Flowers Foods, Inc. (NYSE:FLO) Q2 2023 Earnings Call Transcript

Ryals McMullian: Sure. So, as far as pricing goes, we got in the pricing that we needed for the year. Now there is some of it on the contractual business that will continue to trickle in, but I think it’s fair to say most of it is done. As far as resistance goes, broadly speaking, everybody understands the inflationary environment. So, we — again, we were able to get through all the pricing that we wanted. In terms of volume, remember, a lot of the volume declines — first of all, overall, the volume declines are largely made up of foodservice and cake volume declines. And then most of that is intentional. So, as we rationalize some of that lower margin business that we’ve been talking, that certainly plays into it. Same thing on the cake side, just getting out of some of the cheaper business, focusing more on the branded business.

Obviously that’s having an effect on volumes. I think sequentially, for cake, you should see that improve. It did improve this quarter quite markedly, because we’re really starting to lap some of the heavy SKU ramp that we did last year. And then finally in terms of foodservice, we did have some disruptions in the quarter from one of our cold storage suppliers that definitely impacted volume performance in the quarter.

Mitchell Pinheiro: Okay. And then just last question. So, when it comes to — you talked about — I was interested in the — you’ve moved some of your sales — your, I guess, the bakery function away from the sales leadership and more to the supply chain leadership and you’re seeing positive benefits on both ends, better efficiency in the bakery and also, you pointed out how you’re pleased with how the sales sort of have improved. And I’m just curious, how that — you have a lot of national customers. How much influence the local sales leadership has at each bakery? And whether — is there also a reduction in force at all as it relates to the sales, just having more sales out there — more salespeople out there?

Ryals McMullian: Well, I’ll answer your last question first. No, not from a material standpoint. Obviously, there’s always a little bit of attrition in turnover. But I think the more important pieces of your questions are, yeah, it does have an effect at local level, yes. A lot of national accounts now. Grocers have consolidated. We all know that. But the area sales director can have a major impact at the local store level, helping to sell in that additional display, for example. Those types of executional elements are critical. And I would point to that reorganization as one of the reasons we’ve performed so well in the quarter. As you know, this is the big summer buns season. We had our best buns season ever. We achieved our highest buns share in the quarter.

I think those are all proof points that the organizational restructure is working. Mitch, it’s really a matter of focus, having our sales folks be able to focus only on sales, what they do best, and then similarly on the supply chain side, having that expertise solely focus on running those bakeries as efficiently as possible. And to your point, we’ve seen improvements on both fronts.

Mitchell Pinheiro: Okay. All right. Thank you very much for the questions.

Ryals McMullian: Thanks, Mitch.