Flowers Foods is battling hurdles due to cost inflation. In the fourth quarter of fiscal 2023, materials, supplies, labor and other production costs (excluding depreciation and amortization) were partly impacted by elevated labor and maintenance costs. The inflationary environment may continue to pose challenges for the company, potentially impacting consumer purchasing power and input costs, which could affect profitability. Flowers Foods' SD&A expenses came in at 39.7% of sales in the fourth quarter, up 180 bps. Adjusted SD&A expenses expanded 150 bps to 39.4% of sales. This can be mainly attributed to higher labor, insurance, marketing and technology expenses. The adjusted EBITDA margin was 8.5%, contracting 40 bps due to inflated labor, repair and maintenance costs, along with digital and marketing investments. While FLO expects growth initiatives to drive additional volume and fill capacity with higher-margin business over time, the short-term impact of overhead costs may affect profitability.