FLO
#Good morning, <UNK>.
Yes, from a gross margin perspective you will see them remain dilutive as we continue to buy from our copackers.
But again that is key to the integration of the acquisitions and making sure we have the production to meet the market needs.
What you will see though the with the Tuscaloosa facility coming online at the end of the first quarter you will see that impact begin to abate some as the year progresses.
I think when you look at the demand for the products and you look at the production capacity, Tuscaloosa will only meet the some of the incremental needs.
We will over the next two years to three years will continue to rely on some copack production to be able to fill markets.
But again as we bring more of that into Tuscaloosa, some of that into Alpine, you will see the impact of that begin to decrease.
Yes, from an operating margin perspective we do anticipate them ---+ they will be accretive.
Looking at 2016 we do expect $0.03 to $0.05 accretion from the acquisitions from an earnings perspective.
At this point it is hard to forecast that, <UNK>.
Again those costs can be lumpy from quarter to quarter.
Looking at 2015 we were up roughly $5 million to $6 million, and then projecting for 2016 currently we're just saying we anticipate incremental
<UNK>, again looking at the fourth quarter the market was soft, and we have heard that from retailers.
We have heard it from other food companies.
And whatever the reasons were, whether it was weather that was warmer than usual or other reasons, the fourth quarter was soft.
I don't see any of the factors that influenced the fourth quarter dramatically changing the profile going forward.
We're as I mentioned earlier, we've started this year pretty much on track from a sales standpoint.
We're very excited about the brand portfolio that our Company has.
Would you look at the brands we've developed and the brands that we've acquired, now we have a strong brand in every segment of the marketplace.
And the good news is that there is a lot of room to grow from a market share standpoint.
I would like to point out the specialty bread category and also the breakfast category are two segments that are very much underdeveloped.
Dave's Killer Bread and Alpine, again those also fit well in underdeveloped segments.
So we have opportunities from a brand standpoint.
We also have opportunities from a geographical expansion standpoint.
Even though that we have ---+ we are now serving 85% of the US with DSD distribution, a large percent of that our market share is underdeveloped, because we haven't been there that long.
So we have tremendous opportunity to grow in new markets like Omaha, Indy, Kansas City, Denver, the list goes on and on.
And then we have tremendous opportunity to grow our market share simply by developing our brands in these new markets.
And I think it's also worth reminding that this fresh bakery category is the third largest category in the supermarket.
And so even though category is flat to down slightly, it is still the third-largest category which is significant.
So we are bullish about 2016, and we feel like we have all of the elements of growth that are going to be needed in place.
<UNK>, at the end of the day the consumer determines what the correct price is for products.
We're running our offense based on our cost structure and what price should be for our products, and based on what happens in the marketplace, we will make adjustments if necessary.
But we're very confident in all of the work that has already been done to maximize pricing whether it's promotional pricing or increases in everyday pricing.
Through category management our retailers realize that profit contribution that this fresh bakery category makes to their store, and they understand the need for improved pricing.
That is a general statement.
You do have specific supermarkets or retailers that may have a different philosophy.
But in general the retail trade understands the value from a profit standpoint of the category.
When you look at the components of the growth primarily in DSD, I think <UNK> mentioned it earlier we did see some pricing softness.
When you look at price mix it was relatively flat for the quarter, and we had seen some improvements from that perspective in the first three quarters so that did fall off in the fourth quarter and continued to progressively, probably deaccelerate a little bit or accelerate more than we anticipated.
As I mentioned the Alpine acquisition did come in slightly below plan, so some of that business did not come on as we had anticipated.
That was roughly $9 million to $10 million of revenue.
And then our volume and DSD did get softer in the fourth quarter than we had anticipated as well.
We did not have as strong of a holiday around Thanksgiving or Christmas than we had forecasted.
So those were too big factors in part of the fall off as well.
From a share perspective we actually improved our share slightly with our DSD business.
Again, part of it is just from an execution standpoint we didn't meet some of the targets we had set.
And then another factor would be, obviously, some of the slowdown in the category.
But generally speaking there's really no one factor that we can point to.
I was going to add that if you look at the IRI data for the quarter, obviously the category was down slightly, but our share did not decline.
So any sales that we did not capitalize on did not to go to competition.
We still maintained our growth trend within the category.
The problem is that the category declined in the fourth quarter for a, as <UNK> said, a multitude of reasons.
When you look over the last two years we've made several acquisitions.
There has been a lot of cost coming in to the system.
Obviously based on the top line performance you can see we have not gained a topline growth that we had forecasted.
So as you look to 2016 and coming off a couple of quarters here where there's been from an earnings perspective and a topline perspective, we feel like we are cautiously optimistic coming into the year.
But what I would say is that as we look at the growth opportunities, we're betting down a lot of that in 2016.
We have a history of being the low cost producer.
So if cost and revenue are not matching we will take the necessary measures to make sure that cost is in line with the revenue structure.
But I do believe with this organic acquisition the all trend growth there, we have a significant opportunity to get back on track from a revenue perspective.
And then if we hit our revenue targets then you should see the earnings come back in line with what you would expect from Flowers from a growth perspective as well.
Thank you.
Hello.
Good morning, <UNK>.
Yes.
You should see in the first quarter of 2016 some of the pricing actions take fruition.
You should see a majority ---+ a majority of those will be in place for most of the quarter.
Q1.
Yes.
No, <UNK>.
Of course our Nature's Own brand is the number one brand in soft variety.
Price competition is different from one market to the other.
We did have some activity in our core markets we had to react to.
But we also in expansion markets basically are growing our nature's own brand and expansion markets by being very competitive with the market leader as we move forward.
There is really no ---+ it is a market by market situation.
And we want to make sure that we protect our brand share.
But at the same time we're very focused on maximizing margins.
We are ---+ we have a lot of focus on making sure that we're making the right decisions when it comes to pricing.
As I mentioned earlier our average price in the soft variety categories is roughly 9% higher than the market.
So, because we have the number one brand, our competition is always aiming at that brand.
But in terms of moving forward, I don't anticipate any deterioration of pricing.
I'm encouraged by the IRI numbers in the fourth quarter showing overall pricing included ---+ increasing.
And as I mentioned earlier we are very focused, starting to see some of the results of that pricing in the last few weeks.
So we're optimistic about improving pricing in 2016, not deteriorating pricing.
That is correct.
I think that's probably one of our strengths.
Our team whether it's an account team or the individual bakeries, we work very closely with the retailers to help them manage their overall bakery department.
I feel like from a merchandising standpoint they recognize the benefit of strong brands, and they also understand that selling branded products is the best thing for their margin.
But I feel like in terms of merchandising we have direct influence with many of our retail customers, and we're helping them to merchandise their stores to the benefit of their business which also helps us along the way.
Our ---+ in terms of actually activity within each individual store, our distributors are very important.
The relationship between our distributor and that local store manager, they are able to do things from a merchandising standpoint that can help him build his business as well.
So really working on a merchandising improvement at many different levels, and I would like to think that is one of our distributor strengths and one of our strengths.
Very good.
Thank you for your interest in our Company.
We're excited about 2016 and the momentum that we have moving forward going to the new year.
And we'll look forward to visiting with you at the end of the quarter.
Thank you for your attention this morning.
