FLOWERS FOODS (-) : 1Q26 Quick Take - Cutting the Dividend

Research evidence excerpt

FLOWERS FOODS (-) : 1Q26 Quick Take - Cutting the Dividend

EQUITIES

FOOD & HPC

FLOWERS FOODS UNDERPERFORMPRICE* USD7.0  TARGET PRICE USD8 (UPSIDE 14%)

FLASH NOTE

1Q26 Quick Take – Cutting the Dividend

21 MAY 2026 Securities Research Report Production time: 22:26* (London time)

Research Analyst & Publishing Entities

Max Gumport BNP Paribas Securities Corp (1) (+1) 917 583 4529 max.gumport@us.bnpparibas.com

1st Take

While FLO just reported 1Q26 results, the most incremental news was its decision to cut its quarterly dividend by ~-

50% to $0.125. We’ve long argued that the company should do so and commend the company for taking this difficult

step. We believe that it is the right move for the long-term health of the company as cash flow can now be freed up for

delevering and reinvestment. That said we’d still expect this news to be met with a negative share price reaction,

particularly as dividend investors reevaluate their positions. Indeed, just last week, B&G Foods fell ~-13% in reaction to

its own dividend cut.

With regard to results, the company posted an adjusted EBITDA and EPS beat. That said, the upside relative to our

model primarily came from SD&A as gross margin missed and organic sales only slightly beat. The company reaffirmed

its outlook for 2026 and has now established guidance for capex as well.

Quarterly Performance

FLO reported 1Q26 adjusted EPS of $0.29, which is +$0.03 ahead of Consensus of $0.26 and +$0.01 ahead of our

estimate of $0.28. Relative to our model, the adjusted EPS beat was driven by better than expected SD&A cost control

and partially offset by lower than expected gross margin and top-line contribution from Simple Mills.

FLO reported an organic sales decline of -1.2% YOY, or +50 bps above Consensus of -1.7% YOY and +20 bps above