Lenexa / KS. (twnk) Hostess Brands Inc., one of the largest manufacturers and marketers of sweet baked goods in the United States including «Twinkies», «Ding Dongs», «Ho Hos», «Donettes» and a variety of new and classic treats, reported its financial results for the three and six months ended June 30, 2023.
«Hostess Brands delivered another strong quarter with double-digit profit growth and higher margins driven by favorable net price realization, normalizing supply chain, and contributions from productivity initiatives. Our foundation for sustainable growth remains strong. We are executing well against our growth initiatives with strong customer support behind back-to-school merchandising, leading innovation in the category, and increased investment in our brands, which provide confidence in our ability to generate stronger sales growth in the second half of 2023,» said President and Chief Executive Officer Andy Callahan and added: «We believe we continue to be well-positioned for attractive shareholder returns as we build a premier, pure-play snacking company. Given our strong first-half performance, we are raising our full-year adjusted Ebitda and adjusted EPS guidance toward the higher end of our previous range, delivering above long-term algorithm profit growth in 2023.»
Second Quarter 2023 Financial Highlights versus Q2-2022
- Net revenue of USD 352.4 million increased 3.5 percent from the same period last year, as 10.4 percent contribution from price/mix more than offset lower volume in the quarter.
- Gross profit increased 11.8 percent to USD 126.0 million, or 35.8 percent of net revenue. On an adjusted basis, gross profit increased 12.1 percent to USD 126.4 million, or 35.9 percent of net revenue. Gross margin increased by 265 basis points, 275 basis points on an adjusted basis, from year-ago levels, as favorable net price realization, normalizing supply chain, and productivity more than offset high single-digit inflation.
- Net income was USD 32.5 million, or USD 0.24 per diluted share, compared to USD 30.5 million, or USD 0.22 per diluted share, in the same period last year. Adjusted net income increased to USD 37.7 million, resulting in USD 0.28 adjusted EPS, as compared to USD 0.22 in the prior period.
- Adjusted Ebitda increased 16.1 percent to USD 80.0 million. Adjusted Ebitda margins increased by 247 basis points to 22.7 percent.
- Cash and cash equivalents were USD 99.4 million as of June 30, 2023, resulting in a net leverage ratio of 2.9x.
- Capital expenditures were USD 58.2 million, including the build-out of the new bakery in Arkadelphia, Arkansas, which remains on track to begin operations in the 4th quarter of 2023.
- Reaffirms full-year 2023 guidance for net revenue growth of 4 percent to 6 percent, raises adjusted Ebitda and adjusted EPS guidance toward the higher end of its previous USD 315 million to USD 325 million and USD 1.08 to USD 1.13 guidance ranges, respectively.