Flowers Foods, Inc. (FLO) Q2 2022 Earnings Call Transcript

Flowers Foods, Inc.  (NYSE: FLO) Q2 2022 earnings call dated Aug. 12, 2022

Corporate Participants:

J.T. Rieck — Senior Vice President of Finance and Investor Relations

A. Ryals McMullian — President & Chief Executive Officer

R. Steve Kinsey — Chief Financial Officer & Chief Accounting Officer

Analysts:

Bill Chappell — Truist Securities — Analyst

Rob Dickerson — Jefferies — Analyst

Jim Salera — Stephens — Analyst

Connor Rattigan — Consumer Edge Research — Analyst

Stephen Powers — Deutsche Bank Securities — Analyst

Mitchell Pinheiro — Sturdivant & Company — Analyst

Presentation:

Operator

Good day and welcome to the Flowers Foods Second Quarter 2022 Results Call. [Operator Instructions]. As a reminder this call may be recorded.

I would like to turn the call over to J.T. Rieck, Senior Vice President of Finance and IR. You may begin.

J.T. Rieck — Senior Vice President of Finance and Investor Relations

Thank you, Michelle, and good morning. I hope everyone had the opportunity to review our earnings release, listen to our prepared remarks and view the slide presentation that were all posted yesterday evening on our Investor Relations website. After today’s Q&A session, we will also post an audio replay of this call.

Please note that in this Q&A session, we may make forward-looking statements about the Company’s performance. Although we believe these statements to be reasonable, they are subject to risks and uncertainties that could cause actual results to differ materially.

In addition to what you hear in these remarks, important factors relating to Flowers Foods business are fully detailed in our SEC filings. We also provide non-GAAP financial measures for which disclosure and reconciliations are provided in the earnings release and at the end of the slide presentation on our website.

Joining me today are Ryals McMullian, President and CEO and Steve Kinsey, our CFO. Ryals, I’ll turn it over to you.

A. Ryals McMullian — President & Chief Executive Officer

Okay. Thanks J.T. Good morning everybody. Thanks for joining the second quarter call. We continue to execute well in the quarter, driving second quarter sales to record levels. Our performance in this challenging consumer environment demonstrates the resiliency of the category and the strength of our leading brands.

Due to the outstanding efforts of our team, we successfully mitigated much of the supply chain pressure we discussed last quarter. As a result, we raised the bottom end of our 2022 EPS guidance by $0.05 to $1.25.

I’d like to thank our exceptional Flowers team for their hard work and dedication, which has made this strong performance possible. The fundamentals of our business is strong and have never been more optimistic about our prospects. No matter the environment, our team is focused on delivering results in line with or better than our long-term financial targets.

So with that, Michelle, we’re ready to start the Q&A, please.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Bill Chappell with Truist. Your line is open.

Bill Chappell — Truist Securities — Analyst

Thanks. Good morning.

A. Ryals McMullian — President & Chief Executive Officer

Good morning.

Bill Chappell — Truist Securities — Analyst

Hey. Ryals, you had mentioned in prepared remarks a little bit about, I guess one competitor being a little bit slower to raise prices and I don’t know if that was just a timing issue or not. Maybe discuss any changes in terms of competitive landscape of pricing or is everybody, for the most part, kind of moving up with commodities and input costs and what have you. And then, your kind of thought as, I think you also had thought that inflation would start to peak by October in terms of what you’re looking at, so maybe a little more color there would be great. Thanks.

A. Ryals McMullian — President & Chief Executive Officer

Sure, happy to do. I’ll let Steve handle the inflation question. But with regard to pricing, it wasn’t so much the other competitors where we’re late in raising price. It’s just that, Bill, we went in a little bit earlier than normal. So I would say that most of the rest of the industry was relatively on time as far as typical times to raise prices in the industry.

But we went in June, a little bit earlier. And so what’s you ended up with where price gaps that were a little bit larger than historical gaps. And I think we commented that that impacted our unit share a little bit in the quarter. But since then, most of the industry has followed and raised prices as we have.

Steve, you want to touch on inflation?

R. Steve Kinsey — Chief Financial Officer & Chief Accounting Officer

Sure. Yeah, Bill. So we have said that Q3, we will see our highest overall cost from an inflationary standpoint. It will moderate somewhat in Q4, but again it’s still will be elevated in Q4, but the peak of that happens in Q3 and then it starts to pull back slightly.

Bill Chappell — Truist Securities — Analyst

Got it. And then separately, just on acquisition/innovation, can you give us a little bit more color, and sorry, the name of the company is escaping me, of the investment you made in the quarter. I guess I would have expected normally you to buy outright those type of businesses. So kind of partnering with a small business and what that brings to the portfolio and then I’ll leave it at that and let others ask questions on other innovation.

A. Ryals McMullian — President & Chief Executive Officer

Sure. Thanks Bill. Yeah, the name of the Company is Base Culture. They are gluten-free and grain-free baked foods company. So it’s all keto and paleo-certified, very much on trend. The reason that we took more of a venture approach to this is that Base Culture is much, much earlier in their growth cycle than even like Dave’s Killer Bread was back in 2015.

And we’ve been looking for some time to start doing venture type, minority type investments to bolster our own internal agile innovation efforts. And this will just fit very nicely with our portfolio and where we’re trying to go as far as healthier eating, on trend attributes like keto and paleo which we don’t really have much of an offering in right now. So we’re quite excited about it. Small investment, but — and a small company, but we’re quite excited about the prospects.

Bill Chappell — Truist Securities — Analyst

And when should we start to see, I guess wider distribution of their products? And then, is there an option to own the company outright down the road?

A. Ryals McMullian — President & Chief Executive Officer

Yeah, I mean there is and it will be helping them not only with their production, because obviously, we had that skillset and they don’t. They’re a very small organization, but also sales and distribution opportunity. So we’re already working in that regard.

Bill Chappell — Truist Securities — Analyst

So I would see the products in the next couple of quarters everywhere or that’s too quick?

A. Ryals McMullian — President & Chief Executive Officer

It’ll probably take a little bit longer than that for it to be everywhere, again they’re really small. But we’ll grow them in a way that they can absorb with their production capacity which eventually will need to be expanded.

Bill Chappell — Truist Securities — Analyst

Got it. I’ll turn it over. Thanks so much.

A. Ryals McMullian — President & Chief Executive Officer

Thank you, Bill.

Operator

Our next question comes from Robert Dickerson with Jefferies. Your line is open.

Rob Dickerson — Jefferies — Analyst

Great. Thanks so much. Maybe just a question for you Steve, first. I think you just said, I think costs may have peaked in Q2 still high in Q3, Q4, I think in the prepared remarks, it seems like you’re essentially almost fully hedged for the year in ingredients, so I’m assuming. So if we think about kind of that margin cadence, I guess inclusive of mix in the back half, is there — there should be kind of this implied expectation for EBITDA to actually grow, I guess, in the second half and then maybe just explain if that’s — it sounds like it’s a little bit more Q4 weighted, and I have a quick follow-up.

R. Steve Kinsey — Chief Financial Officer & Chief Accounting Officer

Yeah, I mean, just one quick correction there, we said Q3 would be our highest cost quarter.

Rob Dickerson — Jefferies — Analyst

Right.

R. Steve Kinsey — Chief Financial Officer & Chief Accounting Officer

Yeah, cost contingency [Technical Issues] coming into Q3. It will pull back some in Q4, but for the most part, Q4 was — will remain — will be elevated as well just not and quiet to the level as Q3. And then you’re right in the back half, we have said, a lot of our initiatives come into play. We have the pricing to mitigate a lot of the inflation, but we do have several cost savings initiatives as well as productivity initiatives that are in flight. And from a cadence perspective, we said those will come in Q3, Q4, so that will be big driver of EBITDA in the back half.

A. Ryals McMullian — President & Chief Executive Officer

And Rob, just to put a number on that, we’re still — we’re still in the range of that $25 million to $35 million, all of which is back half.

Rob Dickerson — Jefferies — Analyst

Okay, great. Yeah, I really just asked because I think there is a line in the prepared remarks which said as you’ve gone through the second quarter you actually started to see EBITDA improve. So it sounds like maybe that was also a function of maybe some of the — more of the pricing and some of the productivity coming through in that kind of latter part of the quarter. Is that fair?

A. Ryals McMullian — President & Chief Executive Officer

Yeah. And remember too, I don’t know if this was clear from the prepared remarks, but there is still more pricing that will continue to come in, Steve, roughly through the third quarter.

R. Steve Kinsey — Chief Financial Officer & Chief Accounting Officer

Right. Yeah.

A. Ryals McMullian — President & Chief Executive Officer

Most of it’s in, but there is still more rolling in, primarily in foodservice. So that will also help too, Rob.

Rob Dickerson — Jefferies — Analyst

Okay. Super. And then just quickly on DKB, obviously, it sounds like there is a little bit of supply constraint in the quarter. It seems like that’s essentially been fixed now. And then you also have the new West Coast facility. So kind of bigger picture. We’re thinking it through kind of back half of this year and then really on the go forward from there. You — I mean, well, let’s say, you’re not going to quantify what the opportunity is in the West Coast with DKB, but my sense is that would still be kind of an ongoing driver of the business, maybe outside of what you see on the rest of the business. So any incremental color there will be great.

A. Ryals McMullian — President & Chief Executive Officer

Yeah. No question about it, Rob. I mean we’re still — we’re still so confident in DKB and its growth prospects. We were hampered a bit by the packaging issues that we had in the second quarter for DKB, but also those capacity constraints, which are now resolved. Those capacity constraints, we don’t promote DKB that much, but we were so constrained, we weren’t able to do much at all and so that hurt the units a bit.

Now that we have Henderson up and running, we can go back to what we have been doing historically driving the growth of DKB out west. Even still though I do want to point out and I don’t know if you mentioned this in the prepared remarks or not, but even though DKB was slightly pressured in the quarter from a unit standpoint, the breakfast segment for DKB was outstanding in the quarter. And as you know that’s been a key area of focus for us since we’re underpenetrated there. So that was one highlight for DKB in the quarter that I want to call out.

Rob Dickerson — Jefferies — Analyst

All right. Super. Thanks so much. I’ll pass it on.

A. Ryals McMullian — President & Chief Executive Officer

Thank you, Rob. Appreciate it.

Operator

Our next question comes from Ben Bienvenu with Stephens. Your line is open.

Jim Salera — Stephens — Analyst

Hey, guys. Jim Salera on for Ben. Good morning.

A. Ryals McMullian — President & Chief Executive Officer

Good morning.

Jim Salera — Stephens — Analyst

I wanted to ask, Ryals in your prepared comments, you had mentioned you are seeing lower income consumers trade down to less expensive, which is kind of on par with expectations. But then for higher income consumers, they had actually been increasing their purchases with the premium products. Can you maybe just drill down on that a little bit and see or talk about what’s driving that? Because we would think that everyone just kind of shifts parallel shift down. So the fact that they are increasing is, I would say, countercyclical to what you would expect.

A. Ryals McMullian — President & Chief Executive Officer

Yeah. There is a lot to talk about there really. And I know there is going to be a lot of questions about elasticity so this is as good a time as any to talk about it. There is quite a few sort of competing data points out there that we’re looking at. On the one hand, we saw private label gain a little bit of unit share, 10 basis points of unit share. But if you look at the overall private label units, they were down almost 8 million units in the quarter.

So a lot of that private label share growth was being driven in mass. And what we’ve seen in mass is retail prices being held down, which kind of creates a bit more of a gap than you might have historically seen. If you look at the grocery channel sort of ex-mass, private label loss share again in the quarter. And in that channel, the price gaps were much more in line with historical average has been what we’re seeing in mass.

Turning to DKB specifically, DKB’s unit declines were primarily in California and the mass channel. And they were — as you pointed out, they were concentrating more among lower-income households. But DKB grew units and share in the Northeast and nationwide among higher income households, which you might expect. And product reps [Phonetic] also increased nationwide among both middle and higher income households.

But then a caveat to that is, we are seeing even those higher income households seek a bit more value from the mass and club channel. So you can see there’s a little bit of — a little bit a yin and yang there when we’re looking at the data because I think it’s still early days, but the takeaway is that given the environment and everybody saw the news yesterday, grocery price is up 13.1%, the highest since 1979, and yet we still perform very, very well in that environment, Nature’s Own units were up, Canyon units were up.

Yes, our volumes were down, but quite a bit of that is our own portfolio optimization and SKU rationalization we’re doing and our volume declines were right in line with our expectations. So overall, when you look at the total picture even though there is some sort of conflicting data points out there, we were very, very pleased with how our brands of the Company performed in the quarter.

Jim Salera — Stephens — Analyst

If I can follow-up on that, do you think it’s because the price point is still so accessible just in dollar terms that if everything is up, a 13% change on a $2 item is obviously a lot lower than a 13% change on a $20 item. Is it just that there is nowhere else for the consumer to go? And so it’s easy to make a $3 indulgent purchase than a $30 one or may [Technical Issues].

A. Ryals McMullian — President & Chief Executive Officer

Yeah, yeah. Certainly, I think it’s part of it. We’ve said many, many times, I mean when you think about an inflationary environment, bread is still a very, very economical choice, just given the number of servings in a loaf, right. And furthermore, we — even though prices have increased, we play across all the price points from super-premium Dave’s Killer Bread and Canyon all the way down to private label. So there is — simply put, there is something for everybody there. There is something for every household income, every household budget.

Jim Salera — Stephens — Analyst

Okay, great. And then if you guys could give us, you mentioned real briefly in the prepared remarks the DKB bars test. Maybe you could just give us a little more commentary on consumer reception of that maybe channels that are worked in better or worse, just how we’re thinking about the rollout of that?

A. Ryals McMullian — President & Chief Executive Officer

Yes. So, it’s still early days for that. We’re still in test market, but we’re working towards national distribution on the first three SKUs. As we said in the prepared remarks, we’re wildly excited about the results that we’ve seen so far. It’s just further testament to the DKB brand and what it stands for and the quality and the story behind it, etc. So we’re very excited about it.

And further news, not in the prepared remarks, we’ve recently launched three additional SKUs that are high protein, which the original three were not to add to that that we’re also putting in the test markets and quite excited about as well. So, not resting on our laurels, we continue to innovate with DKB and one of the reasons we continue to be excited about its growth prospects going forward.

Jim Salera — Stephens — Analyst

Okay. Great. When do we — when should we expect to see the first handful of SKUs out kind of stores across the country?

A. Ryals McMullian — President & Chief Executive Officer

Yeah, early next year.

Jim Salera — Stephens — Analyst

Okay. Perfect. Thanks guys. I’ll pass it on.

A. Ryals McMullian — President & Chief Executive Officer

Thank you.

Operator

[Operator Instructions] Our next question comes from Connor Rattigan with Consumer Edge Research. Your line is open.

Connor Rattigan — Consumer Edge Research — Analyst

Good morning, guys. Thanks for the question.

A. Ryals McMullian — President & Chief Executive Officer

Good morning.

Connor Rattigan — Consumer Edge Research — Analyst

Good morning. Thanks. I guess just on the mix shift more towards private label in the quarter, I was wondering if you can address the margin implications of that shift. Just I guess how much of the 240 basis point decline was attributable to that mix shift? And I guess also sort of just following up on Ben’s question, would it be a reasonable assumption that maybe in the next few quarters the portfolio remains slightly more oriented towards private label versus 2021?

A. Ryals McMullian — President & Chief Executive Officer

So, private label definitely went up in the quarter, but remember that’s virtually all price. I’ve already mentioned that the units were down in the category, 8 million units and that’s a good thing. As we’ve mentioned on prior calls, we’ve been working diligently to improve the margin profile of our lower margin business which is, generally speaking, the private label and foodservice businesses and we’ve taken significant price to mitigate these inflationary headwinds in both of those businesses.

Now, certainly, there is still lower margin than branded retail and the pressures we’re feeling on gross margin from ingredients packaging, freight, eggs, you name it, is certainly impacting us on the gross margin line, but Steve can comment further. We have done a good job, I think, leveraging SG&A and that’s come down as a percent of sales.

R. Steve Kinsey — Chief Financial Officer & Chief Accounting Officer

Right. I mean I would say overall the inflationary pressures probably drive more of the margin pressure than the mix shift, because it’s — even though it’s happening, it’s still not — we said it’s still not meaningful at this point. We continue to monitor that. So a lot of the margin pressure really is coming from the inflation on input cost, transportation, labor more than the mix itself.

A. Ryals McMullian — President & Chief Executive Officer

Yes. The one other things I would add to that, Connor, that’s exactly why it’s more important than ever for us to maintain our marketing and brand support investments because as we said — we said it last quarter, I mean in this kind of environment, I mean, you’ve got to expect some amount of trade down, particularly among lower income households. But lower income households, believe or not, are 20% of Dave’s Killer Bread units, kind of surprising even to me when I first heard that.

But you know, continuing to support the brands, continuing to be out there from a marketing standpoint, keeping those brands front and center, we will get through this eventually. And when we do, we want those consumers, obviously, to come back to the brands they love.

Connor Rattigan — Consumer Edge Research — Analyst

Thanks. That was helpful. And then I guess just a follow-up to that too. Just a question about the Phoenix bakery closure. So in the prepared remarks, you guys commented that it’s — I guess, it’s an older lower-margin bakery that services more private label products. I guess just why the decision to close it now? I mean was this like a long-running plan or I mean just, I guess given the increased private label demand you saw in the quarter?

A. Ryals McMullian — President & Chief Executive Officer

So, yeah. Phoenix is an older, much less efficient bakery. This is all part of our network optimization plans that we’ve been talking about for several years now. And alongside that we did exit some lower margin private label and foodservice business out there. And we have plenty of capacity to take over what remains and ample capacity to fund future growth. So we can take care of all our — all of our remaining business. But as we execute our portfolio strategy, it will, it can have network optimization implications as well and that’s what you saw with Phoenix.

Connor Rattigan — Consumer Edge Research — Analyst

Okay, great. Thank you. I’ll pass it on.

A. Ryals McMullian — President & Chief Executive Officer

Thank you.

Operator

Our next question comes from Steve Powers with Deutsche Bank. Your line is open.

Stephen Powers — Deutsche Bank Securities — Analyst

Hey guys, good morning.

A. Ryals McMullian — President & Chief Executive Officer

Good morning.

Stephen Powers — Deutsche Bank Securities — Analyst

I want to go back to what you were seeing or what you have been seeing in terms of the different tactics in terms of private label pricing mass versus grocery. And how you think that evolves? Do ultimately mass prices move higher because the cost picture demands it or does this risk creating some kind of competitive dynamic where grocery prices move lower to compete with mass and then we have sort of just downward pressure on the category? How are you thinking about that evolution?

A. Ryals McMullian — President & Chief Executive Officer

Well, we certainly haven’t seen that yet. And I can’t speak to why certain retailers are doing what they’re doing. All we can do is execute on our plans. I would — obviously, we hope that they will come up and some of those gaps will close a bit, but it’s certainly hard for me to predict what they’re going to do. But again, as we mentioned, so far — so far we haven’t seen this in grocery and again private label loss share in grocery.

Stephen Powers — Deutsche Bank Securities — Analyst

Yeah, yeah. And it’s not — and as you said, you still have some pricing set to come in, it’s not — nothing that you’re seeing has really altered your own strategy from a pricing standpoint or your own expectations in terms of price realization?

A. Ryals McMullian — President & Chief Executive Officer

It has not.

Stephen Powers — Deutsche Bank Securities — Analyst

Okay. Okay. Very good. Thank you. Thank you very much.

A. Ryals McMullian — President & Chief Executive Officer

Thanks Steve.

Operator

Our next question comes from Mitchell Pinheiro with Sturdivant & Company. Your line is open.

Mitchell Pinheiro — Sturdivant & Company — Analyst

Yeah. Hey, good morning.

A. Ryals McMullian — President & Chief Executive Officer

Good morning, Mitch.

Mitchell Pinheiro — Sturdivant & Company — Analyst

Hey, I had a question. You talked about price increases and ahead of competition, which deemed to trim a little bit of volume in the quarter. And is pricing — I mean, it seems to suggest that it’s — that maybe this is certainly a commodity type product if merely a price increase a couple of weeks or a month ahead of the competition is going to affect volume that much. Why is it — was it a very large price increase relative to the competition or why would it be that dramatic?

A. Ryals McMullian — President & Chief Executive Officer

Yeah. So it’s not in terms of magnitude of our price increases versus competitors’ price increases. It was just that in this environment when you start getting gaps that much larger, that can’t affect behavior somewhat. That’s not the only thing that affected units in the quarter. We talked about supply chain issues, etc., but it certainly was a factor. We also comped to hurricane, which we haven’t mentioned yet and we did perform very well. So there were other things other than that, but it’s certainly had at least some effect in the quarter, but that’s all much more normalized at this point.

Mitchell Pinheiro — Sturdivant & Company — Analyst

Okay. And how did foodservice do in the quarter?

A. Ryals McMullian — President & Chief Executive Officer

From a top line standpoint, really, really well. So if you look at it from a pre-pandemic standpoint year-to-date in terms of sales dollars, the foodservice business has recovered, but the units are still below pre-pandemic.

Mitchell Pinheiro — Sturdivant & Company — Analyst

And is that — are units below across the board or in one particular segment like QSR or fast casuals?

A. Ryals McMullian — President & Chief Executive Officer

I have to look. I want to say it was a little bit lower in quick-serve.

R. Steve Kinsey — Chief Financial Officer & Chief Accounting Officer

QSR was the more challenged.

A. Ryals McMullian — President & Chief Executive Officer

Yeah.

Mitchell Pinheiro — Sturdivant & Company — Analyst

Okay. And is there a reason for that? Is it just traffic in the QSR customers or is there anything going on underneath that?

A. Ryals McMullian — President & Chief Executive Officer

No, I think it’s just — Mitch, I think it’s just a bit more normalization coming out of the pandemic. Remember, quick-serve actually did pretty well during the pandemic, just because of less contact, but now that people are more comfortable going back to restaurants, I think that’s why you’re seeing that shift.

R. Steve Kinsey — Chief Financial Officer & Chief Accounting Officer

But that’s also good for us because our margins are higher in those other segments.

Mitchell Pinheiro — Sturdivant & Company — Analyst

Right. And then you had, I don’t know, seems like about six quarters of lower volume growth. When does that stop? When are we going to see SKU rationalizations slowdown or has an impact on your results? And if you could talk about that a little bit would be helpful.

A. Ryals McMullian — President & Chief Executive Officer

Yeah. So I think, generally speaking, we’ve done the bulk of what we want to do for now. I mean obviously, SKU rats [Phonetic] are kind of a continual process. But I think in large measure, we’ve cleaned out most of the underperforming items that we wanted to, to simplify operations, simplify our sales execution for that matter and get to the business of growing volumes. I think innovation remains key for that. And so, obviously, our goal over time is to not only grow dollars, but continue growing our units, our unit share as well. So we’re focused on that.

Mitchell Pinheiro — Sturdivant & Company — Analyst

So, if we look at the third quarter, I mean are we going to still see some year-over-year volume declines in the overall business?

R. Steve Kinsey — Chief Financial Officer & Chief Accounting Officer

Yes. So Mitch, embedded in the EPS guidance is an assumption around mainly elasticities. And as I’ve said so far year-to-date, we’re running right about where we thought we would be. So I think it’s reasonable to assume that trend to continue through the year.

Mitchell Pinheiro — Sturdivant & Company — Analyst

Okay. And then, could you talk about specifically about some of the cost savings programs that you’re currently initiating and how they’re going to flow through the second half?

A. Ryals McMullian — President & Chief Executive Officer

Yes. So that’s that $25 million to $35 million and it’s a mix of benefits from our digital investments that we’ve made, which we expect in the back half. We talked a little bit about bakery of the future. And then — so that’s bakery improvement in the digital sense. There are also separate bakery improvement projects, initiatives that are underway and also procurement. So, those are sort of the three big areas that the savings will come from.

Mitchell Pinheiro — Sturdivant & Company — Analyst

And as you look next year, does any of that carry through into ’23?

A. Ryals McMullian — President & Chief Executive Officer

Yes, it does. We have not quantified that yet, but yes, it does.

Mitchell Pinheiro — Sturdivant & Company — Analyst

Okay. And then I guess finally just — when it comes to regional variations in your business, is there any — which were the best performing regions and which were the worst performing regions, geographically?

A. Ryals McMullian — President & Chief Executive Officer

Yeah. So the Northeast continues to be a call out for us. As you know, we put a lot of focus up there and it continues to pay dividends for us. We did have a couple of regions that underperformed, by our standards. But I would submit to you that was more operational performance-driven than it was topline sales performance-driven.

Mitchell Pinheiro — Sturdivant & Company — Analyst

Okay. That’s all I have. Thank you for your time.

A. Ryals McMullian — President & Chief Executive Officer

Great. Thank you, Mitch.

Operator

There are no further questions. I’d like to turn the call back over to Ryals McMullian, for any closing remarks.

A. Ryals McMullian — President & Chief Executive Officer

Thanks Michelle. Thank you very much, everybody, for your interest in Flowers. We look forward to speaking with you again next quarter. Everybody take care.

Operator

[Operator Closing Remarks]