code of Business Conduct and Ethics • Flowers Foods Employee Code of Conduct • Animal Welfare Commitment • Stock Ownership Guidelines 12
The following corporate governance documents may be obtained free of charge through our website in the “CORPORATE GOVERNANCE” section of the “INVESTORS” tab or by sending a written request to Flowers Foods, Inc., 1919 Flowers Circle, Thomasville, GA 31757, Attention: Investor Relations. • Corporate Governance Guidelines • Finance Committee Charter • Audit Committee Charter • Nominating/Corporate Governance Committee Charter • Compensation and Human Capital Committee Charter • Political Contribution and Activity Policy • Flowers Foods Code of Conduct • Animal Welfare Commitment • Stock Ownership Guidelines 12
To date, we have rolled out bakery of the future to 33 bakeries, digital logistics to all bakery locations, and autonomous planning and our digital sales tools across our entire sales organization. Costs related to the digital initiatives are fluid and cannot be currently estimated.
To date, we have rolled out bakery of the future to 36 bakeries, digital logistics to all bakery locations, and autonomous planning and our digital sales tools across our entire sales organization. Costs related to the digital initiatives are fluid and cannot be currently estimated.
Disruptions in our operations, related to factors including, but not limited to, the procurement of raw materials and packaging items, transport of our products, and available workforce, have negatively impacted, and could continue to negatively impact, our operations, results of operations, cash flows, and liquidity.
Disruptions in our operations, related to factors including, but not limited to, the procurement of raw materials and packaging items, transport of our products, and workforce availability, have negatively impacted, and could continue to negatively impact, our operations, results of operations, cash flows, and liquidity.
See Note 2, Summary of Significant Accounting Policies , of Notes to Consolidated Financial Statements of this Form 10-K for detailed financial information about our operating segment. 6 Brands & Products We report our sales as Branded Retail and Other. The Other category includes store branded retail, foodservice, restaurant, institutional, vending, thrift stores, and contract manufacturing.
See Note 2, Summary of Significant Accounting Policies , and Note 4, Segments , of Notes to Consolidated Financial Statements of this Form 10-K for detailed financial information about our operating segment. Brands & Products We report our sales as Branded Retail and Other. The Other category includes store branded retail, foodservice, restaurant, institutional, vending, thrift stores, and contract manufacturing.
Our legacy of excellence is built on 100+ years of hard work by thousands of Flowers team members. As W.H. Flowers, Jr. said, “ The key to any enterprise or goal is people.
Flowers' legacy of excellence is built on 100+ years of hard work by thousands of Flowers team members. As W.H. Flowers, Jr. said, “ The key to any enterprise or goal is people.
We transitioned into the build phase at the beginning of Fiscal 2022 and during the second quarter of Fiscal 2023, we began deploying the ERP upgrade. We plan to continue the deployment across the organization over the next few years. We expect the transformation strategy initiatives to require significant capital investment and expense over the next several years.
We transitioned into the build phase at the beginning of Fiscal 2022 and during the second quarter of Fiscal 2023, we began deploying the ERP upgrade. We plan to continue the deployment across the organization over the next two years. We expect the transformation strategy initiatives to require significant capital investment and expense over the next two years.
We also purchase organic and gluten-free ingredients. We also use paper products, such as corrugated containers, folding cartons, films and plastics to package our bakery foods. We strive to maintain diversified sources for all of our baking ingredients and packaging products. In addition, we are dependent on natural gas or propane as fuel for firing our ovens.
We also use paper products, such as corrugated containers, folding cartons, films and plastics to package our bakery foods. We strive to maintain diversified sources for all of our baking ingredients and packaging products. In addition, we are dependent on natural gas or propane as fuel for firing our ovens.
The DSD distribution system primarily involves aggregating order levels and delivering products from bakeries to independent distributors for sale and direct delivery to customer stores. The independent distributors are responsible for ordering products, stocking shelves, maintaining special displays, and developing and maintaining good customer relations to ensure adequate inventory and removing unsold goods.
The DSD distribution system primarily involves aggregating order levels and delivering products from bakeries to independent distributors for sale and direct delivery to customer stores. The independent distributors are responsible for ordering products, selling products to customers, stocking shelves, maintaining special displays, developing and maintaining good customer relations, ensuring adequate inventory, and removing unsold goods.
Our benefits package includes: • comprehensive health insurance coverage to employees working 30 hours or more each week; • parental leave to all new parents for birth, adoption or foster placement; • adoption reimbursement of up to $20,000 per employee, per lifetime; 11 • short-term disability to provide wage protection for up to six months; • a tuition reimbursement program; and • a 401(k) plan (certain union-affiliated employees participate in a company-sponsored pension or multi-employer plan) with generous company match.
Our benefits package includes: • comprehensive health insurance coverage to employees working 30 hours or more each week; • parental leave for all new parents when their families experience a birth, adoption or foster placement; • adoption reimbursement of up to $20,000 per employee, per lifetime; • short-term disability to provide wage protection for up to six months; • a tuition reimbursement program; and • a 401(k) plan (certain union-affiliated employees participate in a company-sponsored pension or multi-employer plan) with generous company contributions.
Additionally, we have made and are continuing to make marketing investments to target e-commerce sales as consumers shift to more online shopping alternatives, such as grocery delivery sites, retailer websites and apps, among others. 7 Customers Our top 10 customers in Fiscal 2023 accounted for 55.5% of sales.
Additionally, we have made and are continuing to make marketing investments to target e-commerce sales as consumers shift to more online shopping alternatives, such as grocery delivery sites, retailer websites and apps, among others. Customers Our top 10 customers in Fiscal 2024 accounted for 56.7% of sales.
During Fiscal 2023, our largest customer, Walmart/Sam’s Club, represented 22.3% of the company’s sales. The loss of, or a material negative change in our relationship with, Walmart/Sam’s Club or any other major customer could have a material adverse effect on our business.
During Fiscal 2024, our largest customer, Walmart/Sam’s Club, represented 22.4% of the company’s sales. The loss of, or a material negative change in our relationship with, Walmart/Sam’s Club or any other major customer could have a material adverse effect on our business.
See Item 1A., Risk Factors , “We may experience difficulties in designing and implementing the upgrade of our ERP system.” Segment Since the beginning of Fiscal 2019, we have managed our business as one operating segment.
See Item 1A., Risk Factors , “We may experience difficulties in deploying the upgrade of our ERP system.” Segment Since the beginning of Fiscal 2019, we have managed our business as one operating segment.
In Fiscal 2023, Branded Retail sales represented 64.1% of our total sales. Our brands are some of the best-known in the U.S. fresh packaged bread industry and many of them hold leading market positions in the categories in which they compete.
In Fiscal 2024, Branded Retail sales represented 63.9% of our total sales. Our brands are some of the best-known in the U.S. fresh packaged bread industry and many of them hold leading market positions in the categories in which they compete.
The store brand share of retail fresh packaged bread in the U.S. accounts for approximately 21% of the dollar sales and approximately 31% of unit sales. Its dollar share had been steadily declining for a number of years prior to Fiscal 2022, however that trend reversed in Fiscal 2022 and expanded in Fiscal 2023.
The store brand share of retail fresh packaged bread in the U.S. accounts for approximately 25% of the dollar sales and approximately 35% of unit sales. Store brand's dollar share had been steadily declining for a number of years prior to Fiscal 2022, however that trend reversed in Fiscal 2022 and expanded in Fiscal 2023 and Fiscal 2024.
The recent inflationary environment has pressured more consumers to trade down to store brand bakery products. 10 Human Capital Resources As of December 30, 2023, Flowers and its subsidiaries had approximately 9,300 employees located throughout the U.S. and approximately 4,800 long-term leased employees. Approximately 865 employees are covered by collective bargaining agreements and there are no material outstanding labor disputes.
The recent inflationary environment has pressured more consumers to trade down to store brand bakery products. 10 Human Capital Resources As of December 28, 2024, Flowers and its subsidiaries had approximately 10,200 employees located throughout the U.S. and approximately 4,100 long-term leased employees. Approximately 830 employees are covered by collective bargaining agreements and there are no material outstanding labor disputes.
The company is currently in substantial compliance with all material environmental laws and regulations affecting the company and its properties. 9 Competitive Overview The U.S. market for fresh and frozen bakery products is estimated at $50 billion at retail. The fresh packaged bread category is intensely competitive and has continued to experience industry consolidation and volume decreases in recent years.
The company is currently in substantial compliance with all material environmental laws and regulations affecting the company and its properties. 9 Competitive Overview The U.S. market for fresh and frozen bakery products is estimated at more than $55 billion at retail. The fresh packaged bread category is intensely competitive and has experienced volume decreases in recent years.
Labor shortages and turnover at some of our bakeries in Fiscal 2023 and 2022 hampered production levels. These and other factors, including, but not limited to, high employment rates and additional government regulations, may continue to adversely affect labor availability and labor costs.
Labor shortages and turnover at some of our bakeries in Fiscal 2024 and Fiscal 2023 negatively impacted our results. These and other factors, including, but not limited to, high employment rates and additional government regulations, may continue to adversely affect labor availability and labor costs.
We employ a disciplined approach to M&A, seeking out candidates primarily in the grain-based foods arena that enhance our branded portfolio, extend our geographic presence, are a strong cultural fit, and add enhanced capabilities to our company.
We employ a disciplined approach to M&A, seeking out candidates that enhance our branded portfolio, extend our geographic presence, are a strong cultural fit, and add enhanced capabilities to our company.
We currently anticipate the upgrade of our ERP system will cost approximately $350 million (of which approximately 34% has been or is anticipated to be capitalized) and anticipate the upgrade to be completed in 2026. Previously, these costs were estimated to be approximately $275 million.
We currently anticipate the upgrade of our ERP system will cost approximately $350 million (of which approximately 35% has been or is anticipated to be capitalized) and anticipate the upgrade to be completed in 2026.
These and other supply chain disruptions could continue to negatively impact production volumes due to uncertainty in the global and U.S. supply chain.
These and other supply chain disruptions, including any impact from the imposition of tariffs, could continue to negatively impact production volumes due to uncertainty in the global and U.S. supply chain.
Current Inflationary Economic Environment and Other Macroeconomic Factors We continue to monitor the impact of the inflationary economic environment, supply chain disruptions, labor shortages, the conflict between Russia and Ukraine, and the conflict in the Middle East on our business.
Current Inflationary Economic Environment and Other Macroeconomic Factors We continue to monitor the impact of a variety of factors on our business, including the impact of the inflationary economic environment on our costs and the buying patterns of our consumers, supply chain disruptions, increased labor costs, the conflict between Russia and Ukraine, and the conflict in the Middle East.
Independent distributors, highly motivated by financial incentives from their distribution rights ownership, strive to increase sales within their defined geographic territory by offering outstanding service and merchandising.
Many other independent distributors have opted to obtain their own financing arrangements. Independent distributors, highly motivated by financial incentives from their distribution rights ownership, strive to increase sales within their defined geographic territory by offering outstanding service and merchandising.
Invest in our brands to align with consumers to maximize our return on investment. • Prioritize margins: Optimize the portfolio and supply chain. • Smart M&A: Disciplined approach to acquisitions in the grain-based foods arena that enhances our branded portfolio and margin profile.
Invest in our brands to align with consumers to maximize our return on investment. • Prioritize margins: Optimize the portfolio and supply chain. • Smart M&A: Disciplined approach to acquisitions that enhance our branded portfolio, improve our margin profile, and broaden our geographic reach.
An overall labor shortage, lack of skilled labor, or increased turnover could have a material adverse impact on the company’s operations, results of operations, liquidity, or cash flows. We believe we have sufficient liquidity to satisfy our cash needs and we continue to execute on our strategic priorities, including our transformation strategy initiatives.
An overall labor shortage, lack of skilled labor, or increased turnover has and could continue to have a negative impact on the company’s operations, results of operations, liquidity, or cash flows. 4 We believe we have sufficient liquidity to satisfy our cash needs and we continue to execute on our strategic priorities, including the deployment of the upgrade of our ERP system.
The table below presents the approximate number of territories used by the company as of December 30, 2023: Type of territory Number of territories Independent distributor-owned and operated territories 5,105 Territories classified as available for sale 567 Other company operated territories 251 Total territories 5,923 The company expects to repurchase approximately 400 territories in California during Fiscal 2024 and convert them to company operated territories mostly as a result of the settlement of litigation as further discussed in Note 23, Commitments and Contingencies, of Notes to Consolidated Financial Statements of this Form 10-K.
The table below presents the approximate number of territories used by the company as of December 28, 2024: Type of territory Number of territories Independent distributor-owned and operated territories 4,784 Territories classified as available for sale 552 Other company operated territories 518 Total territories 5,854 During Fiscal 2024, the company commenced repurchasing approximately 400 territories in California and converting them to company operated territories mostly as a result of the settlement of litigation as further discussed in Note 24, Commitments and Contingencies, of Notes to Consolidated Financial Statements of this Form 10-K.
People of character, people of integrity, people who don’t mind working and taking advantage of their opportunity. ” We continue to strive toward a people-centric legacy by implementing initiatives that enhance the lives of every employee.
People of character, people of integrity, people who don’t mind working and taking advantage of their opportunity. ” We continue to strive toward a people-centric legacy by implementing initiatives that enhance the lives of every employee. Our hiring efforts utilize a variety of channels and include various recruiting intelligence and marketing strategies.
Programs available at our bakeries include Skillsoft online learning and a Mentor Up Mentoring Program. • Offering a variety of programs that contribute to our leadership, training and development goals, including the “Flowers Front-Line Leadership Program,” “Lead Now” for leaders at all levels, and “Leading The Flowers Way” for our high potential leaders. • Encouraging employees to discuss their professional development during annual performance reviews with their supervisors. • Offering the Continuous Performance Management module which supports ongoing performance conversations between employees and their managers. • Offering Career Conversations training for supervisory employees to discuss career pathing and employee development.
Programs available at our bakeries include Skillsoft online learning and a Mentor Up Mentoring Program. • Offering a variety of programs that contribute to our leadership, training and development goals, including the “Flowers Front-Line Leadership Program,” “Lead Now” for leaders at all levels, and “Leading The Flowers Way” for our high potential leaders. • Encouraging employees to discuss their professional development during annual performance reviews with their supervisors. • Expanding our goal setting process to include the creation of personal development plans (PDPs).
These challenges may negatively affect our ability to operate our production lines efficiently or run at full capacity which could lead to increased labor costs, including additional overtime to meet demand and higher wage rates to attract and retain workers.
These challenges may negatively impact the efficiency of our production lines and our ability to operate at, or near, full capacity and could result in increased labor costs, including additional overtime to meet demand and higher wage rates to attract and retain workers.
(Source: Circana Flowers custom database, 52 weeks ending 12/31/23 ): The current competitive landscape for breads and rolls in the U.S. baking industry consists of Bimbo Bakeries USA (BBU), Flowers Foods, and Campbell Soup Company, under the Pepperidge Farm brand, along with a number of smaller independent regional bakers, local bakeries, and retailer-owned bakeries.
(Source: Circana Flowers custom database, 52 weeks ending 12/29/24; due to a change in methodology and sources, data provided previously may not be comparable to current data): The current competitive landscape for breads and rolls in the U.S. baking industry consists of Bimbo Bakeries USA (BBU), Flowers Foods, and The Campbell's Company, under the Pepperidge Farm brand, along with a number of smaller independent regional bakers, local bakeries, and retailer-owned bakeries.
We believe our flexible bakery system allows us to quickly shift production to high demand products and adjust distribution where needed. We are continuing to optimize our distribution system by reducing network complexity through depot consolidation and reducing transport miles. M&A has always been, and we expect will continue to be, an important part of our long-term growth strategy.
Additionally, we are continuing to optimize our distribution system by reducing network complexity through depot consolidation and reducing transport miles. M&A has always been, and we expect will continue to be, an important part of our long-term growth strategy.
Prices of ingredient and packaging materials fluctuate due to various factors including, but not limited to, government policy and regulation, weather conditions, domestic and international demand, or other unforeseen circumstances, and we monitor these markets closely. Ingredient and packaging costs were volatile in both Fiscal 2023 and 2022 but are expected to be more favorable in Fiscal 2024.
Prices of ingredient and packaging materials fluctuate due to various factors including, but not limited to, government policy and regulation, weather conditions, domestic and international demand, or other unforeseen circumstances, and we monitor these markets closely.
Marketing We support our key brands with an advertising and marketing effort that targets consumers through electronic and in-store coupons, social media (such as Facebook and X (formerly Twitter)), digital media (including e-newsletters to consumers), websites (our brand sites and third-party sites), event and sports marketing, on-package promotional offers and sweepstakes, and print advertising.
These channels include supermarkets, drugstores, mass merchandisers, discount stores, club stores, convenience stores, thrift outlet stores, and foodservice, among others. 7 Marketing We support our key brands with an advertising and marketing effort that targets consumers through electronic and in-store coupons, social media (such as Facebook and X), digital media (including e-newsletters to consumers), websites (our brand sites and third-party sites), event and sports marketing, on-package promotional offers and sweepstakes, and print advertising.
The table below presents the major brands within our diversified brand portfolio: Strategic Positioning Key Brands Mainstream Nature's Own, Wonder, Tastykake Organic Dave's Killer Bread Gluten Free Canyon Bakehouse Brand Highlights • Nature’s Own is the best-selling loaf bread in the U.S.
The table below presents the major brands within our diversified brand portfolio: Strategic Positioning Key Brands Mainstream Nature's Own, Wonder, Tastykake Organic DKB Gluten Free Canyon Bakehouse Brand Highlights • Nature’s Own is the best-selling loaf bread in the U.S. (Source: Circana Total US MultiOutlet+w/Conv L52 Weeks Ending 12/29/24 ).
(Loaf, Bagels, Breakfast Bread, and English Muffins). (Source: Circana Total US MultiOutlet+C-Store L52 Weeks Ending 12/31/23 ) DKB’s sales, at estimated retail, were $1.0 billion for Fiscal 2023. • Canyon Bakehouse, acquired at the end of Fiscal 2018, is the #1 selling gluten-free bread brand in the U.S.
DKB’s sales, at estimated retail, were $1.1 billion for Fiscal 2024. • Canyon Bakehouse, acquired at the end of Fiscal 2018, is the #1 selling gluten-free bread brand in the U.S. (Source: Circana Total US MultiOutlet+w/Conv L52 Weeks Ending 12/29/24 ).
The company currently operates 238 such stores and reported sales of $70.3 million during Fiscal 2023 from these outlets.
The company currently operates 223 such stores and reported sales of $64.1 million during Fiscal 2024 from these outlets.
We also are subject to the regulations of various state agencies, with respect to production processes, product quality, packaging, labeling, storage, distribution, labor, and local regulations regarding the licensing of bakeries and the enforcement of state standards and facility inspections. Under various statutes and regulations, these federal and state agencies prescribe requirements and establish standards for quality, purity, and labeling.
Federal Trade Commission, the U.S. Environmental Protection Agency, the U.S. Department of Commerce, and the U.S. Department of Labor. We also are subject to the regulations of various state agencies, with respect to production processes, product quality, packaging, labeling, storage, distribution, labor, and local regulations regarding the licensing of bakeries and the enforcement of state standards and facility inspections.
The cost of compliance with such laws and regulations has not had a material adverse effect on the company’s business. We believe we are currently in substantial compliance with all material federal, state and local laws and regulations affecting the company and its properties.
We believe we are currently in substantial compliance with all material federal, state and local laws and regulations affecting the company and its properties.
(Source: Circana Total US MultiOutlet+C-Store L52 Weeks Ending 12/31/23 ) Nature’s Own’s sales, at estimated retail, were $1.5 billion for Fiscal 2023. • Nature’s Own Honey Wheat is the #1 Universal Product Code (“UPC”) in the U.S. Fresh Packaged Bread category based on dollars and units. In the U.S.
Nature’s Own’s sales, at estimated retail, were $1.5 billion for Fiscal 2024. • Nature’s Own Honey Wheat is the #1 Universal Product Code (“UPC”) in the U.S. Fresh Packaged Bread category based on dollars and units. In the U.S. Fresh Packaged Bread category, Nature’s Own Butterbread is the #2 UPC based on units and the #3 UPC based on dollars.
The company also sells products under franchised and licensed trademarks and trade names which we do not own pursuant to contractual arrangements. We consider our trademarks and trade names important to our business since we use them to build strong brand awareness and consumer loyalty. Raw Materials Our primary baking ingredients are flour, sweeteners, shortening, yeast and water.
We consider our trademarks and trade names important to our business since we use them to build strong brand awareness and consumer loyalty. Raw Materials Our primary baking ingredients are flour, sweeteners, shortening, yeast and water. We also purchase organic and gluten-free ingredients.
Once repurchased, the territories will not be resold and will be classified as company operated territories. Our warehouse distribution system delivers a portion of our packaged bakery snack products from a central distribution facility located near our Crossville, Tennessee snack cake bakery. We believe this centralized distribution system allows us to achieve both production and distribution efficiencies.
Our warehouse distribution system delivers a portion of our packaged bakery snack products from a central distribution facility located near our Crossville, Tennessee snack cake bakery. We believe this centralized distribution system allows us to achieve both production and distribution efficiencies. Products coming from different bakeries are then cross-docked and shipped directly to customers’ warehouses nationwide.
Regulations As a producer and marketer of food items, our operations are subject to regulation by various federal governmental agencies, including the U.S. Food and Drug Administration, the U.S. Department of Agriculture, the U.S. Federal Trade Commission, the U.S. Environmental Protection Agency, the U.S. Department of Commerce, and the U.S. Department of Labor (the “DOL”).
Any decrease in the availability of these agreements and instruments could increase the price of these raw materials and significantly affect our earnings. Regulations As a producer and marketer of food items, our operations are subject to regulation by various federal governmental agencies, including the U.S. Food and Drug Administration, the U.S. Department of Agriculture, the U.S.
Transformation Strategy Initiatives In the second half of Fiscal 2020, we launched initiatives to transform our business operations.
The transaction is subject to customary regulatory and other approvals and closing conditions and is anticipated to close in the first quarter of Fiscal 2025. Transformation Strategy Initiatives In the second half of Fiscal 2020, we launched initiatives to transform our business operations.
For additional discussion on the impact of macroeconomic factors on our business, refer to Part II, Item 7., Management’s Discussion and Analysis of Financial Condition and Results of Operations , of this Form 10-K. 4 Strategic Initiatives We are a brand-focused company dedicated to the consumer and committed to growing our most profitable brands through innovation, market expansion, and prudent mergers and acquisitions (“M&A”).
For additional discussion on the impact of macroeconomic factors on our business, refer to Part II, Item 7., Management’s Discussion and Analysis of Financial Condition and Results of Operations , of this Form 10-K.
Fresh Packaged Bread category, Nature’s Own Butterbread is the #2 UPC based on units and the #3 UPC based on dollars. (Source: Circana Total US MultiOutlet+C-Store L52 Weeks Ending 12/31/23 ) • DKB is the #1 selling organic brand in the U.S. and the company’s #2 brand, with the top-selling organic brand in four different segments.
(Source: Circana Total US MultiOutlet+w/Conv L52 Weeks Ending 12/29/24 ) • DKB is the #1 selling organic brand in the U.S. and the company’s #2 brand, with the top-selling organic brand in four different segments (Loaf, Bagels, Breakfast Bread, and English Muffins). (Source: Circana Total US MultiOutlet+w/Conv L52 Weeks Ending 12/29/24 ).
Additionally, in Fiscal 2022, we introduced new varieties of DKB Organic Snack Bars, including protein bars, and began the nationwide rollout of three varieties of the DKB Organic Snack Bars in Fiscal 2023. In early Fiscal 2023, we launched DKB Crunchy Snack Bites in test markets.
In Fiscal 2023, we introduced Nature's Own Keto bread, Nature's Own Hawaiian and Everything hamburger buns, Tastykake Dipp'n Sticks , and Mrs. Freshley's Donut Sticks , among others. Additionally, in Fiscal 2023, we began the nationwide rollout of three varieties of DKB Organic Snack Bars and launched DKB Crunchy Snack Bites in test markets.
Our strategic priorities and our long-term goals are as follows: Strategic Priorities: • Develop team: Capabilities to build brands and create value. • Focus on brands: Enhance relevancy and expand presence.
Strategic Initiatives We are a brand-focused company dedicated to the consumer and committed to growing our most profitable brands through innovation, market expansion, and prudent mergers and acquisitions (“M&A”). Our strategic priorities and our long-term goals are as follows: Strategic Priorities: • Develop team: Capabilities to build brands and create value. • Focus on brands: Enhance relevancy and expand presence.
Products coming from different bakeries are then cross-docked and shipped directly to customers’ warehouses nationwide. Our frozen bread and roll products are shipped to various outside freezer facilities for distribution to our customers. 8 Intellectual Property We own many trademarks, trade names, patents, and licenses.
Our frozen bread and roll products are shipped to various outside freezer facilities for distribution to our customers. Intellectual Property We own many trademarks, trade names, patents, and licenses. The company also sells products under franchised and licensed trademarks and trade names which we do not own pursuant to contractual arrangements.
(Source: Circana Total US MultiOutlet+C-Store L52 Weeks Ending 12/31/23 ) Canyon Bakehouse’s sales, at estimated retail, were $164 million for Fiscal 2023. • Wonder , over 100 years old, enjoys 97% brand awareness (Source: Kantar Brand Health Tracking Study - Summer 2023 ).
Canyon Bakehouse’s sales, at estimated retail, were $170 million for Fiscal 2024. • Wonder , over 100 years old, enjoys 97% brand awareness (Source: Kantar Brand Health Tracking Study - Summer 2023 ). Wonder’s Classic White loaf is the #2 UPC in the white loaf segment based on dollars and units in the U.S.
We enter into forward purchase agreements and other financial instruments to manage the impact of volatility in certain raw material prices. Any decrease in the availability of these agreements and instruments could increase the price of these raw materials and significantly affect our earnings.
Ingredient and packaging costs were volatile in both Fiscal 2024 and 2023 but are expecting reduced volatility in Fiscal 2025 (excluding any impact of potential tariffs). We enter into forward purchase agreements and other financial instruments to manage the impact of volatility in certain raw material prices.
Wonder’s sales, at estimated retail, were $512 million for Fiscal 2023 (Source: Circana Total US MultiOutlet+C-Store L52 Weeks Ending 12/31/23 ) In Fiscal 2023, we introduced Nature's Own Keto bread, Nature's Own Hawaiian and Everything hamburger buns, Tastykake Dipp'n Sticks , and Mrs. Freshley's Donut Sticks , among others.
(Source: Circana Total US MultiOutlet+w/Conv L52 Weeks Ending 12/29/24 ). Wonder’s sales, at estimated retail, were $535 million for Fiscal 2024. In Fiscal 2024, we introduced Nature's Own Keto hamburger and hotdog buns, Nature's Own Small Loaf breads, Wonder bagels and English muffins, and DKB Organic Rolls, among other new products.
As we implement our targeted sales portfolio strategy, the flexibility of our production and distribution systems allows us to pivot capacity to meet this changing demand.
We have also executed strategies to optimize our non-retail and store branded retail sales by exiting certain lower margin business, implementing price increases, and acquiring new customers. As our sales portfolio continues to evolve, the flexibility of our production and distribution systems allows us to pivot capacity to meet changing demand and we continue to optimize these systems.
Through this partnership, we have donated $2.3 million to the USO and some of our marketing campaigns and packaging tie-ins recognize the service and sacrifices of the military. Presently, Flowers employs more than 490 veterans. Flowers offers team members competitive wages, benefits, and training opportunities, while also promoting a safe and healthy workplace.
In support of these efforts, Flowers' brands fulfilled their multi-year commitment, donating $2.8 million to the USO through Fiscal 2024, and increased their total pledge to $3.4 million through 2026. Presently, Flowers employs approximately 475 veterans. Flowers offers team members competitive wages, benefits, and training opportunities, while also promoting a safe and healthy workplace.
We believe executing on our strategic priorities will drive future growth and margin expansion and deliver meaningful shareholder value over time.
We believe that executing on our strategic priorities will drive future growth and margin expansion and deliver meaningful shareholder value over time. Simple Mills Acquisition On January 7, 2025, the company entered into an Agreement and Plan of Merger to acquire Simple Mills ("Simple Mills"), maker of a premium brand of better-for-you crackers, cookies, snack bars, and baking mixes.
To mitigate the ongoing cost pressures, we implemented price increases during the first quarter of Fiscal 2023 and midway through the second quarter of Fiscal 2023. Additionally, in both the current and prior year, we experienced supply chain disruptions and capacity constraints (largely for gluten-free production) resulting in lower production volumes and sales.
Additionally, due to volatility in our input costs in the previous two fiscal years, we implemented price increases to mitigate these cost pressures during the first quarter of Fiscal 2023 and midway through the second quarter of Fiscal 2023 and executed our portfolio optimization initiatives.
The DKB snack bars and snack bites are part of an initiative to extend our presence beyond the traditional bread category and into the snacking category. Our brands and products are sold through various channels throughout the U.S. These channels include supermarkets, drugstores, mass merchandisers, discount stores, club stores, convenience stores, thrift outlet stores, and foodservice, among others.
In Fiscal 2025, we plan to roll out DKB snack bites nationwide and introduce Wonder branded cake products. The DKB snack bars and snack bites are part of an initiative to extend our presence beyond the traditional bread category and into the snacking category.
Flowers aims to attract a qualified workforce through an inclusive and accessible recruiting process that utilizes online recruiting platforms, campus outreach, apprenticeships, internships, and job fairs. In 2023, we established relationships with historically black colleges and universities (HBCUs) to expand our reach and recruit more diverse talent.
Through campus outreach, apprenticeships, and internship and rotational programs, we employ an inclusive recruiting process to attract and retain top talent in a competitive talent market. Most recently, Flowers has increased the number of focus schools and career fairs attended annually, and developed new relationships with Historically Black Colleges and Universities (HBCUs).
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Our results for Fiscal 2023 continued to benefit from a more optimized sales mix of branded retail products as compared to pre-pandemic periods. However, we experienced significant input cost inflation for commodities and transportation, and, to a lesser extent, for labor in the current and prior year periods.
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The total cash purchase price is approximately $795 million. The acquisition is expected to expand the company’s exposure to the better-for-you snacking segment and diversify its category exposure, and enhances the company's growth and margin prospects.
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Our cross-functional transformation office is responsible for overseeing the implementation of our strategic priorities, including our digital and ERP initiatives, which are discussed in more detail under the “Transformation Strategy Initiatives” section below.
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The transaction is subject to customary regulatory and other approvals and closing conditions and is anticipated to close in the first quarter of Fiscal 2025. Founded in 2012, Simple Mills is a market-leading natural brand offering premium better-for-you crackers, cookies, snack bars, and baking mixes.
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In Fiscal 2022, we increased production capacity for our organic products by adding a production line at our Henderson, Nevada bakery to better serve the West Coast market. Additionally, we ceased production at our Phoenix, Arizona bakery, an older, less efficient bakery that produced traditional bread and bun products.
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Built upon the belief that food has the power to spark impactful change, Simple Mills’ mission is to revolutionize the way food is made to positively impact people and the planet.
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The increase in estimated costs resulted from expanding the project scope and anticipation of greater reliance on external resources for bakery deployments due to labor constraints. As of December 30, 2023, we have incurred costs related to the project of approximately $214 million.
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The brand’s stunningly simple ingredients, pioneering use of nutrient-dense nut, seed, and vegetable flours, and exceptional taste have cultivated unmatched brand love and loyalty among natural and mainstream consumers alike. Simple Mills products are available nationwide across more than 30,000 natural and conventional stores.
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Wonder’s Classic White loaf is the #2 UPC in the white loaf segment based on dollars and units in the U.S.
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Inflationary pressures have negatively impacted consumer purchasing patterns and behaviors over the last several years resulting in softness in the fresh packaged bread and cake categories and increased competition.
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New product introductions in Fiscal 2022 included Nature's Own Hawaiian loaf bread, Nature's Own Perfectly Crafted Sourdough loaf bread, DKB Organic Everything Bread, and Canyon Bakehouse Gluten-Free Brioche and Hawaiian dinner roll varieties, among other new products.
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Commodity cost inflation began to moderate in the latter half of Fiscal 2023 and that trend continued throughout Fiscal 2024. Additionally, in the prior year, capacity constraints, largely for gluten-free production, resulted in lower production volumes and sales of these products.
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Flowers is also a proud second chance employer for individuals impacted by the criminal justice system, furthering the commitment that began when we acquired the DKB brand in Fiscal 2015. At Flowers, we have implemented recruitment initiatives at our bakeries to attract and retain ex-offenders.
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We believe our flexible bakery system allows us to quickly shift production to high demand products and adjust distribution where needed. For example, we ceased production at our Baton Rouge, Louisiana bakery in Fiscal 2024 and our Phoenix, Arizona bakery in Fiscal 2022 to shift production to more efficient bakeries.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe expanding presence of e-commerce retailers has impacted, and may continue to impact, consumer preferences and market dynamics, which in turn may negatively affect our sales or profits. We experience price pressure from time to time due to competitors’ promotional activity and other pricing efforts. This pricing pressure is particularly strong during adverse economic periods and periods of high inflation.
Biggest changeWe experience price pressure from time to time due to competitors’ promotional activity and other pricing efforts. This pricing pressure is particularly strong during adverse economic periods and periods of high inflation. Increased competition could result in reduced sales, margins, profits and market share. Product removals, damaged product or safety concerns could adversely impact our results of operations.
In light of those and other geopolitical events, nation-state actors or their supporters may launch retaliatory cyber-attacks, and may attempt to cause supply chain and other third-party service provider disruptions, or take other geopolitically motivated retaliatory actions that may disrupt our business operations, result in data compromise, or both. These circumstances increase the likelihood of cyber-attacks and/or security breaches.
In light of those and other geopolitical events, nation-state actors or their supporters may launch retaliatory cyber-attacks, and may attempt to cause supply chain and other third-party service provider disruptions, or take other geopolitically motivated retaliatory actions that may disrupt our business operations, result in data compromise, 15 or both. These circumstances increase the likelihood of cyber-attacks and/or security breaches.
Disputes with significant suppliers could also adversely affect our ability to supply products to our customers. If our sales to one or more of these customers are reduced, this reduction may adversely affect our business, financial condition or results of operations. 17 Our large customers may impose requirements on us that may adversely affect our results of operations.
Disputes with significant suppliers could also adversely affect our ability to supply products to our customers. If our sales to one or more of these customers are reduced, this reduction may adversely affect our business, financial condition or results of operations. Our large customers may impose requirements on us that may adversely affect our results of operations.
Our success depends in part on our ability to respond to current market trends and to anticipate the tastes and dietary habits of consumers, including concerns of consumers regarding health and wellness, obesity, product attributes, ingredients, and packaging.
Our success depends in part on our ability to respond to current market trends and to anticipate the tastes and dietary habits of consumers, including concerns of consumers regarding nutrition, health and wellness, obesity, product attributes, ingredients, and packaging.
Future annual amounts could be impacted by 13 various factors, such as changes in the number of plan participants, changes in the discount rate, changes in the expected long-term rate of return, changes in the level of contributions to the plan, and other factors.
Future annual amounts could be impacted by various factors, such as changes in the number of plan participants, changes in the discount rate, changes in the expected long-term rate of return, changes in the level of contributions to the plan, and other factors.
He began his career with The Proctor & Gamble Company in 1988, serving in a number of operational leadership roles at production facilities in the U.S. and Puerto Rico until joining PepsiCo in 2003. David M. Roach Age 54 Chief Strategic Projects Officer Mr. Roach was named chief strategic projects officer in August 2022.
He began his career with The Proctor & Gamble Company in 1988, serving in a number of operational leadership roles at production facilities in the U.S. and Puerto Rico until joining PepsiCo in 2003. David M. Roach Age 55 Chief Strategic Projects Officer Mr. Roach was named chief strategic projects officer in August 2022.
Thomas served on Flowers’ board of directors as an independent director. Stephanie B. Tillman Age 53 Chief Legal Counsel Ms. Tillman was named chief legal counsel and corporate secretary effective January 2020. Previously, she served as vice president, chief compliance officer, and deputy general counsel from April 2011 to January 2020. Prior to that, Ms.
Thomas served on Flowers’ board of directors as an independent director. Stephanie B. Tillman Age 54 Chief Legal Counsel Ms. Tillman was named chief legal counsel and corporate secretary effective January 2020. Previously, she served as vice president, chief compliance officer, and deputy general counsel from April 2011 to January 2020. Prior to that, Ms.
Mark Chaffin Age 53 Chief Information Officer Mr. Chaffin was named chief information officer (“CIO”) in February 2020 after serving four months in an interim capacity. Prior to joining Flowers, Mr. Chaffin was a partner in the Southeast practice of Fortium Partners, a provider of technology leadership services, from 2019 until joining Flowers.
Mark Chaffin Age 54 Chief Information Officer Mr. Chaffin was named chief information officer (“CIO”) in February 2020 after serving four months in an interim capacity. Prior to joining Flowers, Mr. Chaffin was a partner in the Southeast practice of Fortium Partners, a provider of technology leadership services, from 2019 until joining Flowers.
If we are unable to implement the ERP system upgrade as planned, the effectiveness of our internal control over financial reporting could be adversely affected, our ability to assess those controls adequately could be delayed, and our financial condition, results of operations and cash flows could be negatively impacted.
If we are unable to deploy the ERP system upgrade as planned, the effectiveness of our internal control over financial reporting could be adversely affected, our ability to assess those controls adequately could be delayed, and our financial condition, results of operations and cash flows could be negatively impacted.
Mark Courtney Age 63 Chief Brand Officer Mr. Courtney was named chief brand officer in July 2020. He previously served as president of the Fresh Packaged Bread Business Unit from May 2019 to July 2020, senior vice president of retail accounts from May 2017 to May 2019, and senior vice president of sales from June 2008 to May 2017.
Mark Courtney Age 64 Chief Brand Officer Mr. Courtney was named chief brand officer in July 2020. He previously served as president of the Fresh Packaged Bread Business Unit from May 2019 to July 2020, senior vice president of retail accounts from May 2017 to May 2019, and senior vice president of sales from June 2008 to May 2017.
Tillman served in various roles in the legal department since joining the company in 1995. Cindy L. Cox Age 57 Chief Human Resources Officer Ms. Cox joined Flowers as chief human resources officer in February 2023.
Tillman served in various roles in the legal department since joining the company in 1995. Cindy L. Cox Age 58 Chief Human Resources Officer Ms. Cox joined Flowers as chief human resources officer in February 2023.
He rejoined Flowers in 2012. Terry S. Thomas Age 54 Chief Growth Officer Mr. Thomas joined Flowers as chief growth officer in September 2023. Prior to joining the company, Mr.
He rejoined Flowers in 2012. Terry S. Thomas Age 55 Chief Growth Officer Mr. Thomas joined Flowers as chief growth officer in September 2023. Prior to joining the company, Mr.
McMullian served as vice president of mergers and acquisitions and deputy general counsel from 2015 until 2017, vice president and associate general counsel from 2011 until 2015, and as associate general counsel from 2003, when he joined the company, until 2011. R. Steve Kinsey Age 63 Chief Financial Officer and Chief Accounting Officer Mr.
McMullian served as vice president of mergers and acquisitions and deputy general counsel from 2015 until 2017, vice president and associate general counsel from 2011 until 2015, and as associate general counsel from 2003, when he joined the company, until 2011. R. Steve Kinsey Age 64 Chief Financial Officer Mr.
Damage or disruption to our manufacturing or distribution capabilities, or the manufacturing or distribution capabilities of our suppliers, due to weather, including any potential effects of climate change, natural disaster, fire or explosion, terrorism, pandemics (such as COVID-19 and any variants), inferior product or ingredient supply, labor strikes or work stoppages, or adverse outcomes in litigation involving our independent distributor model, could impair our ability to make, move or sell our products.
Damage or disruption to our manufacturing or distribution capabilities, or the manufacturing or distribution capabilities of our suppliers, due to weather, including any potential effects of climate change, natural disaster, fire or explosion, terrorism, pandemics, inferior product or ingredient supply, labor strikes or work stoppages, or adverse outcomes in litigation involving our independent distributor model, could impair our ability to make, move or sell our products.
Prior to that, Mr. Courtney served in various sales positions since joining the company in 1983. 20 Name, Age and Office Business Experience Tom Winters Age 60 Chief Supply Chain Officer Mr. Winters joined Flowers as chief supply chain officer in April 2022.
Prior to that, Mr. Courtney served in various sales positions since joining the company in 1983. 22 Name, Age and Office Business Experience Tom Winters Age 61 Chief Supply Chain Officer Mr. Winters joined Flowers as chief supply chain officer in April 2022.
Acquisitions, including future acquisitions, require us to efficiently integrate the acquired business or businesses, which involves a significant degree of difficulty, including the following: • integrating the operations and business cultures of the acquired businesses while carrying on the ongoing operations of the businesses we operated prior to the acquisitions; • managing a significantly larger company than before consummation of the acquisitions; • the possibility of faulty assumptions underlying our expectations regarding the prospects of the acquired businesses; • coordinating a greater number of diverse businesses and businesses located in a greater number of geographic locations; • attracting and retaining the necessary personnel associated with the acquisitions; • creating uniform standards, controls, procedures, policies and information systems and controlling the costs associated with such matters; and • expectations about the performance of acquired trademarks and brands and the fair value of such trademarks and brands.
Acquisitions, including future acquisitions, require us to efficiently integrate the acquired business or businesses, which involves a significant degree of difficulty, including the following: • integrating the operations and business cultures of the acquired businesses while carrying on the ongoing operations of the businesses we operated prior to the acquisitions; • managing a significantly larger company than before consummation of the acquisitions; • the possibility of faulty assumptions underlying our expectations regarding the prospects of the acquired businesses; • coordinating a greater number of diverse businesses and businesses located in a greater number of geographic locations; • attracting and retaining the necessary personnel associated with the acquisitions; • creating uniform standards, controls, procedures, policies and information systems and controlling the costs associated with such matters; and • expectations about the performance of acquired trademarks and brands and the fair value of such trademarks and brands. 14 Divestitures have operational risks that may include impairment charges.
Cyber-attacks and other cyber incidents are occurring more frequently in the United States and are becoming more sophisticated with a wide range of expertise and motives. Such cyber-attacks and cyber incidents can take many forms, including extortion, denial of service, or social engineering through phishing or malware emails.
Cyber-attacks and other cyber incidents are occurring more frequently in the United States and are becoming more sophisticated with a wide range of expertise and motives. Such cyber-attacks and cyber incidents can take many forms, including extortion, denial of service, employee or personnel failures, or social engineering through phishing, ransomware or malware.
Investments in partnerships, joint ventures, or other entities may, under certain 14 circumstances, involve risks not present were a third-party not involved, including the possibility that our joint venture partners might become bankrupt, fail to fund their share of required capital contributions, make poor business decisions, or block or delay necessary decisions.
Investments in partnerships, joint ventures, or other entities may, under certain circumstances, involve risks not present were a third-party not involved, including the possibility that our joint venture partners might become bankrupt, fail to fund their share of required capital contributions, make poor business decisions, or block or delay necessary decisions which can lead to potential impairment recognition.
If we are not able to successfully maintain our brand recognition or were to suffer damage to our reputation or loss of consumer confidence in our products for any of these reasons, our revenues and profitability could be adversely affected. Our inability to execute our business strategy could adversely affect our business.
If we are not able to successfully maintain our brand recognition or were to suffer damage to our reputation or loss of consumer confidence in our products for any of these reasons, our revenues and profitability could be adversely affected.
The design and implementation of the upgrade to the ERP system requires an investment of significant personnel and financial resources, including substantial expenditures for outside consultants, system hardware and software in addition to other expenses in connection with the transformation of our financial and operating processes.
The design and implementation of the upgrade to the ERP system has required, and continues to require, an investment of significant personnel and financial resources, including substantial expenditures for outside consultants, system hardware and software in addition to other expenses in connection with the transformation of our financial and operating processes.
He was elected as chairman of the board of directors effective May 25, 2023 and has served as chief executive officer since May 2019. Previously, Mr. McMullian served as president and chief executive officer from May 2019 to August 2023.
Ryals McMullian Age 55 Chairman and Chief Executive Officer Mr. McMullian serves as chairman and chief executive officer of Flowers. He was elected as chairman of the board of directors effective May 25, 2023 and has served as chief executive officer since May 2019. Previously, Mr. McMullian served as president and chief executive officer from May 2019 to August 2023.
In addition, our IT systems (including those provided to us by third parties) may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, systems failures, security breaches or intrusions (including theft of customer, consumer or other confidential data), and viruses.
In addition, our IT systems (including those provided to us by third parties), and the IT systems of our third-party business partners, may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, systems failures, security breaches or intrusions (including theft of customer, consumer or other confidential data), and cyber incidents.
The independent distributors and third-party transportation companies are dependent upon gasoline and diesel for their vehicles. The cost of these fuels may fluctuate widely due to economic and political conditions, government policy and regulation, war or other conflicts (including the current situation in Ukraine and the Middle East), or other unforeseen circumstances.
The independent distributors and third-party transportation companies are dependent upon gasoline and diesel for their vehicles. The cost of these fuels may fluctuate widely due to economic and political conditions, government policy and regulation, war or other conflicts, or other unforeseen circumstances.
We continue to evaluate the possible impact of such new laws and regulations, including those mentioned in the following sentence. In October 2023, California passed new laws that mandate the disclosure of GHG emissions, including Scope 3 emissions, and climate-related financial risks and measures adopted to reduce and adapt to such risks. Both California laws require initial disclosures in 2026.
We continue to evaluate the possible impact of such new laws and regulations, including those mentioned in the following sentence. In October 2023, California passed new laws that mandate the disclosure of GHG emissions, climate-related financial risks and measures adopted to reduce and adapt to such risks.
We have several large customers that account for a significant portion of sales, and the loss of one of our large customers could adversely affect our financial condition and results of operations. Our top ten customers accounted for 55.5% of sales during Fiscal 2023. Our largest customer, Walmart/Sam’s Club, accounted for 22.3% during this period.
We have several large customers that account for a significant portion of sales, and the loss of one of our large customers could adversely affect our financial condition and results of operations. Our top ten customers accounted for 56.7% of sales during Fiscal 2024. Our largest customer, Walmart/Sam’s Club, accounted for 22.4% during this period.
As a result, climate change could negatively affect our business and operations. 18 Additionally, as concerns about climate change and other environmental issues continue to increase, we may be required to comply with new laws and regulations which may result in increased/not yet identified compliance costs, the scale of which is to be evaluated.
Additionally, as concerns about climate change and other environmental issues continue to increase, we may be required to comply with new laws and regulations which may result in increased/not yet identified compliance costs, the scale of which is to be evaluated.
In an inflationary environment, such as the current economic environment, depending on the market conditions of the baking industry and the raising of interest rates by the United States Federal Reserve (and the duration of the currently elevated interest rates), we may be unable to raise the prices of our products enough to keep up with the rate of inflation, which would reduce our profit margins, and continued inflationary pressures could impact our business, financial condition, and results of operations.
In an inflationary environment, such as the current economic environment, depending on the market conditions of the baking industry, we may be unable to raise the prices of our products enough to keep up with the rate of inflation, which would reduce our profit margins, and continued inflationary pressures could impact our business, financial condition, and results of operations.
A number of factors may adversely affect the labor force available to us, including high employment levels, federal unemployment subsidies and benefits offered, and other government regulations, which include laws and regulations related to workers’ health and safety, wage and hour practices, and immigration.
We have recently experienced labor shortages at some of our bakeries. A number of factors may adversely affect the labor force available to us, including high employment levels, federal unemployment subsidies and benefits offered, and other government regulations, which include laws and regulations related to workers’ health and safety, wage and hour practices, and immigration.
We employ various operating strategies to maintain our position as one of the nation’s leading producers and marketers of bakery products available to customers through multiple channels of distribution.
Our inability to execute our business strategy could adversely affect our business. We employ various operating strategies to maintain our position as one of the nation’s leading producers and marketers of bakery products available to customers through multiple channels of distribution.
An overall labor shortage, lack of skilled labor, increased turnover or labor inflation could have a material adverse impact on the company’s operations, results of operations, liquidity or cash flows. Additionally, health care, workers’ compensation, postretirement welfare, and pension costs are increasing and will likely continue to do so.
An overall labor shortage, lack of skilled labor, increased turnover or labor inflation could have a material adverse impact on the company’s operations, results of operations, liquidity or cash flows. Additionally, health care and workers’ compensation are increasing and will likely continue to do so. Any substantial increase in these costs may have an adverse impact on our profitability.
We are subject to increasing legal complexity and could be party to litigation that may adversely affect our business. Increasing legal complexity may continue to affect our operations and results in material ways.
These California laws require initial disclosures in 2026. 19 We are subject to increasing legal complexity and could be party to litigation that may adversely affect our business. Increasing legal complexity may continue to affect our operations and results in material ways.
Any substantial increase in these costs may have an adverse impact on our profitability. The company records the liabilities related to its benefit plans based on actuarial valuations, which include key assumptions determined by management. Material changes in benefit plan liabilities may occur in the future due to changes in these assumptions.
The company records the liabilities related to its benefit plans based on 13 actuarial valuations, which include key assumptions determined by management. Material changes in benefit plan liabilities may occur in the future due to changes in these assumptions.
Any such product removal, damaged product or an adverse result in any litigation related to such a product removal or damaged product could have a material adverse effect on our operating and financial results in future periods, depending on the costs of the product removal from the market, the destruction of product inventory, diversion of management time and attention, contractual and other claims made by customers that we supply, loss of key customers, competitive reaction and consumer attitudes.
Any such product removal, damaged product or an adverse result in any litigation related to such a product removal or damaged product could have a material adverse effect on our operating and financial results in future periods, depending on the costs of the product removal from the market, the destruction of product inventory, diversion of management time and attention, contractual and other claims made by customers that we supply, loss of key customers, competitive reaction and consumer attitudes. 17 Even if a product liability, consumer fraud or other claim is unsuccessful or without merit, the negative publicity surrounding such assertions regarding our products could adversely affect our reputation and brand image.
We are in the midst of implementing an upgrade to our ERP system to a more robust platform. The upgrade of the ERP system is designed to accurately maintain our financial records, enhance our operational functionality and provide timely information to our management team related to the operations of the business.
The upgrade of the ERP system is designed to accurately maintain our financial records, enhance our operational functionality and provide timely information to our management team related to the operations of the business.
Any of these developments could materially and/or negatively affect our financial condition, results of operations and cash flows. We may not be able to attract or retain the highly skilled people we need for our business. We depend on the skills and continued service of key personnel, including our experienced management team.
We may not be able to attract or retain the highly skilled people we need for our business. We depend on the skills and continued service of key personnel, including our experienced management team.
We may not be able to implement the ERP system upgrade successfully without experiencing delays, increased costs and other difficulties, including potential design defects, miscalculations, testing requirements, and the diversion of management’s attention from day-to-day business operations.
During the second quarter of Fiscal 2023, we began deploying the ERP upgrade. The deployment is anticipated to be completed in Fiscal 2026. We may not be able to deploy the ERP system upgrade successfully without experiencing delays, increased costs and other difficulties, including potential design defects, miscalculations, testing requirements, and the diversion of management’s attention from day-to-day business operations.
In particular, increasing regulation of fuel emissions could substantially increase the distribution and supply chain costs associated with our products.
In particular, increasing regulation of fuel emissions could substantially increase the distribution and supply chain costs associated with our products. As a result, climate change could negatively affect our business and operations.
We compete with other companies both within and outside of our industry for talented personnel, and we may lose key personnel or fail to attract, recruit, hire, develop, and retain other talented personnel. Any such loss, failure or negative perception with respect to these individuals may adversely affect our business or financial results.
We compete with other companies both within and outside of our industry for talented personnel, and we may lose key personnel or fail to attract, recruit, hire, develop, and retain other talented personnel.
We may become involved in lawsuits and legal proceedings alleging that the consumption of any of our products causes or caused injury, illness or death.
We may be required to recall certain of our products should they be mislabeled, contaminated, spoiled, tampered with or damaged. We may become involved in lawsuits and legal proceedings alleging that the consumption of any of our products causes or caused injury, illness or death.
Kinsey was named chief financial officer (“CFO”) and chief accounting officer (“CAO”) in April 2020. Previously, he served as executive vice president, CFO and chief administrative officer from May 2017 to April 2020. Mr. Kinsey served as executive vice president and CFO from 2008 until 2017, and as senior vice president and CFO from 2007 to 2008.
Kinsey has served as chief financial officer (“CFO”) since April 2020. Previously, he served as CFO and chief accounting officer ("CAO") from April 2020 to December 2024, and executive vice president, CFO and chief administrative officer from May 2017 to April 2020. Mr.
If we are unable to prevent physical and electronic break-ins, cyber-attacks and other information security breaches, we may suffer financial and reputational damage, be subject to litigation or incur remediation costs or penalties because of the unauthorized disclosure of confidential information belonging to us or to our partners, customers, suppliers or employees. 15 We may experience difficulties in designing and implementing the upgrade of our ERP system.
If we are unable to prevent physical and electronic break-ins, cyber-attacks and other information security breaches, we may suffer financial and reputational damage, operational disruptions, be subject to litigation, civil or criminal investigations, regulatory intervention or incur costs related to remediation, payment of ransom or penalties, including as result of unauthorized disclosure of confidential information belonging to us or to our partners, customers, suppliers or employees.
In addition, the rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks. There can be no assurance that the policies, protocols, and practices that we follow to address cybersecurity, including our controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information.
There can be no assurance that the policies, protocols, and practices that we follow to address cybersecurity, including our controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information. We may incur significant costs in protecting or remediating cyber-attacks or other cyber incidents.
We are also subject to the legal and compliance risks associated with privacy, data collection, protection and management, in particular as it relates to information we collect when we provide products to customers. Executive Offices The address and telephone number of our principal executive offices are 1919 Flowers Circle, Thomasville, Georgia 31757, (229) 226-9110.
We are also subject to the legal and compliance risks associated with privacy, data collection, protection and management, in particular as it relates to information we collect when we provide products to customers.
Industry Risks Increases in costs and/or shortages of raw materials, fuels and utilities could adversely impact our profitability. Raw materials, such as flour, sweeteners, shortening, yeast, and water, which are used in our bakery products, are subject to price fluctuations.
Raw materials, such as flour, sweeteners, shortening, yeast, water, and eggs, which are used in our bakery products, are subject to price fluctuations.
Before joining Flowers, he served as senior vice president of supply chain at PepsiCo, Inc., overseeing supply chain functions for two of the company's North American divisions. During his 19-year tenure at PepsiCo, he also held a number of operations and production roles with responsibility for the management of internal plants, warehouses, and contract manufacturers.
During his 19-year tenure at PepsiCo, he also held a number of operations and production roles with responsibility for the management of internal plants, warehouses, and contract manufacturers.
In addition, activities related to identifying, recruiting, hiring, and integrating qualified individuals may require significant time and expense. We may not be able to locate suitable replacements for any key employees who terminate their employment or offer employment to potential replacements on reasonable terms, each of which may adversely affect our business and financial results.
We may not be able to locate suitable replacements for any key employees who terminate their employment or offer employment to potential replacements on reasonable terms, each of which may adversely affect our business and financial results. Labor shortages and increased turnover or increases in employee and employee-related costs could have adverse effects on our profitability.
Prior to those appointments, Mr. Kinsey served in various accounting roles since joining the company in 1989. Heeth Varnedoe IV Age 57 President and Chief Operating Officer Mr. Varnedoe was named president and chief operating officer effective September 2023. Previously, he served as chief operating officer from January 2023 to August 2023.
Kinsey served as executive vice president and CFO from 2008 until 2017, and as senior vice president and CFO from 2007 to 2008. Prior to those appointments, Mr. Kinsey served in various accounting roles since joining the company in 1989. Heeth Varnedoe IV Age 58 President and Chief Operating Officer Mr.
Both conflicts are fast-moving and uncertain. Global grain markets have exhibited increased volatility as sanctions have been imposed on Russia by the United States, the United Kingdom, the European Union, and others in response to Russia’s invasion of Ukraine.
Global grain markets have exhibited increased volatility as sanctions have been imposed on Russia by the United States, the United Kingdom, the European Union, and others in response to Russia’s invasion of Ukraine. Furthermore, the conflict in the Middle East may impact oil production capacity, oil prices, and cause disruptions in global supply chains and shipping routes.
These changes could also result from regulatory developments based on the manner in which the U.S. Department of Labor applies the Fair Labor Standards Act. In addition, as a result of California distributor-related litigation, we plan to convert our DSD distribution model in California to an employment model in 2024.
These changes could also result from regulatory developments based on the manner in which the U.S. Department of Labor applies the Fair Labor Standards Act.
The cost of these inputs may fluctuate widely due to foreign and domestic government policies and regulations, inflation, weather conditions, domestic and international demand, availability due to supply chain conditions, or other unforeseen circumstances. The global economy has been negatively impacted by the military conflict between Russia and Ukraine and the conflict in the Middle East.
The cost of these inputs may fluctuate widely due to foreign and domestic government policies and regulations (including tariffs), inflation, weather conditions, domestic and international demand, availability due to supply chain conditions, livestock disease (for example, avian influenza) or other unforeseen circumstances.
Divestitures have operational risks that may include impairment charges. Divestitures also present unique financial and operational risks, including diverting management attention from the existing core business, separating personnel and financial data and other systems, and adversely affecting existing business relationships with suppliers and customers.
Divestitures also present unique financial and operational risks, including diverting management attention from the existing core business, separating personnel and financial data and other systems, and adversely affecting existing business relationships with suppliers and customers. Co-investments with third parties through partnership, joint ventures, or other entities may involve non-controlling, illiquid interests and limited decision-making authority.
Information about our Executive Officers The following table sets forth certain information regarding the persons who currently serve as the executive officers of Flowers Foods. 19 EXECUTIVE OFFICERS Name, Age and Office Business Experience A. Ryals McMullian Age 54 Chairman and Chief Executive Officer Mr. McMullian serves as chairman and chief executive officer of Flowers.
Executive Offices The address and telephone number of our principal executive offices are 1919 Flowers Circle, Thomasville, Georgia 31757, (229) 226-9110. Information about our Executive Officers The following table sets forth certain information regarding the persons who currently serve as the executive officers of Flowers Foods. 21 EXECUTIVE OFFICERS Name, Age and Office Business Experience A.
Legal and Regulatory Risks Government regulation, including labeling or warning requirements, could adversely impact our results of operations and financial condition.
However, if we fail to meet a large customer’s demands, we could lose that customer’s business, which also could adversely affect our sales and results of operations. 18 Legal and Regulatory Risks Government regulation, including labeling or warning requirements, could adversely impact our results of operations and financial condition.
In addition, the risk of cyber-attacks has increased in connection with the military conflict between Russia and Ukraine, the conflict in the Middle East, and the resulting geopolitical conflicts.
Cybersecurity threat actors also may attempt to exploit vulnerabilities through software including software that is commonly used by companies in cloud-based services and bundled software. In addition, the risk of cyber-attacks has increased in connection with the military conflict between Russia and Ukraine, the conflict in the Middle East, and the resulting geopolitical conflicts.
Even if a product liability, consumer fraud or other claim is unsuccessful or without merit, the negative publicity surrounding such assertions regarding our products could adversely affect our reputation and brand image. We also could be adversely affected if our customers or consumers in our principal markets lose confidence in the safety and quality of our products.
We also could be adversely affected if our customers or consumers in our principal markets lose confidence in the safety and quality of our products.
Compliance with requirements imposed by large customers may be costly and may have an adverse effect on our margins and profitability. However, if we fail to meet a large customer’s demands, we could lose that customer’s business, which also could adversely affect our sales and results of operations.
Compliance with requirements imposed by large customers may be costly and may have an adverse effect on our margins and profitability.
Competition is based on product availability, product quality, price, effective promotions, and the ability to target changing consumer preferences. Substantial growth in e-commerce has encouraged the entry of new competitors and business models, intensifying competition by simplifying distribution and lowering barriers to entry.
Substantial growth in e-commerce has encouraged the entry of new competitors and business models, intensifying competition by simplifying distribution and lowering barriers to entry. The expanding presence of e-commerce retailers has impacted, and may continue to impact, consumer preferences and market dynamics, which in turn may negatively affect our sales or profits.
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Labor shortages and increased turnover or increases in employee and employee-related costs could have adverse effects on our profitability. We have recently experienced labor shortages at some of our bakeries.
Added
In addition, as a result of California distributor-related litigation, we began converting our independent distributor partners distribution model in California to an employment model in Fiscal 2024 and anticipate completing the conversion early in the second quarter of Fiscal 2025. Any of these developments could materially and/or negatively affect our financial condition, results of operations and cash flows.
Removed
Co-investments with third parties through partnership, joint ventures, or other entities, may involve non-controlling, illiquid interests and limited decision-making authority.
Added
Any such loss, failure or negative perception with respect to these individuals may adversely affect our business or financial results or our ability to meet regulatory reporting requirements. In addition, activities related to identifying, recruiting, hiring, and integrating qualified individuals may require significant time and expense.
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We may incur significant costs in protecting or remediating cyber-attacks or other cyber incidents.
Added
Additionally, a company determination that any brand is no longer expected to contribute to the company's future results could lead to an impairment or material impairment of an intangible asset, resulting in an impairment or an acceleration of amortization due to a reduction in the useful life, and could adversely affect our business, financial condition or results of operations.
Removed
Furthermore, the conflict in the Middle East may impact oil production capacity, oil prices, and cause disruptions in global supply chains and shipping routes.
Added
In particular, this risk arises in the context of the pending Simple Mills Acquisition, which is expected to close in the first quarter of Fiscal 2025.
Removed
Increased competition could result in reduced sales, margins, profits and market share. 16 Product removals, damaged product or safety concerns could adversely impact our results of operations. We may be required to recall certain of our products should they be mislabeled, contaminated, spoiled, tampered with or damaged.
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In addition, the rapid evolution and increased adoption of artificial intelligence (“AI”) and machine learning technologies may intensify our cybersecurity risks and make it more difficult to anticipate and implement protective measures to recognize, detect, and prevent the occurrence of any of the cyber events described above.
Added
Further, the technology and techniques used in cyberattacks are constantly evolving and the pace and extent of that evolution may accelerate with the use of emerging technologies including AI and machine learning.
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We may experience difficulties in deploying the upgrade of our ERP system. We are in the midst of deploying an upgrade to our ERP system to a more robust platform.
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We use, and may continue to expand our use of, AI in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our business operations. We may leverage AI, including generative AI, in our product development, operations, and software programming.
Added
Our competitors or other third parties may incorporate AI into their operational processes more quickly or more successfully than we do, which could impair our ability to compete effectively and adversely affect our results of operations.
Added
In addition, there are significant risks involved in developing and deploying AI and there can be no assurance that the usage of AI will enhance our products or services or be beneficial to our business, including our efficiency or profitability.
Added
For example, our AI-related efforts, particularly those related to generative AI, subject us to risks related to accuracy, intellectual property infringement or misappropriation, data privacy, and cybersecurity, among others. It is also uncertain how various laws related to online services, intermediary liability, and other issues will apply to content generated by AI.
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AI also presents emerging ethical issues, and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability.
Added
The rapid evolution of AI, including the regulation of AI by government or other regulatory agencies, will require significant resources to develop, test and maintain our platforms, offerings, services, and features to implement AI ethically and minimize any unintended harmful impacts. 16 Industry Risks Increases in costs and/or shortages of raw materials, fuels and utilities could adversely impact our profitability.
Added
The global economy has been negatively impacted by the military conflict between Russia and Ukraine and the conflict in the Middle East. Both conflicts are fast-moving and uncertain.
Added
Competition is based on product availability, product quality, price, effective promotions, and the ability to target changing consumer preferences. Competitor and customer pressures require that we timely and effectively respond to changes in relevant markets, including changes to distribution channels and technological developments.
Added
Failure to effectively and timely assess new or developing trends, technological advancements (including advancements such as AI and machine learning, which may become critical in understanding consumer preferences in the future) or changes in distribution methods could negatively impact demand for our products, our operating results, achievement of our strategic and financial goals and our ability to capitalize on new revenue or value-producing opportunities.
Added
Although we have various insurance programs in place that, subject to their terms and conditions, are intended to address certain costs associated with these events, the potential liabilities associated with these litigation matters, or those that could arise in the future, could be excluded from coverage or, if covered, could exceed the coverage provided by such programs.
Added
In addition, insurance carriers may seek to rescind or deny coverage with respect to pending or future claims or lawsuits. If we do not have sufficient coverage under our policies, or if coverage is denied, we may be required to make material payments to settle litigation or satisfy any judgment.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis individual has a variety of IT security skills, experiences and professional expertise, obtained through work experience and information security certifications and education. Management tracks cybersecurity incidents through the process described above. Management regularly reports to the audit committee regarding policies and processes for assessing and managing risk associated with information technology and cybersecurity, as well as material cybersecurity incidents.
Biggest changeThe VP of Information Security is responsible for managing and assessing material risks from cybersecurity threats. This individual has a variety of IT security skills, experiences and professional expertise, obtained through work experience and information security certifications and education. Management tracks cybersecurity incidents through the process described above.
As described in its charter, the audit committee of the Board of Directors oversees risks related to information technology security and regularly reviews and discusses with management the company’s information technology security risk exposures, including (a) the potential impact of those exposures on the company’s business, financial results, operations and reputation, (b) the steps that management has taken to monitor and mitigate such exposures, (c) the company’s information governance policies and programs, and (d) legislative and regulatory developments that could materially impact the company’s privacy and data risk exposure.
As described in its charter, the audit committee of the Board of Directors oversees risks related to information technology security and regularly reviews and discusses with the VP of Information Security and other members of management the company’s information technology security risk exposures, including (a) the potential impact of those exposures on the company’s business, financial results, operations and reputation, (b) the steps that management has taken to monitor and mitigate such exposures, (c) the company’s information governance policies and programs, and (d) legislative and regulatory developments that could materially impact the company’s privacy and data risk exposure.
At the management-level, the company’s IT systems are overseen by our chief information officer, who has responsibility for information technology strategy and operations. The company's Information Security program is led by the company’s VP of Information Security, who has responsibility for information security strategy and operation.
At the management-level, the company’s IT systems are overseen by our CIO, who has responsibility for information technology strategy and operations. The company's Information Security program is led by the company’s VP of Information Security, who reports directly to the company's chief financial officer. The VP of Information Security has responsibility for information security strategy and operation.
The company’s board of directors oversees the company’s Information Security program, which is approved annually. The audit committee is tasked with oversight of certain risk issues, including cybersecurity.
Governance . The company’s board of directors (the "Board" or "Board of Directors") oversees the company’s Information Security program, which is approved annually. The audit committee is tasked with oversight of certain risk issues, including cybersecurity, and regularly reports its activities to the Board of Directors .
The company engages consultants, auditors, and other third parties to identify and manage risk from third parties. 21 No risks from previous cybersecurity threats have materially affected or are reasonably likely to materially affect Flowers’ business strategy, results of operations, or financial condition. However, we may incur significant costs in protecting or remediating cyber-attacks or other cyber incidents.
No risks from cybersecurity threats, including as the result of previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect Flowers’ business strategy, results of operations, or financial condition. However, we may incur significant costs in protecting or remediating cyber-attacks or other cyber incidents.
If we are unable to prevent physical and electronic break-ins, cyber-attacks and other information security breaches, we may suffer financial and reputational damage, be subject to litigation or incur remediation costs or penalties because of the unauthorized disclosure of confidential information belonging to us or to our partners, customers, suppliers or employees. Governance .
If we are unable to prevent physical and electronic break-ins, cyber-attacks and other information security breaches, we may suffer financial and reputational damage, operational disruptions, be subject to litigation, civil or criminal investigations, regulatory intervention or incur costs related to remediation, payment of ransom or penalties, including as a result of unauthorized disclosure of confidential information belonging to us or to our partners, customers, suppliers or employees.
Added
However, there is no guarantee that such coverage will be sufficient to address costs, liabilities and damages we may incur in connection with a cybersecurity incident or that such coverage will continue to be available on commercially reasonable terms or at all. 23 The company engages consultants and other third parties to identify and manage cybersecurity risks, including risks from third-party service providers that may impact the company.
Added
Management regularly reports to the audit committee regarding policies and processes for assessing and managing risk associated with information technology and cybersecurity, as well as material cybersecurity incidents.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAdditionally, across the continental U.S. in the markets we serve, we own approximately 140 warehouse/distribution centers and lease approximately 509 warehouse/distribution centers. 22 The table below sets forth the production and sales operations in our bakeries: Alabama Kansas Tennessee Birmingham (P) Lenexa (PS) Cleveland (P) Montgomery (P) Kentucky Crossville (PS)* Tuscaloosa (P) Bardstown (PS) Knoxville (PS) Arizona London (PS)* Texas Mesa (PS)* Louisiana Denton (PS) Tolleson (P) Baton Rouge (PS) El Paso (PS) Arkansas Lafayette (P) Houston (P) Batesville (PS) New Orleans (PS) Houston (PS) Texarkana (P) Maine San Antonio (PS) California Lewiston (P) Tyler (PS) Modesto (Leased) (P) Lewiston (PS) Utah Colorado Nevada West Jordan (PS) Johnstown (P) Henderson (PS) Virginia Florida North Carolina Lynchburg (P) Bradenton (PS) Goldsboro (PS) Norfolk (PS) Jacksonville (PS) Jamestown (PS) Lakeland (P) Newton (PS) Miami (PS) Oregon Georgia Milwaukie (PS) Atlanta (P) Pennsylvania Savannah (P) Oxford (PS) Suwanee (P) Philadelphia (Leased) (PS) Thomasville (PS) Tucker (P) Villa Rica (P) P - Production Only PS - Production and Sales *Only thrift store sales We believe our facilities are well-maintained and adequate, that they are being appropriately utilized and that they have sufficient production utilization for their present intended purposes.
Biggest changeAdditionally, across the continental U.S. in the markets we serve, we own approximately 140 warehouse/distribution centers and lease approximately 500 warehouse/distribution centers. 24 The table below sets forth the production and sales operations in our bakeries: Alabama Kansas Texas Birmingham (P) Lenexa (PS) Denton (PS) Montgomery (P) Kentucky El Paso (PS) Tuscaloosa (P) Bardstown (PS) Houston (P) Arizona London (PS)* Houston (PS) Mesa (PS)* Louisiana San Antonio (PS) Tolleson (P) Lafayette (P) Tyler (PS) Arkansas New Orleans (PS) Utah Batesville (PS) Maine West Jordan (PS) Texarkana (P) Lewiston (P) Virginia California Lewiston (PS) Lynchburg (P) Modesto (Leased) (P) Nevada Norfolk (PS) Colorado Henderson (PS) Johnstown (P) North Carolina Florida Goldsboro (PS) Bradenton (PS) Jamestown (PS) Jacksonville (PS) Newton (PS) Lakeland (P) Oregon Miami (PS) Milwaukie (PS)* Georgia Pennsylvania Atlanta (P)^ Oxford (PS) Savannah (P) Philadelphia (Leased) (PS) Suwanee (P) Tennessee Thomasville (PS) Cleveland (P) Tucker (P) Crossville (PS)* Villa Rica (P) Knoxville (PS) P - Production Only PS - Production and Sales *Only thrift store sales ^ Company announced the closure of this bakery effective late in the first quarter of Fiscal 2025.
Item 2. Pr operties Our principal executive offices are company owned and located in Thomasville, Georgia. The company also leases properties that are used for shared services functions and our IT group and owns several properties for our corporate offices. The company also has an additional shared services center in Phoenix, Arizona. We operate 46 bakeries across the continental U.S.
Item 2. Pr operties Our principal executive offices are company owned and located in Thomasville, Georgia. The company also leases properties that are used for shared services functions and our IT group and owns several properties for our corporate offices. The company also has an additional shared services center in Phoenix, Arizona. We operate 45 bakeries across the continental U.S.
During heightened periods of demand, the company can improve utilization by streamlining production with longer production runs and fewer differentiated products produced. Production utilization is not materially different when a sales facility is also located at the bakery.
On a consolidated basis during Fiscal 2024, our average quarterly production utilization ranged from 89% to 97% across all bakeries. During heightened periods of demand, the company can improve utilization by streamlining production with longer production runs and fewer differentiated products produced. Production utilization is not materially different when a sales facility is also located at the bakery.
As discussed in Item 1., Business, of this Form 10-K, the company is restructuring its plant operation responsibilities from the sales function to the supply chain function. This transition began in Fiscal 2023 and is anticipated to be completed for the remaining bakeries in Fiscal 2024.
As discussed in Item 1., Business, of this Form 10-K, the company has restructured its plant operation responsibilities from the sales function to the supply chain function.
Utilization is actual labor time as a percent of available hours of production in a week (based on 120 hours/week for three shifts). On a consolidated basis during Fiscal 2023, our average quarterly production utilization ranged from 89% to 98% across all bakeries.
We believe our facilities are well-maintained and adequate, that they are being appropriately utilized and that they have sufficient production utilization for their present intended purposes. Utilization is actual labor time as a percent of available hours of production in a week (based on 120 hours/week for three shifts).

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings For a description of all material pending legal proceedings, See Note 23, Commitments and Contingencies , of Notes to Consolidated Financial Statements of this Form 10-K. Item 4. Mine Saf ety Disclosures Not Applicable 23 PART II
Biggest changeItem 3. Legal Proceedings For a description of all material pending legal proceedings, See Note 24, Commitments and Contingencies , of Notes to Consolidated Financial Statements of this Form 10-K. Item 4. Mine Saf ety Disclosures Not Applicable 25 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe table below sets forth the common stock repurchased by the company during the twelve weeks ended December 30, 2023 (amounts in thousands, except share price data): Period Total Number of Shares Purchased Weighted Average Price Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 8, 2023 — November 4, 2023 — $ — — 23,229 November 5, 2023 — December 2, 2023 700 $ 21.30 700 22,529 December 3, 2023 — December 30, 2023 — $ — — 22,529 Total 700 $ 21.30 700 24 Stock Performance Graph The chart below is a comparison of the cumulative total return (assuming the reinvestment of all dividends paid) of our common stock, Standard & Poor’s 500 Index, Standard & Poor’s 500 Packaged Foods and Meats Index, and Standard & Poor’s MidCap 400 Index for the period December 29, 2018 through December 30, 2023 the last day of our 2023 fiscal year.
Biggest changeAt the close of the company’s fourth quarter on December 28, 2024, 21.5 million shares remained under the existing authorization. 26 Stock Performance Graph The chart below is a comparison of the cumulative total return (assuming the reinvestment of all dividends paid) of our common stock, Standard & Poor’s 500 Index, Standard & Poor’s 500 Packaged Foods and Meats Index, and Standard & Poor’s MidCap 400 Index for the period December 28, 2019 through December 28, 2024, the last day of our 2024 fiscal year.
Item 5. Market for the Registrant’s Common Equity, Related S tockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of the company’s common stock are quoted on the New York Stock Exchange (the “NYSE”) under the symbol “FLO.” Holders As of February 15, 2024, there were approximately 3,225 holders of record of the company’s common stock.
Item 5. Market for the Registrant’s Common Equity, Related S tockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of the company’s common stock are quoted on the New York Stock Exchange (the “NYSE”) under the symbol “FLO.” Holders As of February 14, 2025, there were approximately 3,195 holders of record of the company’s common stock.
Flowers Foods’ share price is also indexed to $100 at December 29, 2018. Item 6. [Reserved] 25
Flowers Foods’ share price is also indexed to $100 at December 28, 2019. Item 6. [Reserved] 27
Dividends The payment of dividends is subject to the discretion of the company’s Board. The Board bases its decisions regarding dividends on, among other things, general business conditions, our financial results, contractual, legal and regulatory restrictions regarding dividend payments and any other factors the Board may consider relevant.
While we intend to continue paying dividends on our common stock, the declaration of cash dividends is at the discretion of the Board, considered in the context of, among other things, general business conditions, our financial results, contractual, legal and regulatory restrictions regarding dividend payments and any other factors the Board may consider relevant.
These repurchases may be commenced or suspended without prior notice depending on then-existing business or market conditions and other factors. During the twelve weeks ended December 30, 2023, 0.7 million shares, at a cost of $14.9 million, of the company’s common stock were repurchased under the share repurchase plan.
These repurchases may be commenced or suspended without prior notice depending on then-existing business or market conditions and other factors. The company did not purchase any shares of its common stock in the fourth quarter of Fiscal 2024. From the inception of the plan through December 28, 2024, 73.0 million shares have been repurchased, at a cost of $756.0 million.
December 29, 2018 December 28, 2019 January 2, 2021 January 1, 2022 December 31, 2022 December 30, 2023 FLOWERS FOODS INC 100.00 123.00 132.50 166.47 179.74 146.26 S&P 500 INDEX 100.00 132.97 157.02 202.09 165.49 209.00 S&P 500 PACKAGED FOODS & MEATS INDEX 100.00 130.90 137.01 154.93 169.46 156.66 S&P MIDCAP 400 INDEX 100.00 127.42 144.91 180.79 157.18 183.01 Companies in the S&P 500 Index, the S&P 500 Packaged Foods and Meats Index, and the S&P MidCap 400 Index are weighted by market capitalization and indexed to $100 at December 29, 2018.
December 28, 2019 January 2, 2021 January 1, 2022 December 31, 2022 December 30, 2023 December 28, 2024 FLOWERS FOODS INC 100.00 107.73 135.34 146.14 118.91 112.71 S&P 500 INDEX 100.00 118.08 151.98 124.46 157.17 199.46 S&P 500 PACKAGED FOODS & MEATS INDEX 100.00 104.67 118.36 129.46 119.68 113.91 S&P MIDCAP 400 INDEX 100.00 113.73 141.88 123.35 143.63 164.48 Companies in the S&P 500 Index, the S&P 500 Packaged Foods and Meats Index, and the S&P MidCap 400 Index are weighted by market capitalization and indexed to $100 at December 28, 2019.
Removed
From the inception of the share repurchase plan through December 30, 2023, 72.0 million shares, at a cost of $733.3 million, have been repurchased. The company currently has 22.5 million shares remaining available for repurchase under the share repurchase plan.
Added
Dividends The payment of dividends is subject to the discretion of the company’s Board. For Fiscal 2024 and Fiscal 2023, we paid cash dividends on common stock totaling $0.95 and $0.91 per share, respectively.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations Consolidated Results - Fiscal 2023 compared to Fiscal 2022 The company’s results of operations, expressed as a percentage of sales, are set forth below for Fiscal 2023 and Fiscal 2022: Percentage of Sales Increase (Decrease) Fiscal 2023 Fiscal 2022 Fiscal 2023 Fiscal 2022 Dollars % 52 weeks 52 weeks 52 weeks 52 weeks (Amounts in thousands, except percentages) Sales $ 5,090,830 $ 4,805,822 100.0 100.0 $ 285,008 5.9 Materials, supplies, labor and other production costs (exclusive of depreciation and amortization shown separately below) 2,632,136 2,501,995 51.7 52.1 130,141 5.2 Selling, distribution, and administrative expenses 2,119,718 1,850,594 41.6 38.5 269,124 14.5 Restructuring charges 7,099 — 0.1 — 7,099 NM FASTER Act, net of recovery on inferior ingredients — 236 — 0.0 (236 ) NM Plant closure costs and impairment of assets 7,298 7,825 0.1 0.2 (527 ) NM Depreciation and amortization 151,709 141,957 3.0 3.0 9,752 6.9 Income from operations 172,870 303,215 3.4 6.3 (130,345 ) (43.0 ) Other components of net periodic pension and postretirement benefits credit (269 ) (773 ) (0.0 ) (0.0 ) 504 NM Interest expense, net 16,032 5,277 0.3 0.1 10,755 203.8 Income before income taxes 157,107 298,711 3.1 6.2 (141,604 ) (47.4 ) Income tax expense 33,691 70,317 0.7 1.5 (36,626 ) (52.1 ) Net income $ 123,416 $ 228,394 2.4 4.8 $ (104,978 ) (46.0 ) Comprehensive income $ 122,563 $ 227,281 2.4 4.7 $ (104,718 ) (46.1 ) NM – the computation is not meaningful.
Biggest changeLosses are recorded in the selling, distribution, and administrative expenses line item of the Consolidated Statements of Income. 34 Results of Operations Consolidated Results - Fiscal 2024 compared to Fiscal 2023 The company’s results of operations, expressed as a percentage of sales, are set forth below for Fiscal 2024 and Fiscal 2023: Percentage of Sales Increase (Decrease) Fiscal 2024 Fiscal 2023 Fiscal 2024 Fiscal 2023 Dollars % 52 weeks 52 weeks 52 weeks 52 weeks (Amounts in thousands, except percentages) Net sales $ 5,103,487 $ 5,090,830 100.0 100.0 $ 12,657 0.2 Materials, supplies, labor and other production costs (exclusive of depreciation and amortization shown separately below) 2,577,220 2,632,136 50.5 51.7 (54,916 ) (2.1 ) Selling, distribution, and administrative expenses 2,001,052 2,119,718 39.2 41.6 (118,666 ) (5.6 ) Restructuring charges 7,403 7,099 0.1 0.1 304 4.3 Plant closure costs and impairment of assets 10,310 7,298 0.2 0.1 3,012 41.3 Depreciation and amortization 159,210 151,709 3.1 3.0 7,501 4.9 Income from operations 348,292 172,870 6.8 3.4 175,422 101.5 Other components of net periodic pension and postretirement benefit plans credit (273 ) (269 ) (0.0 ) (0.0 ) (4 ) 1.5 Interest expense, net 19,623 16,032 0.4 0.3 3,591 22.4 Income before income taxes 328,942 157,107 6.4 3.1 171,835 109.4 Income tax expense 80,826 33,691 1.6 0.7 47,135 139.9 Net income $ 248,116 $ 123,416 4.9 2.4 $ 124,700 101.0 Comprehensive income $ 254,325 $ 122,563 5.0 2.4 $ 131,762 107.5 Percentages may not add due to rounding.
During the second quarter of Fiscal 2022, we invested $9.0 million in Base Culture, a Clearwater, Florida-based company with one manufacturing facility. We made an additional investment of $2.0 million in Base Culture in the second quarter of Fiscal 2023.
During the second quarter of Fiscal 2022, we invested $9.0 million in Base Culture, a Clearwater, Florida-based company with one manufacturing facility. We made an additional investment of $2.0 million in the second quarter of Fiscal 2023.
Those potential risks include the possibility of future economic downturns that could result in a significant shift away from our branded retail 36 products to store branded products, supply chain disruptions that have impacted, and could continue to impact, the procurement of raw materials and packaging items, and the workforce available to us, among other risks.
Those potential risks include the possibility of future economic downturns that could result in a significant shift away from our branded retail products to store branded products, supply chain disruptions that have impacted, and could continue to impact, the procurement of raw materials and packaging items, and the workforce available to us, among other risks.
In addition, contingent annuitant mortality rates are applied for surviving spouses after the death of the original retiree. The company determines the fair value of substantially all of its plans’ assets utilizing market quotes rather than developing “smoothed” values, “market related” values, or other modeling techniques.
In addition, contingent annuitant mortality rates are applied for surviving spouses after the death of the original retiree. 33 The company determines the fair value of substantially all of its plans’ assets utilizing market quotes rather than developing “smoothed” values, “market related” values, or other modeling techniques.
The company’s strategy for use of its excess cash flows includes: • implementing our strategic priorities, including our transformation strategy initiatives; • paying dividends to our shareholders; • maintaining a conservative financial position; • making strategic acquisitions; and • repurchasing shares of our common stock.
The company’s strategy for use of its excess cash flows includes: • implementing our strategic priorities, including our transformation strategy initiatives; • paying dividends to our shareholders; • maintaining a conservative financial position; • making strategic acquisitions; and 38 • repurchasing shares of our common stock.
The settlement also requires a phased repurchase of approximately 350 distribution territories in California and the company estimates this cost, along with the cost to repurchase approximately 50 other California distribution territories that are not part of the settlement, to be approximately $80.2 million.
The settlement also requires a phased 29 repurchase of approximately 350 distribution territories in California and the company estimates this cost, along with the cost to repurchase approximately 50 other California distribution territories that are not part of the settlement, to be approximately $80.2 million.
Critical Accounting Estimates The company’s discussion and analysis of its results of operations and financial condition are based upon the Consolidated Financial Statements of the company, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”).
Critical Accounting Estimates The company’s discussion and analysis of its results of operations and financial condition are based upon the Consolidated Financial Statements of the company, which have been prepared in accordance with generally accepted accounting principles in the U.S.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is segregated into four sections, including: • Executive overview — provides a summary of our operating performance and cash flows, industry trends, and our strategic initiatives. • Critical accounting estimates — describes the accounting areas where management makes critical estimates to report our financial condition and results of operations. • Results of operations — an analysis of the company’s consolidated results of operations for Fiscal 2023 compared to Fiscal 2022 as presented in the Consolidated Financial Statements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is segregated into four sections, including: • Executive overview — provides a summary of our operating performance and cash flows, industry trends, and our strategic initiatives. • Critical accounting estimates — describes the accounting areas where management makes critical estimates to report our financial condition and results of operations. • Results of operations — an analysis of the company’s consolidated results of operations for Fiscal 2024 compared to Fiscal 2023 as presented in the Consolidated Financial Statements.
Changes in the gross borrowings and repayments can be caused by cash flow activity from operations, capital expenditures, acquisitions, dividends, share repurchases, and tax payments, as well as derivative transactions which are part of the company’s overall risk management strategy as discussed in Note 11, Derivative Financial Instruments, of Notes to Consolidated Financial Statements of this Form 10-K.
Changes in the gross borrowings and repayments can be caused by cash flow activity from operations, capital expenditures, acquisitions, dividends, share repurchases, and tax payments, as well as derivative transactions which are part of the company’s overall risk management strategy as discussed in Note 12, Derivative Financial Instruments, of Notes to Consolidated Financial Statements of this Form 10-K.
New Accounting Pronouncements Not Yet Adopted See Note 3, Recent Accounting Pronouncements, of Notes to Consolidated Financial Statements of this Form 10-K regarding this information.
New Accounting Pronouncements Not Yet Adopted See Note 3, Recent Accounting Pronouncements, of Notes to Consolidated Financial Statements of this Form 10-K regarding this information. 44
In connection with acquisitions, the company has acquired trademarks, customer lists, and non-compete agreements, a portion of which are amortizable. The company evaluates these assets whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
In connection with acquisitions, the company has acquired trademarks, customer lists, non-compete agreements, and distributor relationships a portion of which are amortizable. The company evaluates these assets whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
The company’s leases consist of the following types of assets: two bakeries, corporate office space, warehouses, bakery equipment, transportation, and IT equipment.
The company’s leases consist of the following types of assets: bakeries, corporate office space, warehouses, bakery equipment, office equipment, transportation, and IT equipment.
We enter into forward purchase agreements and other financial instruments to manage the impact of volatility in certain raw material prices. Any decrease in the availability of these agreements and instruments could increase the price of these raw materials and significantly affect our earnings.
We enter into forward purchase agreements and other financial instruments to manage the impact of volatility in certain raw material prices. Any decrease in the availability of these agreements and instruments could increase the cost of these raw materials and significantly affect our earnings.
In Fiscal 2024, the company does not expect to make any cash contributions to Plan No. 2 and expects to pay $0.3 million in nonqualified pension benefits from corporate assets. Stock-based compensation. Stock-based compensation expense for all share-based payment awards granted is determined based on the grant date fair value.
In Fiscal 2025, the company does not expect to make any cash contributions to Plan No. 2 and expects to pay $0.2 million in nonqualified pension benefits from corporate assets. Stock-based compensation. Stock-based compensation expense for all share-based payment awards granted is determined based on the grant date fair value.
EXECUTIVE OVERVIEW We are the second-largest producer and marketer of packaged bakery foods in the U.S. with Fiscal 2023 sales of $5.1 billion. We operate in the highly competitive fresh bakery market.
EXECUTIVE OVERVIEW We are the second-largest producer and marketer of packaged bakery foods in the U.S. with Fiscal 2024 sales of $5.1 billion. We operate in the highly competitive fresh bakery market.
MATTERS AFFECTING COMPARABILITY The company operates on a 52-53 week fiscal year ending the Saturday nearest December 31. Fiscal 2023 and Fiscal 2022 each consisted of 52 weeks and Fiscal 2024 will also consist of 52 weeks. Furthermore, comparative results from quarter to quarter are impacted by the company's fiscal reporting calendar.
MATTERS AFFECTING COMPARABILITY The company operates on a 52-53 week fiscal year ending the Saturday nearest December 31. Fiscal 2024 and Fiscal 2023 each consisted of 52 weeks. Fiscal 2025 will consist of 53 weeks. Furthermore, comparative results from quarter to quarter are impacted by the company's fiscal reporting calendar.
During Fiscal 2023, we recorded VSIP-related charges of $5.2 million and made VSIP-related payments of $3.8 million. Additionally, we recorded and paid reduction-in-force ("RIF") charges of $0.9 million and relocation costs of $1.0 million in Fiscal 2023. All of these costs are recorded in the restructuring charges line item of the Consolidated Statements of Income.
During Fiscal 2023, we recorded VSIP-related charges of $5.2 million and made VSIP-related payments of $3.8 million. Additionally, we recorded and paid RIF charges of $0.9 million and relocation costs of $1.0 million in Fiscal 2023. These costs are recorded in the restructuring charges line item of the Consolidated Statements of Income.
The income approach is tested using a sensitivity analysis to changes in the discount rate and yield a sufficient buffer to significant variances in our estimates. The estimated fair value of our reporting unit exceeded its carrying value in excess of $3.4 billion in Fiscal 2023.
The income approach is tested using a sensitivity analysis to changes in the discount rate and yield a sufficient buffer to significant variances in our estimates. The estimated fair value of our reporting unit exceeded its carrying value in excess of $3.3 billion in Fiscal 2024.
At this time, we do not expect to make any voluntary cash contributions to our pension plans in Fiscal 2024 and expect to pay $0.3 million in nonqualified pension benefits from corporate assets. The company believes its cash flow and balance sheet will allow it to fund future pension needs without adversely affecting the business strategy of the company.
At this time, we do not expect to make any voluntary cash contributions to our pension plans in Fiscal 2025 and expect to pay $0.2 million in nonqualified pension benefits from corporate assets. The company believes its cash flow and balance sheet will allow it to fund future pension needs without adversely affecting the business strategy of the company.
Although there has been no material adverse impact on the company’s results of operations, liquidity or cash flows in Fiscal 2023, volatility in global and U.S. economic environments, including as a result of, among other things, the inflationary economic environment, supply chain disruptions, labor shortages, the conflict between Russia and Ukraine, and the conflict in the Middle East, could significantly impact our ability to generate future cash flows and w e continue to evaluate these various potential business risks.
Although there has been no material adverse impact on the company’s results of operations, liquidity or cash flows in Fiscal 2024, volatility in global and U.S. economic environments, including as a result of, among other things, the inflationary economic environment, supply chain disruptions, including any impact from the imposition of tariffs, labor shortages, the conflict between Russia and Ukraine, and the conflict in the Middle East, could significantly impact our ability to generate future cash flows and w e continue to evaluate these various potential business risks.
See Note 14, Leases , of Notes to Consolidated Financial Statements of this Form 10-K for detailed financial information regarding the company’s lease arrangements.
See Note 15, Leases , of Notes to Consolidated Financial Statements of this Form 10-K for detailed financial information regarding the company’s lease arrangements.
At December 30, 2023 and December 31, 2022, the company did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which are established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Guarantees.
At December 28, 2024 and December 30, 2023, the company did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which are established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Guarantees.
Revenue is recognized when obligations under the terms of a contract with our customers are satisfied. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services.
Revenue is recognized when obligations under the terms of a contract with our customers are satisfied. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods.
See Item 1A., Risk Factors , “We may experience difficulties in designing and implementing the upgrade of our ERP system.” The company leases certain property and equipment under various financing and operating lease arrangements.
See Item 1A., Risk Factors , “We may experience difficulties in deploying the upgrade of our ERP system.” The company leases certain property and equipment under various financing and operating lease arrangements.
Refer to the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for a discussion of the results of operations for Fiscal 2022 compared to Fiscal 2021. • Liquidity, capital resources and financial position — an analysis of cash flow, contractual obligations, and certain other matters affecting the company’s financial position.
Refer to the Annual Report on Form 10-K for the fiscal year ended December 30, 2023 for a discussion of the results of operations for Fiscal 2023 compared to Fiscal 2022. • Liquidity, capital resources and financial position — an analysis of cash flow, contractual obligations, and certain other matters affecting the company’s financial position.
We expect these changes will continue to occur as part of our hedging program, though the degree and financial impact cannot be currently estimated. 38 • The change in other assets primarily resulted from changes in prepaid assets, service contracts, and income tax receivable balances in each respective period.
We expect these changes will continue to occur as part of our hedging program, though the degree and financial impact cannot be currently estimated. • The change in other assets primarily resulted from changes in income tax receivable balances in each respective period.
Our product offerings include a wide range of fresh breads, buns, rolls, snack items, bagels, English muffins, and tortillas, as well as frozen breads and rolls, which we produce at 46 plants in 19 states. Our products are sold under leading brands such as Nature’s Own, Dave’s Killer Bread ("DKB"), Canyon Bakehouse, Tastykake, Mrs. Freshley’s, and Wonder .
Our product offerings include a wide range of fresh breads, buns, rolls, snack items, bagels, English muffins, and tortillas, as well as frozen breads and rolls, which we produce at 45 plants in 19 states. Our products are sold under leading brands such as Nature’s Own, DKB, Canyon Bakehouse, Tastykake, Mrs. Freshley’s, and Wonder .
This was in conjunction with costs related to a California legal settlement. No impairment charges related to amortizing intangible assets were recorded in Fiscal 2022. 30 As of December 30, 2023, the company also owns trademarks acquired through acquisitions with a total carrying value of $127.1 million that are indefinite-lived intangible assets not subject to amortization.
This was in conjunction with costs related to a California legal settlement. No impairment charges related to amortizing intangible assets were recorded in Fiscal 2024. As of December 28, 2024, the company also owns trademarks acquired through acquisitions with a total carrying value of $127.1 million that are indefinite-lived intangible assets not subject to amortization.
Plant closure costs and impairment of assets. During the third and fourth quarters of Fiscal 2023, the company entered into agreements to sell a warehouse and a closed bakery, respectively, both of which were classified as held for sale, and recorded as impairment charges totaling $1.8 million.
During the third and fourth quarters of Fiscal 2023, the company entered into agreements to sell a warehouse and a closed bakery, respectively, both of which were classified as held for sale, and recorded impairment charges totaling $1.8 million.
See the “Matters Affecting Comparability” section above for a discussion of legal settlements and related costs, project-related consulting costs, and acquisition-related costs. Additionally, See Note 23, Commitments and Contingencies, of Notes to Consolidated Financial Statements of this Form 10-K for additional information regarding legal settlements.
See the “Matters Affecting Comparability” section 37 above for a discussion of legal settlements and related costs and project-related consulting costs. Additionally, see Note 24, Commitments and Contingencies, of Notes to Consolidated Financial Statements of this Form 10-K for additional information regarding legal settlements.
See Note 18, Stockholders’ Equity , of Notes to Consolidated Financial Statements of this Form 10-K for additional information.
See Note 19, Stockholders’ Equity , of Notes to Consolidated Financial Statements of this Form 10-K for additional information.
We use a spot rate approach (“granular method”) to estimate the service cost and interest cost components of benefit cost by applying the specific spot rates along the yield curve to the relevant projected cash flows, as we believe this provides the best estimate of service and interest costs.
We use a spot rate approach (granular method) to estimate the service cost and interest cost components of benefit cost by applying the specific spot rates along the yield curve to the relevant projected cash flows, as we believe this provides the best estimate of service and interest costs.
Key items impacting our liquidity, capital resources and financial position in Fiscal 2023 and 2022: Fiscal 2023: • Generated $349.4 million of net cash from operating activities. • Completed the Papa Pita acquisition on February 17, 2023 for $274.8 million in cash (inclusive of a net working capital purchase price adjustment). • Paid dividends to our shareholders of $195.2 million. • Invested in our business through capital expenditures of $129.1 million (inclusive of $27.8 million of capital expenditures, including amounts recognized in accounts payable at year end, for the ERP upgrade). • Repurchased $45.8 million of our common stock. • Incurred business process improvement costs of $21.5 million related to the ongoing transformation strategy initiatives (exclusive of capitalized or deferred costs).
Fiscal 2023: • Generated $349.4 million of net cash from operating activities. • Completed the Papa Pita acquisition on February 17, 2023 for $274.8 million in cash (inclusive of a net working capital purchase price adjustment). • Paid dividends to our shareholders of $195.2 million. 39 • Invested in our business through capital expenditures of $129.1 million (inclusive of $27.8 million of capital expenditures, including amounts recognized in accounts payable at year end, for the ERP upgrade). • Repurchased $45.8 million of our common stock. • Incurred business process improvement costs of $21.5 million related to the ongoing transformation strategy initiatives (exclusive of capitalized or deferred costs).
This aligns with our brand-focused strategy to drive above-market growth via innovation and focusing on higher margin products. The Other category includes store branded retail and non-retail sales (foodservice, restaurant, institutional, vending, thrift stores, and contract manufacturing).
These categories align with our brand-focused strategy to drive above-market growth via innovation and focusing on higher margin products. The Other category includes store branded retail and non-retail sales (foodservice, restaurant, institutional, vending, thrift stores, and contract manufacturing).
A 1% decrease in the discount rate would increase the fair value of the reporting unit by $0.9 billion and a 1% increase in the discount rate would decrease the fair value by $0.7 billion. Based on management’s evaluation, no impairment charges relating to goodwill were recorded for Fiscal 2023 or Fiscal 2022.
A 1% decrease in the discount rate would increase the fair value of the reporting unit by $1.1 billion and a 1% increase in the discount rate would decrease the fair value by $0.8 billion. Based on management’s evaluation, no impairment charges relating to goodwill were recorded for Fiscal 2024 or Fiscal 2023.
Refer to Item 7A., Quantitative and Qualitative Disclosures About Market Risk, of this Form 10-K for additional information about our derivative financial instruments, including a sensitivity analysis of the company’s potential exposure to commodity price risk. Valuation of Long-Lived Assets, Goodwill and Other Intangible Assets.
Refer to Item 7A., Quantitative and Qualitative Disclosures About Market Risk, of this Form 10-K for additional information about our derivative financial instruments, including sensitivity analyses of the company’s potential exposure to commodity price risk and interest rate risk. 31 Valuation of Long-Lived Assets, Goodwill and Other Intangible Assets.
In the third quarter of Fiscal 2023, we reached an agreement to settle certain distributor-related litigation for a settlement payment, inclusive of plaintiffs’ attorney fees, of $55.0 million.
In the third quarter of Fiscal 2023, we reached an agreement to settle certain distributor-related litigation for a settlement payment, inclusive of plaintiffs’ attorney fees, of $55.0 million which was paid in the second quarter of Fiscal 2024.
Additional detail can be found in the following notes: Critical Accounting Estimate Note Revenue recognition — Derivative financial instruments 11 Long-lived assets — Goodwill and other intangible assets 10 Leases 14 Self-insurance reserves 23 Income tax expense and accruals 22 Postretirement plans 21 Stock-based compensation 19 Commitments and contingencies 23 Revenue Recognition.
Additional detail can be found in the following notes: Critical Accounting Estimate Note Revenue recognition — Derivative financial instruments 12 Long-lived assets — Goodwill and other intangible assets 11 Leases 15 Self-insurance reserves 24 Income tax expense and accruals 23 Postretirement plans 22 Stock-based compensation 20 Commitments and contingencies 24 Revenue Recognition.
Future adverse changes in market conditions or poor operating results of these underlying assets could result in losses or an inability to recover the carrying value of the asset that may not be reflected in the asset’s current carrying value, thereby possibly requiring impairment charges in the future.
Future adverse changes, including decisions to discontinue or significantly reduce certain brands, in market conditions or poor operating results of these underlying assets could result in losses or an inability to recover the carrying value of the asset that may not be reflected in the asset’s current carrying value, thereby possibly requiring impairment charges in the future.
These purchases may be commenced or suspended without prior notice depending on then-existing business or market conditions and other factors. During Fiscal 2023, 1.9 million shares of the company’s common stock were repurchased under the plan at a cost of $45.8 million and during Fiscal 2022, 1.3 million shares were repurchased under the plan at a cost of $34.6 million.
These purchases may be commenced or suspended without prior notice depending on then-existing business or market conditions and other factors. During Fiscal 2024, 1.0 million shares of the company’s common stock were repurchased under the plan at a cost of $22.7 million and during Fiscal 2023, 1.9 million shares were repurchased under the plan at a cost of $45.8 million.
The expensed portion of costs incurred related to these initiatives, which was primarily consulting costs, was $21.5 million in Fiscal 2023 and $33.2 million in Fiscal 2022, and is reflected in the selling, distribution, and administrative expenses line item of the Consolidated Statements of Income. 26 Restructuring charges.
The expensed portion of costs incurred related to these initiatives, which was primarily consulting costs, was $4.5 million in Fiscal 2024 and $21.5 million in Fiscal 2023, and is reflected in the selling, distribution, and administrative expenses line item of the Consolidated Statements of Income. 28 Restructuring charges.
The Inflation Reduction Act ("IRA") did not have a material impact on the effective tax rate for Fiscal 2023 or 2022 and there is no anticipated material impact on the effective tax rate in future periods. Comprehensive Income The decrease in comprehensive income year over year resulted primarily from decreased net income.
The Inflation Reduction Act did not have a material impact on the effective tax rate for Fiscal 2024 or 2023 and there is no anticipated material impact on the effective tax rate in future periods. Comprehensive Income The increase in comprehensive income year over year resulted primarily from increased net income.
We anticipate making payments of approximately $31.4 million, including our share of employment taxes, in performance-based cash awards under our cash incentive plans in the first quarter of Fiscal 2024. During Fiscal 2023 and Fiscal 2022, we paid $32.1 million and $43.8 million, respectively, including our share of employment taxes, in performance-based cash awards under our bonus plans.
We anticipate making payments of approximately $53.9 million, including our share of employment taxes, in performance-based cash awards under our cash incentive plans in the first quarter of Fiscal 2025. During Fiscal 2024 and Fiscal 2023, we paid $31.9 million and $32.1 million, respectively, including our share of employment taxes, in performance-based cash awards under our bonus plans.
On May 26, 2022, the company announced that the Board increased the company's share repurchase authorization by 20.0 million shares. At the close of the company’s fourth quarter on December 30, 2023, 22.5 million shares remained under the existing authorization.
On May 26, 2022, the company announced that the Board increased the company's share repurchase authorization by 20.0 million shares. At the close of the company’s fourth quarter on December 28, 2024, 21.5 million shares remained under the existing authorization.
Fair value is estimated using standard valuation methodologies incorporating market participant considerations and management’s assumptions on revenue, revenue growth rates, operating margins, discount rates, and EBITDA (defined as earnings before interest, taxes, depreciation and amortization). Our estimates can significantly affect the outcome of the test. We perform the fair value assessment using the income and market approach.
Fair value is estimated using standard valuation methodologies incorporating market participant considerations and management’s assumptions on revenue, revenue growth rates, operating margins, discount rates, and EBITDA. Our estimates can significantly affect the outcome of the test. We perform the fair value assessment using the income and market approach.
While there are no requirements to increase our dividend rate, we have shown a recent historical trend to do so. We anticipate funding future dividend payments from cash flows from operations. • In Fiscal 2023, we paid financing fees associated with executing the repurchase facility and for the amendment to the credit facility.
While there are no requirements to increase our dividend rate, we have shown a recent historical trend to do so. We anticipate funding future dividend payments from cash flows from operations. • In Fiscal 2024, we paid financing fees associated with amending the repurchase facility.
Papa Pita is a manufacturer and distributor of bagels, tortillas, breads, buns, English muffins, and flat breads with one production facility in West Jordan, Utah and, prior to the acquisition, Papa Pita co-manufactured certain products for us. Papa Pita has direct-store-delivery distribution in the western U.S., expanding our geographic reach.
Papa Pita is a manufacturer and distributor of bagels, tortillas, breads, buns, English muffins, and flat breads with one production facility in West Jordan, Utah. Prior to the acquisition, Papa Pita co-manufactured certain products for us. Papa Pita has direct-store-delivery distribution in the western U.S., expanding our geographic reach. We incurred additional acquisition-related costs of $3.7 million in Fiscal 2023.
The company completed the sale of the impaired warehouse at the end of the third quarter of Fiscal 2023 and anticipates completing the sale of the closed bakery in the first quarter of Fiscal 2024.
The company completed the sale of the impaired warehouse at the end of the third quarter of Fiscal 2023 and completed the sale of the closed bakery in the first quarter of Fiscal 2024. Acquisition-related costs.
During Fiscal 2023, the company borrowed $540.0 million in revolving borrowings under the credit facility and repaid $540.0 million in revolving borrowings. The amount available under the credit facility is reduced by $8.4 million for letters of credit. The repurchase facility and the credit facility are variable rate debt.
During Fiscal 2024, the company borrowed $88.7 million in revolving borrowings under the credit facility and repaid $86.5 million in revolving borrowings. The amount available under the credit facility is reduced by $8.4 million for letters of credit. The repurchase facility and the credit facility are variable rate debt.
The company had total available liquidity of $559.1 million as of December 30, 2023, consisting of cash on hand and the available balances under the credit facility (as defined below) and the repurchase facility. We expect the transformation strategy initiatives will require significant capital investment and expense over the next several years.
The company had total available liquidity of $569.4 million as of December 28, 2024, consisting of cash on hand and the available balances under the credit facility (as defined below) and the repurchase facility. We expect the transformation strategy initiatives will require significant capital investment and expense over the next two years.
In Fiscal 2022, we paid additional financing costs associated with the Fiscal 2021 amendment of the credit facility and for the amendment of the securitization facility. • Stock repurchase decisions are made based on our stock price, our belief of relative value, and our cash projections at any given time.
In Fiscal 2023, we paid financing fees associated with executing the repurchase facility and for the amendment to the credit facility. • Stock repurchase decisions are made based on our stock price, our belief of relative value, and our cash projections at any given time.
We have elected not to perform the qualitative approach, but instead perform a quantitative analysis by comparing the fair value of the reporting unit with which the goodwill is associated to the carrying amount of the reporting unit.
Flowers has concluded it has one operating segment and one reporting unit. We have elected not to perform the qualitative approach, but instead perform a quantitative analysis by comparing the fair value of the reporting unit with which the goodwill is associated to the carrying amount of the reporting unit.
Impact of the Inflationary Economic Environment and Other Macroeconomic Factors on Our Business We continue to monitor the impact of the inflationary economic environment, supply chain disruptions, labor shortages, the conflict between Russia and Ukraine, and the conflict in the Middle East on our business as further discussed in Item 1., Business, of this Form 10-K.
Impact of the Inflationary Economic Environment and Other Macroeconomic Factors on Our Business We continue to monitor the impact of a variety of factors on our business, including the impact of the inflationary economic environment on our costs and the buying patterns of our consumers, supply chain disruptions, including any impact from the imposition of tariffs, labor shortages, the conflict between Russia and Ukraine, and the conflict in the Middle East, as further discussed in Item 1., Business, of this Form 10-K.
On February 13, 2023, we amended the securitization facility and then on April 14, 2023, terminated the securitization facility and entered into the repurchase facility, a two-year $200.0 million accounts receivable repurchase facility.
On February 13, 2023, we amended the securitization facility and then on April 14, 2023, terminated the securitization facility and entered into the repurchase facility, a two-year $200.0 million accounts receivable repurchase facility. On April 15, 2024, we amended the repurchase facility to extend the scheduled facility expiration date to April 14, 2026.
This estimate is inclusive of an additional $2.0 million of expense anticipated to be recognized in the first quarter of Fiscal 2024 due to the payout for the Fiscal 2022 grant currently trending since the grant date at 125% of target. 32 Commitments and contingencies.
This estimate is inclusive of an additional $2.4 million of expense anticipated to be recognized in the first quarter of Fiscal 2025 due to the payout for the Fiscal 2023 grant currently trending since the grant date at 125% of target.
For Fiscal 2022, deferred income tax activity was primarily composed of changes in temporary differences year over year. • Other non-cash items include non-cash interest expense for the amortization of debt discounts and deferred financing costs (including $0.3 million related to the write-off of unamortized costs upon the early extinguishment of the securitization facility in the first quarter of Fiscal 2023), activity in the allowances for inventory obsolescence, and gains or losses on the sale of assets.
For Fiscal 2023, deferred income tax activity was comprised of temporary differences, including the impact of the capitalization of research and development and certain information technology costs, and accrued legal settlements and related costs. • Other non-cash items include non-cash interest expense for the amortization of debt discounts and deferred financing costs (including $0.3 million related to the write-off of unamortized costs upon the early extinguishment of the securitization facility in the first quarter of Fiscal 2023), activity in the allowances for inventory obsolescence, and gains or losses on the sale of assets.
Changes in accounts payable were mainly attributable to higher capital spending in the prior year largely due to the upgrade of the ERP system and volatility in input costs. • Hedging activities change from market movements that affect the fair value and required collateral of positions and the timing and recognition of deferred gains or losses.
Changes in inventories resulted from volatility in input costs. Changes in accounts payable were mainly attributable to volatility in input costs and timing of capital spending period over period. • Hedging activities change from market movements that affect the fair value and required collateral of positions and the timing and recognition of deferred gains or losses.
As of December 30, 2023 and December 31, 2022, the company was in compliance with all restrictive covenants under our debt agreements. Special Purpose Entities.
As of December 28, 2024 and December 30, 2023, the company was in compliance with all restrictive covenants under our debt agreements.
The decrease in the rate year over year was primarily due to tax credits and windfalls on stock-based compensation awards that vested in Fiscal 2023. For both periods presented, the primary differences in the effective rate and the statutory rate relate to state income taxes, windfalls on the vesting of stock-based compensation awards, and benefits recognized from tax credits.
For the periods presented, the primary differences in the effective rate and statutory rate relate to state income taxes, windfalls on the vesting of stock-based compensation awards, and benefits recognized from tax credits.
In October 2019, the SOA published its final report on their “standard” mortality table (“Pri-2012”). For purposes of measuring pension benefit obligations of Plan No. 2, the company used the Pri-2012 base table with blue collar adjustment, and 117.1% multiplier, and a projection scale of MP-2021. No other collar adjustments are applied for any other plans.
For purposes of measuring pension benefit obligations of Plan No. 2, the company used the Pri-2012 base table with blue collar adjustment, and 117.1% multiplier, and a projection scale of MP-2021. No other collar adjustments are applied for any other plans.
In Fiscal 2024, we expect costs for the upgrade of our ERP system (a portion of which may be expensed as incurred, capitalized, recognized as a cloud computing arrangement, or recognized as a prepaid service contract) to be approximately $25 million to $35 million. Costs related to our digital initiatives are more fluid and cannot currently be estimated.
In Fiscal 2025, we expect costs for the upgrade of our ERP system (a portion of which may be expensed as incurred, capitalized, recognized as a cloud computing arrangement, or recognized as a prepaid service contract) to be approximately $30 million to $35 million.
Net income was $123.4 million for Fiscal 2023 compared to $228.4 million in the prior year. The decrease year over year resulted primarily from lower income from operations, as described above, and higher net interest expense, partially offset by a lower effective tax rate.
Net income was $248.1 million for Fiscal 2024 compared to $123.4 million in the prior year. The increase year over year resulted primarily from significant growth in income from operations, as described above, partially offset by a higher effective tax rate.
The table below presents net cash disbursed for financing activities for Fiscal 2023 and 2022 (amounts in thousands): Fiscal 2023 Fiscal 2022 Dividends paid, including dividends on share-based payment awards $ (195,215 ) $ (186,501 ) Payment of financing fees (533 ) (282 ) Stock repurchases (45,801 ) (34,586 ) Change in bank overdrafts 220 799 Net change in debt obligations 155,000 — Payments on financing leases (1,819 ) (1,597 ) Net cash disbursed for financing activities $ (88,148 ) $ (222,167 ) • Our annual dividend rate increased from $0.88 per share in Fiscal 2022 to $0.92 per share in Fiscal 2023.
The table below presents net cash disbursed for financing activities (amounts in thousands): Fiscal 2024 Fiscal 2023 Dividends paid, including dividends on share-based payment awards $ (203,033 ) $ (195,215 ) Payment of financing fees (190 ) (533 ) Stock repurchases (22,703 ) (45,801 ) Change in bank overdrafts (3,721 ) 220 Net change in debt obligations (27,800 ) 155,000 Payments on financing leases (70 ) (1,819 ) Net cash disbursed for financing activities $ (257,517 ) $ (88,148 ) • Our annual dividend rate increased from $0.92 per share in Fiscal 2023 to $0.96 per share in Fiscal 2024.
Estimates are made based on historical experience and other factors. Price promotion discount expense is recorded as a reduction to gross sales when the discounted product is sold to the customer. Derivative Financial Instruments. The company’s cost of certain raw materials is highly correlated to underlying commodities markets. Raw materials, such as our baking ingredients, experience price fluctuations.
Consideration payable to a customer is recognized at the time control transfers and is a reduction to revenue. Estimates are made based on historical experience and other factors. Derivative Financial Instruments. The company’s cost of certain raw materials is highly correlated to underlying commodities markets. Raw materials, such as our baking ingredients, experience price fluctuations.
In Fiscal 2023, we generated net cash flows from operations of $349.4 million, paid $274.8 million for the Papa Pita acquisition, inclusive of the net working capital purchase price adjustment, and invested $129.1 million in capital expenditures (inclusive of $27.8 million for the ongoing ERP upgrade).
In Fiscal 2024, we amended the two-year $200.0 million trade receivable repurchase facility (the "repurchase facility") to extend the scheduled facility expiration date to April 14, 2026. 30 In Fiscal 2023, we generated net cash flows from operations of $349.4 million, paid $274.8 million for the Papa Pita acquisition, inclusive of the net working capital purchase price adjustment, and invested $129.1 million in capital expenditures (inclusive of $27.8 million for the ongoing ERP upgrade).
Losses are recorded in the selling, distribution, and administrative expenses line item of the Consolidated Statements of Income.
All amounts related to legal settlements and related costs are recorded in the selling, distribution, and administrative expenses line item of the Consolidated Statements of Income.
Net cash for working capital requirements and pension plan contributions included the following items (amounts in thousands): Fiscal 2023 Fiscal 2022 Changes in accounts receivable $ 5,008 $ (55,420 ) Changes in inventories (15,163 ) (37,396 ) Changes in hedging activities, net (1,498 ) (224 ) Changes in other assets and accrued liabilities, net 104,362 (39,080 ) Changes in accounts payable (26,588 ) 82,125 Qualified pension plan contributions (1,000 ) (1,000 ) Net changes in working capital and pension plan contributions $ 65,121 $ (50,995 ) • Changes in accounts receivable were mainly attributable to significant price increases period over period.
Net cash for working capital requirements and pension plan contributions included the following items (amounts in thousands): Fiscal 2024 Fiscal 2023 Changes in accounts receivable $ (4,515 ) $ 5,008 Changes in inventories 8,227 (15,163 ) Changes in hedging activities, net (639 ) (1,498 ) Changes in other assets and accrued liabilities (24,873 ) 104,362 Changes in accounts payable (59,644 ) (26,588 ) Qualified pension plan contributions — (1,000 ) Net changes in working capital and pension plan contributions $ (81,444 ) $ 65,121 40 • Changes in accounts receivable were mainly attributable to price impacts period over period.
The expense for the ROIC shares can be within a range of 0% to 125% of the target. There is a possibility that this expense component will change in subsequent quarters depending on how the company performs relative to the ROIC target. Additionally, there are time-based stock awards that vest over a period of three years.
There is a possibility that this expense component will change in subsequent quarters depending on how the company performs relative to the ROIC target. Additionally, there are time-based stock awards that vest over a period of three years. See Note 20, Stock-Based Compensation , of Notes to Consolidated Financial Statements of this Form 10-K for additional information.
A portion of these shares were acquired to satisfy employees’ tax withholding and payment obligations in connection with the vesting of restricted stock awards, which are repurchased by the company based on the fair market value on the vesting date. • See the discussion below under the “Capital Structure” section regarding changes in debt obligations.
A portion of these shares were acquired to satisfy employees’ tax withholding and payment obligations in connection with the vesting of restricted stock awards, which are repurchased by the company based on the fair market value on the vesting date. • Changes in debt obligations primarily related to drawdowns made to fund the Papa Pita acquisition in the first quarter of Fiscal 2023.
We anticipate this trend to continue due to the agreement to settle the California distributor-related litigation, reached in Fiscal 2023. • As discussed in the Executive Overview section above, on February 17, 2023, we completed the Papa Pita acquisition for $274.8 million in cash (inclusive of a net working capital purchase price adjustment).
The company expects to complete the California repurchases early in the second quarter of Fiscal 2025. • As discussed in the Executive Overview section above, on February 17, 2023, we completed the Papa Pita acquisition for $274.8 million in cash (inclusive of a net working capital purchase price adjustment).
The table below presents net cash disbursed for investing activities for Fiscal 2023 and 2022 (amounts in thousands): Fiscal 2023 Fiscal 2022 Purchase of property, plant, and equipment $ (129,078 ) $ (169,071 ) Principal payments from notes receivable, net of repurchases of independent distributor territories (374 ) 18,829 Acquisition of business (274,755 ) — Investment in unconsolidated affiliate (1,981 ) (9,000 ) Proceeds from sale of property, plant and equipment 2,312 7,681 Other 64 473 Net cash disbursed for investing activities $ (403,812 ) $ (151,088 ) • The company currently estimates capital expenditures of approximately $120.0 million to $130.0 million (inclusive of expenditures for the ERP upgrade of $3.0 million to $6.0 million) in Fiscal 2024. • Decreases in principal payments received combined with increased repurchases of independent distributor territories resulted in the change year over year.
The table below presents net cash disbursed for investing activities (amounts in thousands): Fiscal 2024 Fiscal 2023 Purchase of property, plant, and equipment $ (132,088 ) $ (129,078 ) Repurchases of independent distributor distribution rights, net of principal payments from notes receivable (43,466 ) (374 ) Acquisition of business — (274,755 ) Investment in unconsolidated affiliate — (1,981 ) Proceeds from sale of property, plant and equipment 2,140 2,312 Other 745 64 Net cash disbursed for investing activities $ (172,669 ) $ (403,812 ) • The company currently estimates capital expenditures of approximately $140.0 million to $150.0 million (inclusive of expenditures for the ERP upgrade of $4.0 million to $6.0 million) in Fiscal 2025. • The repurchases of the California distribution rights contributed to most of the change in the repurchases of distribution rights, net of principal payments from notes receivable.
Fiscal 2022: • Generated $360.9 million of net cash from operating activities. • Paid dividends to our shareholders of $186.5 million. • Invested in our business through capital expenditures of $169.1 million (inclusive of $61.3 million of capital expenditures, including amounts recognized in accounts payable at year end, for the ERP upgrade). • Repurchased $34.6 million of our common stock. • Incurred business process improvement costs of $33.2 million related to the ongoing transformation strategy initiatives (exclusive of capitalized or deferred costs). 37 Liquidity Discussion Flowers Foods’ cash and cash equivalents were $22.5 million at December 30, 2023 and $165.1 million at December 31, 2022.
Key items impacting our liquidity, capital resources and financial position in Fiscal 2024 and Fiscal 2023: Fiscal 2024: • Generated $412.7 million of net cash from operating activities. • Paid dividends to our shareholders of $203.0 million. • Invested in our business through capital expenditures of $132.1 million (inclusive of $6.0 million of capital expenditures, including amounts recognized in accounts payable at year end, for the ERP upgrade). • Repurchased $22.7 million of our common stock. • Incurred business process improvement costs of $4.5 million related to the ongoing transformation strategy initiatives (exclusive of capitalized or deferred costs).
Prices of ingredient and packaging materials fluctuate due to various factors including, but not limited to, government policy and regulation, weather conditions, domestic and international demand, or other unforeseen circumstances, and we monitor these markets closely. Ingredient and packaging costs were volatile in both Fiscal 2023 and 2022 but are expected to be more favorable in Fiscal 2024.
Prices of ingredient and packaging materials fluctuate due to various factors including, but not limited to, government policy and regulation (including tariffs), weather conditions, domestic and international demand, availability due to supply conditions, including livestock disease, or other unforeseen circumstances, and we monitor these markets closely.
We currently anticipate the upgrade of our ERP system will cost approximately $350 million (of which approximately 34% has been or is anticipated to be capitalized) and anticipate the upgrade to be completed in 2026. Previously, these costs were estimated to be approximately $275 million.
We currently anticipate the upgrade of our ERP system will cost approximately $350 million (of which approximately 35% has been or is anticipated to be capitalized) and anticipate the upgrade to be completed in Fiscal 2026. As of December 28, 2024, we have incurred costs related to the project of approximately $238 million.
Sales of our leading brands, Nature's Own, DKB, and Canyon Bakehouse , continued to increase from positive price/mix but volumes were lower except for DKB . Income from operations for Fiscal 2023 was $172.9 million compared to $303.2 million in Fiscal 2022.
Sales of our leading brands, Nature's Own, DKB, and Canyon Bakehouse , continued to increase year over year. Income from operations for Fiscal 2024 was $348.3 million compared to $172.9 million in Fiscal 2023.
Materials, Supplies, Labor, and Other Production Costs (exclusive of depreciation and amortization shown separately; as a percent of sales) Line item component Fiscal 2023 % of sales Fiscal 2022 % of sales Change as a % of sales Ingredients and packaging 32.0 31.8 0.2 Workforce-related costs 13.8 13.8 — Other 5.9 6.5 (0.6 ) Total 51.7 52.1 (0.4 ) Materials, supplies, labor and other production costs as a percent of sales decreased year over year due to implementing inflation-driven pricing actions to combat considerable input cost inflation experienced over the past two years.
Materials, Supplies, Labor, and Other Production Costs (exclusive of depreciation and amortization shown separately; as a percent of sales) Line item component Fiscal 2024 % of sales Fiscal 2023 % of sales Change as a % of sales Ingredients and packaging 29.4 32.0 (2.6 ) Workforce-related costs 14.6 13.8 0.8 Other 6.5 5.9 0.6 Total 50.5 51.7 (1.2 ) Materials, supplies, labor and other production costs as a percent of sales decreased year over year due to moderating ingredient and packaging costs, improved sales price/mix, and decreased product returns.
Sales Fiscal 2023 Fiscal 2022 52 weeks 52 weeks $ % $ % % Change (Amounts in thousands) (Amounts in thousands) Branded retail $ 3,263,277 64.1 $ 3,139,306 65.3 3.9 Other 1,827,553 35.9 1,666,516 34.7 9.7 Total $ 5,090,830 100.0 $ 4,805,822 100.0 5.9 (The table above presents certain sales by category that have been reclassified from amounts previously reported to conform to the current period presentation.) 33 The change in sales was attributable to the following: Percentage point change in sales attributed to: Branded Retail Other Total Favorable (Unfavorable) Pricing/Mix* 5.5 16.3 10.1 Volume* (2.6 ) (7.8 ) (5.3 ) Acquisition 1.0 1.2 1.1 Total percentage point change in sales 3.9 9.7 5.9 * Computations above are calculated as follows: Price/Mix $ = Current fiscal year units x change in price per unit Price/Mix % = Price/Mix $ ÷ P rior fiscal year Sales $ Volume $ = Prior fiscal year price per unit x change in units Volume % = Volume $ ÷ P rior fiscal year Sales $ The company disaggregates its sales into two categories, Branded Retail and Other.
Sales Fiscal 2024 Fiscal 2023 52 weeks 52 weeks $ % $ % % Change (Amounts in thousands) (Amounts in thousands) Branded Retail $ 3,262,044 63.9 $ 3,264,742 64.1 (0.1 ) Other 1,841,443 36.1 1,826,088 35.9 0.8 Total $ 5,103,487 100.0 $ 5,090,830 100.0 0.2 (The table above presents certain sales by category that have been reclassified from amounts previously reported to conform to the current period presentation.) 35 The change in sales was attributable to the following: Percentage point change in sales attributed to: Branded Retail Other Total Favorable (Unfavorable) Pricing/Mix^* 0.2 3.8 1.8 Volume* (0.5 ) (3.1 ) (1.7 ) Acquisition until cycled on February 17, 2024 0.2 0.1 0.1 Total percentage point change in net sales (0.1 ) 0.8 0.2 ^ Includes sales reductions from variable consideration and payments to customers. * Computations above are calculated as follows (the Total column is consolidated and is not adding the Branded Retail and Other columns): Price/Mix $ = Current fiscal year units x change in price per unit Price/Mix % = Price/Mix $ ÷ P rior fiscal year Net Sales $ Volume $ = Prior fiscal year price per unit x change in units Volume % = Volume $ ÷ P rior fiscal year Net Sales $ The company disaggregates its sales into two categories, Branded Retail and Other.
Although we do not currently anticipate a need, we also believe that we could access the capital markets to raise additional funds. During the first quarter of Fiscal 2023, we terminated the securitization facility and entered into the repurchase facility, a two-year $200.0 million trade receivable repurchase facility. The earliest maturity date of our non-revolving debt is 2026.
Although we do not currently anticipate a need, we also believe that we could access the capital markets to raise additional funds. The earliest maturity date of our non-revolving debt is 2026.
Additionally, detailed below are expense (recovery) items affecting comparability that will provide additional context while reading this discussion: Fiscal 2023 Fiscal 2022 Footnote 52 weeks 52 weeks Disclosure (Amounts in thousands) Business process improvement costs $ 21,521 $ 33,169 Note 2 Restructuring charges 7,099 — Note 5 Plant closure costs and impairment of assets 7,298 7,825 Note 2 Gain on sale, severance costs, and lease termination (gain) loss — (4,390 ) Note 2 FASTER Act, net of recovery on inferior ingredients — 236 Note 4 Acquisition-related costs 3,712 12,518 Note 2, 6 Legal settlements and related costs 137,529 7,500 Note 23 $ 177,159 $ 56,858 Business process improvement costs related to the transformation strategy initiatives.
Additionally, detailed below are expense items affecting comparability that will provide additional context while reading this discussion: Fiscal 2024 Fiscal 2023 Footnote 52 weeks 52 weeks Disclosure (Amounts in thousands) Business process improvement costs $ 4,529 $ 21,521 Note 2 Restructuring charges 7,403 7,099 Note 6 Restructuring-related implementation costs 2,979 — Note 6 Plant closure costs and impairment of assets 10,310 7,298 Note 2 Acquisition-related costs 2,008 3,712 Note 2, 7, 25 Legal settlements and related costs 3,800 137,529 Note 24 Pension plan settlement loss 241 — Note 22 $ 31,270 $ 177,159 Business process improvement costs related to the transformation strategy initiatives.
Based on these factors, the long-term rate of return assumption for Plan No. 2 is set at 5.9% (net of investment and administrative fees, assumed to be 0.4% per annum) for Fiscal 2024. The company utilizes the Society of Actuaries’ (“SOA”) published mortality tables and improvement scales in developing their best estimates of mortality.
Based on these factors, the long-term rate of return assumption for Plan No. 2 is set at 5.3% for Fiscal 2025. The company utilizes the Society of Actuaries’ (“SOA”) published mortality tables and improvement scales in developing their best estimates of mortality. In October 2019, the SOA published its final report on their “standard” mortality table (“Pri-2012”).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 30, 2023, the company’s hedge portfolio contained commodity derivatives with a fair value (liability) of $(1.9) million and is based on quoted market prices, all of which relates to instruments that will be utilized in Fiscal 2024 except for an immaterial amount that will be utilized in Fiscal 2025.
Biggest changeAs of December 28, 2024, the company’s hedge portfolio contained commodity derivatives with a fair value (liability) of $(0.6) million and is based on quoted market prices, all of which relates to instruments that will be utilized in Fiscal 2025.
A sensitivity analysis has been prepared to quantify the company’s potential exposure to commodity price risk with respect to its derivative portfolio. Based on the company’s derivative portfolio as of December 30, 2023, a hypothetical ten percent change in commodity prices would increase or decrease the fair value of the derivative portfolio by $1.9 million.
A sensitivity analysis has been prepared to quantify the company’s potential exposure to commodity price risk with respect to its derivative portfolio. Based on the company’s derivative portfolio as of December 28, 2024, a hypothetical ten percent change in commodity prices would increase or decrease the fair value of the derivative portfolio by $1.9 million.
Added
Interest Rate Risk The company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the company primarily uses interest rate swaps as part of its interest rate risk management strategy.
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Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During Fiscal 2024, such derivatives were used to hedge the variable cash flows associated with forecasted issuances of debt.
Added
As of December 28, 2024, the company’s hedge portfolio contained interest rate derivatives with a fair value of $7.7 million. A sensitivity analysis has been prepared to quantify the company’s potential exposure to interest rate market risk with respect to our derivative portfolio.
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Based on the company’s derivative portfolio as of December 28, 2024, a hypothetical 100-basis-point increase (decrease) in interest rates would increase (decrease) the fair value of the derivative portfolio by $10.1 million and $(11.6) million, respectively.

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