Flowers Foods at Barclays Conference: Navigating Market Challenges

On Thursday, 04 September 2025, Flowers Foods (NYSE:FLO) participated in the Barclays 18th Annual Global Consumer Staples Conference 2025. The company highlighted its strategic approach to tackling economic uncertainties and evolving consumer preferences. While the bread category faces significant challenges, Flowers Foods aims to leverage innovation and strong brand management to sustain growth.

Key Takeaways

• Flowers Foods is focusing on better-for-you products and alternative distribution channels to adapt to changing consumer trends.
• The company is addressing the decline in traditional bread consumption through innovation and optimizing shelf organization.
• Financial guidance for 2025 has been adjusted due to market headwinds and increased costs from tariffs and input materials.
• The integration of Simple Mills is progressing well, with significant innovation planned for 2026.
• Flowers Foods is expanding its presence in convenience stores and enhancing advertising efforts to support brand differentiation.

Financial Results

• Guidance Adjustment: The 2025 financial guidance was revised downward due to underperformance in the first half and ongoing category challenges.
• Tariff and Cost Impacts: Tariffs and rising costs of palm oil, eggs, cocoa, and packaging are expected to elevate expenses in the latter half of the year.
• Capital Allocation: The company is prioritizing deleveraging following the Simple Mills acquisition, while dividend decisions remain under regular review.

Operational Updates

• Simple Mills Integration: The integration is on track, with plans for substantial innovation in 2026.
• Distribution Expansion: New distribution gains have been achieved in the Midwest and Northeast regions.
• Product Lines: Expansion of small loaf offerings under Nature’s Own and Wonder brands is underway.
• Convenience Store Strategy: Targeting convenience stores with products like Dave’s Killer Bread snacks and Wonder Cake, leveraging warehouse distribution channels.

Future Outlook

• Innovation Focus: Flowers Foods is emphasizing innovation in health-oriented products, including keto options and successful brands like Dave’s Killer Bread.
• Market Positioning: Despite competitive pressures, the company is confident in its leading brand portfolio to navigate market challenges.
• Shelf Organization: Testing of new shelf sets aims to enhance consumer shopping experiences.

Q&A Highlights

• Category Growth: Growth in the broader baked goods category is evidenced by successful brands such as Kodiak Cakes and Smucker’s Uncrustables.
• Consumer Shopping Habits: The company is focusing on evolving consumer shopping and consumption patterns.
• Brand Strength: Flowers Foods is leveraging its top brands to mitigate challenges and stabilize the soft variety segment.

For more details, readers are encouraged to refer to the full transcript of the conference call.

Full transcript - Barclays 18th Annual Global Consumer Staples Conference 2025:

Unidentified speaker, Moderator: We just find our seats. We’ll kick off our our first fireside chat of the day. So good morning, and welcome back, to our fireside chat with Flowers Foods. With us today are Chairman and CEO, Ryals McMullen and CFO and CAO, Steve Kinsey. Welcome to you both.

Thanks for being here.

Steve Kinsey, CFO and CAO, Flowers Foods: Thanks, Steve.

Unidentified speaker, Moderator: Thank you. Great. So first off, maybe maybe, Ryals, you know, we’ve heard a lot about, the last couple days, right, about the challenges currently facing sort of the consumer. You operate in a bit of a unique category. So I’m interested in hearing your perspective as just far as what you’re seeing from the consumer sort of at this stage.

Ryals McMullen, Chairman and CEO, Flowers Foods: Yeah. I mean, really, more broadly, nothing really different than what everybody else is seeing. Yeah. The consumer is still pressured, concerned about inflation, job market, etcetera. So it’s really it’s really no different for for us.

Our category is a little bit unique, you know, in the sense that we there’s a lot of private label in our category that has, you know, kind of been in a long term decline, but typically sees a bit of a pop when, you know, when there’s economic uncertainty, and that’s that’s normal. Yeah. That happens, you know, virtually every time, you know, we see an environment like this. Yeah.

Unidentified speaker, Moderator: And maybe, what are you what are some of the headwinds that you’re sort of seeing that are impacting the bread category specifically? And, know, more importantly, how are you sort of responding in you know, to some of those those challenges?

Ryals McMullen, Chairman and CEO, Flowers Foods: Yeah. I mean, for us, it’s really speaking broadly to things. The economic uncertainty that we just talked about, not unusual to see a little trade down going on there. But then the whole health and wellness issue as well. Bread’s kinda getting a bad rap right now.

A lot of influencers and celebrities and whatnot kinda given giving bread a a bad name.

Unidentified speaker, Moderator: Taylor Swift is helping now.

Ryals McMullen, Chairman and CEO, Flowers Foods: Sourdough focused. Exactly. Exactly. And the con you know, consumers are just really, really fragmented. We were talking yesterday about Instagram just I mean, has basically become, you know, a selling platform.

And, you know, if you have a if you have a feed like mine, you know, there’s, you know, many different kinds of breads that are rolling through that you can order, you know, into your home or sourdoughs that you can bake off at home. So it’s hard to it’s it’s become harder to keep the consumer’s attention. But I think I think one of the things that’s incumbent upon us as a as an industry and specifically Flowers as a company is to is to re retake that narrative, which I think, in many ways, we’ve sort of ceded to the influence of celebrities. And that’s, you know, it’s our fault as an industry, obviously. But we’re intent on recapturing that because there’s a lot of misinformation out there.

Yeah. A ton of misinformation. And we have a a portfolio of products that are largely better for you. And we’ll continue down that track, continue improving on that and continue innovating around that, which will also help to mitigate some of the pressures in the category. Diving a little bit deeper into the category, if you look overall, category has been down 2.5%, 3% roughly.

But if you drill down a level further and look at the subsegments, traditional loaf, which means the 20 ounce honey wheats and other white breads, that part of the category has been down 5% to six And we’re quite exposed to that. So that’s the bad news. The good news is that we are innovating around that and have lots of growth in the portfolio, whether it’s our keto products or everybody’s familiar with Dave’s and Canyon and all that, which continues to do really, really well. I think the challenge for us is how do we address that soft variety of white bread category. And that’s the part that I said on our second quarter call that I think is a generational Yep.

And and I could be wrong. I don’t think I am, but I don’t think it’s coming back. I don’t think I don’t I’m not I don’t mean to say that traditional infant white breads are going away, so don’t misunderstand me. They’re not. There’s tons of that sold in The United States, and that will continue.

I do think over time, it will become a smaller part of the category. And so again, our job is to figure out how to innovate around that and replace that, with more differentiated items that have attributes that consumers are looking for. Yeah.

Unidentified speaker, Moderator: And I guess if we you know, it’s it’s a good lead in. If we zoom out a little bit, what are your longer term expectations for the category?

Ryals McMullen, Chairman and CEO, Flowers Foods: Just that. Just that. I mean and and, you know, I think, you know, organics will continue to be a a bright spot. You know, we were told for years that gluten free was a fad and was gonna go away. Well, it never has.

Mhmm. It’s it’s continuing to grow and and do well. Again, I think the longer term challenge is the salt for that that salt variety aspect. I think that the the bread wall, if you will, is gonna change a lot because of that. It’s it’s we talked a lot about this yesterday in our one on ones.

It’s a very difficult category to shop Yeah. For consumers. There’s a lot of SKUs on the wall. It’s not organized in a very intuitive way. So take small loaves, for example.

Demographic changes in the country, smaller household, people having children later, etcetera. Small loaves are a big deal, not just for economic reasons, but just for practical reasons. I just don’t want that much bread. I want a light bread, but I want less of it. Well, I mean, try to find that.

You know, it’s sprinkled, you know, kinda kinda everywhere. There’s not a lot of facings. And so longer term, I can see a bread wall that has a lot less soft variety and white bread on it and a lot more of those differentiated items, but organized in a way that makes it more intuitive for the shopper.

Unidentified speaker, Moderator: Have there I’m just curious on that. Have there been any retailers where you’ve been able to sort of maybe test a We’re doing that right now. Sort of a different, you know, shelf set.

Ryals McMullen, Chairman and CEO, Flowers Foods: There’s there, there have been a few regionals that are that are testing it on their own. Mhmm. And then we’re proactively testing it with one of our better, retailers. Yeah. To sort of see how things balance out.

I mean, I think it’ll take, probably a few tries to find the right balance. We’re doing it in in several different markets, and smaller markets. You’re trying to capture the the the differences between the two. But I think we’ll get a lot of learnings out of that that we can then take to others.

Unidentified speaker, Moderator: Yeah. I know the regionals tend to be a

Ryals McMullen, Chairman and CEO, Flowers Foods: little more proactive sometimes also. They do. Figuring out. Little little more agile.

Unidentified speaker, Moderator: Yep. Yep. Exactly. Well, good. Relating to the competitive environment, I guess, what’s been the nature of, you know, some of the the new low price competitors?

And is this type of activity something you’ve experienced in the past? And if so, sort of what have you learned from that experience?

Ryals McMullen, Chairman and CEO, Flowers Foods: Yes. First of all, I’ll just say, it’s this has always been a competitive category. That’s not Margins are thin in this business. It’s always been pretty tough sledding. And I mentioned the private label trade down earlier.

That’s totally normal. And that is not among the things I have to worry about. That’s not one of them. Yeah. The lower price entrance is a little bit of a change.

Mhmm. And certainly, we’re addressing that with small loaves and and some other things. But that’s that’s probably the biggest difference is is, you know, branded items that are priced at or even sometimes a little bit below private label. That that is also new. Yep.

We’re addressing that with, you know, with value with value offerings for for our shoppers. But that too, will get better as the economic environment gets better because they’re they’re branded, but they’re still relatively undifferentiated. Got it. That’s helpful.

Unidentified speaker, Moderator: I know Flowers has also been sort of pairing and adding distribution, both on the branded retail side of the business and otherwise in private label and foodservice and whatnot. I guess where are we now in that cycle? And how do

Ryals McMullen, Chairman and CEO, Flowers Foods: you think incremental gains and losses in the second half will compare to the first half? So on the our other category, which is kind of it’s got foodservice and private label and all that, we some of you will recall, we did a lot of upper out, basically meaning we we needed to margin up that business or free up capacity to do other things, primarily, branded. We’re we’re we’re done with that. That that that as a a discrete initiative is over. Now in those categories, you’re always picking up and losing.

It’s bid or contract business, so but that’s normal. But the proactive up and out is sort of done. The shelf space gains and the new distribution that we’re winning in the Midwest, which is a big white space for us, and the Northeast, which is a growing market for us, where we have lower share than we do in our core, that will continue.

Unidentified speaker, Moderator: Got it. That’s helpful. I know on tariffs, have obviously been a big topic of discussion of late. What sort of exposure does flours have to tariffs? And I guess where are you seeing the most pressure?

And has anything changed, I guess, versus your sort of prior forecast that may have resulted in a lower impact than you may have initially anticipated?

Steve Kinsey, CFO and CAO, Flowers Foods: Yeah. I mean, so we get quite a few ingredients internationally. Mhmm. I mean, obviously, wheat and flour are wholly domestic, but, things like bottled wheat, gluten, palm oil, cocoa Mhmm. You know, all that comes in international.

So it’s, you know, it’s pretty impactful, overall. When we came out in q at the end of q one with guidance, I’d say we were fairly conservative. I mean, we went to the upper end of the, you know, of the forecast with regard to what we thought the the impact would be, and then, obviously, it’s pulled back quite a bit. Yep. So, you know, that impacted our view for the rest of the year.

But, you know, when you look at, you know, the overall kinda tariff bucket, you know, we probably have, let’s say, you know, 12 or 15 countries that we deal with. So, so far, there’s been no supply challenge, with regard to tariffs, but, you know, it will impact our back half cost.

Unidentified speaker, Moderator: Okay. And then how do you sort mitigation strategies? I guess, one, could be some incremental pricing. It’s tough in this environment. I guess, do you expect to have to take pricing or at least in some part to help mitigate some of these tariff impacts?

Ryals McMullen, Chairman and CEO, Flowers Foods: I mean, we’ll look at everything. We’re going to comment on pricing going forward. But in times like this, you look at everything to try to maintain your margins, also be mindful of elasticities, particularly when you’ve got a strained consumer.

Unidentified speaker, Moderator: Right, right. Yes. Early this year, the company announced that it had completed the acquisition of Simple Mills, a natural brand offering premium, sort of better for you crackers, cookies, snack bars and baking mixes. How’s the integration been going? And has it been in line with expectations?

And how do you expect to drive growth in that business going forward?

Ryals McMullen, Chairman and CEO, Flowers Foods: Yes. They’re doing great. The integration went very, very smoothly. They continue to perform right in line with our expectations. And I say that even though we kind of got the unexpected hit of tariffs, which hit them a little bit too.

So despite that, they continue to do well. They lead in all the categories that they play in, in the natural channel and are competing very well even with the larger, more traditional players in the sort of cookie and cracker categories. But Stuff and Bell is very clearly on trend. We’re really excited about next year for them. They have been kind of on a, you know, year on, year off sort of two year innovation cycle.

2026 will be their largest innovation year ever. A lot of new introductions coming out. We’ll continue to help them gain distribution. That will be a big piece of the growth puzzle for us in addition to continuing to innovate around that brand. So all good there.

Unidentified speaker, Moderator: Great. On your second quarter earnings call, you lowered underlying ’25 guidance, excluding Simple Mills, for both the top and the bottom line. I guess what drove the guidance reduction? And what gives you the confidence that the current guidance is now in a good spot for the balance of the year?

Steve Kinsey, CFO and CAO, Flowers Foods: I mean, when you look at, really, the first half performance, I think we’ve a little more challenged than we were expecting. And then really coming into the second quarter, coming out onto the third quarter, continuing to see challenges in the category. So a lot of it was top line driven. Obviously, there were some benefit from the tariffs. We did I would say we typically have a pretty strong season in Q2 with Memorial Day and July 4.

You know, that wasn’t quite as strong as we had forecasted. Although, I would say it was still good. Obviously, you know, it’s a big bun season for us. Okay. Just did not come in quite where we had planned.

So, you know, just thinking about the consumer, thinking about our cost in the back half, which are, you know, from a comp perspective, are elevated compared to the first half. We just felt like we’re more prudent to bring guidance down and tighten the range a little bit.

Unidentified speaker, Moderator: Got it. I wanna touch a bit on on innovation. Specifically, I guess, what are you most excited about? How has the Wondercake, introduction performed, you know, versus expectations so far? Yeah.

Tasty product.

Ryals McMullen, Chairman and CEO, Flowers Foods: Yeah. Thank you. Thank you. Yeah. We’re excited about a lot.

I mean, we as as many of you know, if you listen to our calls, you know, we’ve had a very heavy focus on innovation for a number of years now. And, you know, I would say, you know, most of it is centered around better for you snacks like the the DKB stuff. Wonder, obviously, much more indulgent, not quite on the better for you profile. Yeah, I mean, we’ve put a lot of focus on it, put a lot of resources behind it, a lot of investment in it. And when you think about the better for you health attributes, we started down this path long before RFK was in his position.

So we’ve got a good head start. We were already moving the company in that direction. So really excited about the DKB platform continuing to gain distributions, velocity, etcetera. We’ve already talked about Simple Mills. That obviously is right on trend there.

And then Wonder, as many of you know, our cake business has struggled for quite a while. We’ve got a great regional brand in Tasty that does well in that part of the world, but outside of that tends to struggle against Hostess and Debbie and some of the others. So we knew we needed to do something to combat that and decided to try, you know, under the iconic Wonder brand. I mean, Wonder brand. I mean, it’s brand’s got 98% awareness.

So we thought we’d give it a whirl and, you know, set pretty high expectations for it, and it’s vastly exceeded our expectations. Lots of retailer excitement around it. Some retailers even took it early before the broader launch, and it’s continued to gain momentum. So we’ll build on that next year with a round of innovation for Wonder as well. But it’s been a very nice addition to the portfolio and really helped what had been a struggling category for us.

Unidentified speaker, Moderator: Good. Good. Can you provide maybe, you know, an update on how small loaves are doing? They’re they’re doing very well.

Ryals McMullen, Chairman and CEO, Flowers Foods: You know, as we as we touched on earlier, you know, shifts in the country and people just, you know, either looking to, you know, reduce their consumption of carbs or because they don’t need as much and and, you know, don’t want to be wasteful by throwing out a a half a loaf of bread perhaps, it it fits that bill perfectly. And so we I think we started with three SKUs. I think we’ve got six now. We’ll continue to build on that and build and build space. We are offering it under the Nature’s Own brand, which is the number one soft variety brand in the country.

And we also have a bit more value priced option in the in the mini loaf coming out under the Wonder brand.

Unidentified speaker, Moderator: K. Great. I guess just to put a finer point on it to to level set. Past few years, you’ve discussed you’ve discussed Dave’s Killer Bread bars and bites as part of the broader push into sort of the better for you snacking arena. Where do we stand today on that brand family within snacking?

And what do you

Ryals McMullen, Chairman and CEO, Flowers Foods: see ahead on on that growth factor? We’re gonna we’re gonna continue to grow. I mean, we started we started with the bars. Very competitive category, but Dave’s is is holding its own there, and competing very well from a from a velocity standpoint. I mean, we’re still small, Mhmm.

But we continue to gain distribution, continue to grow. We followed that with the snack bites. There’s kinda three sweeter options. There’s three savory options. More flavors coming next year.

And different pack sizes. This one here is the larger one, and there’s some in the room across the way too if folks are interested. But we also have smaller two ounce packs too that’ll, you know, be great for convenience stores, which I should mention is a huge white space for us. We’re big in mass and grocery and club and dollar stores and all that. Convenience stores were very underpenetrated.

Just because we’re largely a bread company, Not a lot of bread sold in convenience stores, short shelf life, all that sort of thing. But now with Dave’s Kittle bread snack portfolio, the bars, the bites, and everything to come behind it, plus Simple Mills Mhmm. Plus Wonder Cake, you’ve got a a really nice portfolio to bring to C stores, and there’s a 150,000 of them.

Unidentified speaker, Moderator: Yeah. How do you, how do you access C stores from a distribution perspective? Is it is it using your distribution? Okay.

Ryals McMullen, Chairman and CEO, Flowers Foods: Yes. Yes. And all the I should mention too, all these products, Wonder included, are all warehouse delivered, so none of this is on the route trucks that traditionally deliver the bread.

Unidentified speaker, Moderator: Got

Ryals McMullen, Chairman and CEO, Flowers Foods: it. It’s it’s hard to get part of the problem with convenience stores historically for us, the distributors just don’t wanna stop there. The the the stop is so small. Mhmm. They would much rather go to their Publix or their Walmart or Kroger and do their big drop.

Yep. So warehouse is the way to go. I think, you know, to give them credit, I mean, Hostess is the one that taught us all that, you know, they converted from DSD to warehouse. Yeah. Great model for it.

Thanks.

Unidentified speaker, Moderator: Any other products in the innovation pipeline of note or things that are coming that There are.

Ryals McMullen, Chairman and CEO, Flowers Foods: I can’t be specific about it for competitive reasons, but we have quite a few very on trend offerings coming, in just a few weeks’ time actually for the fall resets and then some at the very beginning of the year and for the spring resets next year. So it’s heavy a load in, that we’ve been working on for a while. And again, back to the beginning of our conversation, particularly on the bread side, that will also help to mitigate some of the softness we see in the core of the category.

Unidentified speaker, Moderator: Right. As we think about input costs outside of tariffs, what sort of impact will they have on the second half? And sort of where are the greatest areas of pressure? Sure.

Steve Kinsey, CFO and CAO, Flowers Foods: I mean, you know, as I said, from a comp perspective, the second half is tougher than the first. You know, we are expecting absolute dollar increases in things like, palm oil, eggs, you know, cocoa packaging, ex tariffs. So, even though, you know, wheat has pulled back some, it’s still a little volatile, and it’s still at, you know, a higher base. You know, it has been nice to see, you know, a pullback in wheat. But, you know, from an overall cost perspective, including tariffs, the back half will be up year over year.

And that’s all planned in our guidance. Yes.

Unidentified speaker, Moderator: You. You’ve been going through the ERP transition. Maybe you can just level set the audience on where we currently stand in that process and what the plan is for the year, and whether there have been any disruptions as you’ve sort of restarted the rollout. Sure.

Steve Kinsey, CFO and CAO, Flowers Foods: I mean, we started this in ’20 well, actually, we started it before 2023. We actually initiated a rollout, and we had to pause it, to come back. And two bakeries, you know, our goal was to make sure we didn’t do anything, you know, to jeopardize the business. So, you know, we thought it was prudent to start small. We had a couple of missteps, came back, you know, corrected those.

Mhmm. You know, earlier this year, we did, you know, test things at one bakery and completed the rollout. Things went pretty well. So we feel great about that. We’re actually starting, you know, in the back half now to ramp things back up.

We have a handful of bakeries planned in Q3. Depending on how that goes, then we may be able to pick up the pace. So we feel like from an overall cost perspective, we’re good. We’ll stay within the range that we’ve forecasted. And then from a timing perspective, right now, we’re still shooting for the 2026, but it will depend on the success, I think, of the rollouts in the back half of this year.

Okay.

Unidentified speaker, Moderator: Great. Can you talk about additional factors to consider around margins in the period ahead? And specifically, I think in the most recent quarter, co manufacturing costs were up presumably related to innovation. In your 10 Q, I think you said the higher rate of spend was likely to continue. So how should investors think about that line item as you scale up some of, you know, the many initiatives that you’re you’re talking about here?

Ryals McMullen, Chairman and CEO, Flowers Foods: Yeah. Specific to that line item, most of that is gonna be Simple Mills. They all of their products are currently comanufactured. And then to a lesser degree, the DKB bar and bites items are also co manufactured. So that’s we do a little bit of co manufacturing on the bread side, but most of that is gonna be these newer acquisition plus our newer innovation items outside of the bread category.

Unidentified speaker, Moderator: Okay. Yep. Got it. I think directionally, you’ve been more inclined to increase spending around advertising and marketing really to support your differentiated products and innovation. I guess what’s your outlook for brand support against the sort of current backdrop?

And how are you thinking about that in the years ahead?

Ryals McMullen, Chairman and CEO, Flowers Foods: Yes. I mean, we definitely have, over the last several years, increased our brand support. We think that’s really important, particularly as we made that pivot to be more consumer focused and consumer led. Obviously, means needed brand support, particularly when we are moving outside of our core categories. And we have to support this.

We have to tell consumers that there. Expect that to continue. I think that there’s certainly a balance between the advertising support and the promotional support. Many of you know, we we historically don’t promote as much as our competition. That’s not to say we don’t promote.

We do, but a much but at a much lower, rate. We view trade spend as a tool to drive awareness and household penetration not as a tool to gain unit share. We use the strength of our brands to gain unit share. And so you can expect that balance to continue much like it has in the past. That’s not to say that sometimes you don’t have to respond to some competitive activity, but we do so in a way that’s thoughtful and generates the best possible ROI.

Unidentified speaker, Moderator: I guess post Simple Mills, what are your capital allocation priorities? Are you still in a position to contemplate additional acquisitions at this stage? And with a relatively high payout ratio, what are the plans for the dividend going forward?

Steve Kinsey, CFO and CAO, Flowers Foods: Yes. I mean, we’ve from a capital allocation perspective, we’ve been pretty consistent all of my career. I don’t really see anything philosophically changing there. Obviously, from a debt perspective, we are more levered than we have been historically driven by the Simple Mills acquisition. So we’re very from a priority perspective, we’re very focused on deleveraging.

You know, most of our debt is fixed. We have great liquidity in our revolver, our AR facility. You know, from a debt tower perspective, 2026, we have a tranche of bonds coming due. Mhmm. You know, if I had today, I had to, you know, forecast, I’d you would expect us to, you know, refinance that with something that’s potentially prepayable.

That would give us the ability to delever. So, you know, we’re so we’re very focused, you know, on that. With regards to the dividend, it’s a Board decision, obviously, but payout ratio is elevated. I would say, from an overall cash flow perspective, still have a nice arbitrage between D and A, CapEx. There are levers we can pull if need be.

But the Board has good visibility into historic cash flow. They have, I feel like, good visibility into future cash flow. I mean, even though we are seeing some pressures, this is still a great cash generation business. So they’ll just continue to evaluate the dividend on a quarterly basis go forward.

Unidentified speaker, Moderator: And, Ryals, you know, you’ve got, obviously, and and Steve, history in this business and and, frankly, in the broader sort of packaged food landscape. The way many of these stocks in this space are trading these days, it’s it’s almost as if investors are starting to sort of think that, hey. Some of the challenges the industry is facing, like, this time is different somehow. Mhmm. And, you know, that that the the issues are more structural in nature even though the industry has been through many challenges over the years and typically does find its way Yeah.

Forward. And I’m just curious your your thought on that. I mean, are are things different this time, or is it just, hey. The challenges are different each time, but the industry is fairly agile, and it’ll find its way through it.

Ryals McMullen, Chairman and CEO, Flowers Foods: Yeah. I think it’s I think it’s definitely the latter, and I think that’s true across food. Yeah. You know, every time we encounter one of these you know, it was back in the Atkins days. You heard it back then when the world was coming in for carbs.

Unidentified speaker, Moderator: Low carb, low fat. Exactly. I mean, it keeps going. You know?

Ryals McMullen, Chairman and CEO, Flowers Foods: And we were talking about eggs. You know, eggs used to be Right. Deadly, apparently. You know? And now it’s, you know, complete it’s completely changed and and protein’s great and and you move on.

So it’s the challenges are are definitely different. Mhmm. But as I said at the outset, you know, there there are ways around this. And I think the industry will innovate around it. They’ll respond to the challenges.

Some of them will be temporary in nature. Some of them will be, more permanent in nature. I think we’ve got a good handle on that. We’re first to acknowledge that, you know, our category, is challenged, but it’s been challenged in the past, and we we’ve always found our way around it. Yeah.

I was telling someone yesterday, I would be, you know, obviously, we’re, you know, we’re concerned. First of all, most of us are heavy owners of our stock. I mean, that’s always been true at Flowers. It’s still true today. So this is deeply personal to us.

And we’re aware of the challenges that we have ahead of us. We’re deeply focused on them. I would be a lot more concerned if we were trying to compete with number four, number five and number seven brands. But that’s not the case. The case is that we have number one brands across categories.

And now with the additional supplementals, even more so outside the category. So that gives me great confidence that behind the strength of those brands, we’ll find ways around this. So we’re it’s an uncomfortable period right now, but we’re also excited about the future.

Unidentified speaker, Moderator: Yeah. I appreciate that perspective. Right? Because I think I think that that broader context is important, you know, for for folks here with that question because particularly those that don’t necessarily have a lengthier history in the space. Right?

Steve Kinsey, CFO and CAO, Flowers Foods: And have

Unidentified speaker, Moderator: you seen these sorts of of things before? And maybe just in our last moments, I guess anything, that you wanna sort of talk to the group about on either what you think might be most misunderstood? You know, you’ve you’ve been in meetings, during the day yesterday as well. You’re getting a lot of the the similar incoming questions that we went through today. But are there any themes or topics that you feel like, hey.

Those are all reasonable and and relevant, but that maybe people are missing either the forest for the trees in some way or along those lines?

Ryals McMullen, Chairman and CEO, Flowers Foods: Yeah. It’s a great question. I’m glad you asked it because I do think there’s something. Some of the folks that know us a little bit better, I don’t think fall into this category. But for those of you that might not, I would ask you to look at the category more deeply than just on the surface level because there is growth in this category.

You know, I’ll even mention some of our sort of indirect competitors here. People are still eating a lot of baked goods. Yep.

Unidentified speaker, Moderator: If you if anybody in

Ryals McMullen, Chairman and CEO, Flowers Foods: the room is familiar with Kodiak Cakes, I mean, they’re they’re doing $500,000,000 plus of that. Okay? That’s a baked product. Mhmm. Smucker’s does over a billion with Uncrustables.

That is a baked product. You know, peep it’s it’s really more of, you know, how people are shopping for baked goods, where they’re shopping for baked goods, how they consume baked goods. And that’s what we’re working on. I want folks to take away that there is growth in this category. And, yeah, I’ve highlighted some of the areas even within our current category that are growing within bread.

Yep. I mean, Dave’s Killer Bread is still doing great. Look look at your syndicated data. You can see it very, very clearly. Canyon is still doing very, very well.

Alright. You know, we were not a first mover in keto. We’re number one in keto. There’s that number one brand again, Nature’s Own. So there is growth here.

Having said that, I’m not gonna tell you that it’s an overnight fix. It’s not. It’s gonna take a little bit of time for this transition to take place. I think the takeaway though is is that we’re well ahead of it. And we’re working on it, and we’re being proactive about it.

So over time, I think as you see the portfolio start to change and shift, alongside of some of those pressures that are more economic related as things get better, which they always do, some of those pressures will relieve. And my goal for the soft variety segment, which is, again, where we’re most pressured, is just to get that stable. Yep. If we can get that even just flat Mhmm. That will make a tremendous difference in our results, which at the end of the day, the only thing that matters to shareholders.

Unidentified speaker, Moderator: Yep. That’s great perspective. So I really appreciate that. And think that’s a good point to head over to the breakout for those that have some additional questions. And please join me in thanking Riles and Steve for

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