Hostess Brands: Reports Third Quarter 2022 Results

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 nine months ended September 30, 2022.

«Hostess Brands delivered another quarter of record-high sales, highlighting the strength of our snacking-oriented portfolio, impactful innovation that targets growing snacking occasions, and successful pricing actions to offset elevated inflation. The resiliency of our operating model and the agility of our talented team enabled us to deliver double-digit adjusted Ebitda growth in a volatile environment,» commented Andy Callahan, the Hostess Brands’ President and Chief Executive Officer. He continued, «Given our strong year-to-date results and continued momentum, Hostess Brands is raising its full-year net revenue, adjusted Ebitda, and adjusted EPS guidance as we continue to make investments in innovation and advertising to generate top-tier growth over the longer-term.»

Third Quarter 2022 Financial Highlights

  • Net revenue of USD 346.2 million increased 20.2 percent from the same period last year as higher price/mix accounted for 20.1 percent of the quarterly growth, with remaining growth attributed to higher volume.
  • Gross profit increased 16.6 percent to USD 115.4 million, or 33.3 percent of net revenue, while on an adjusted basis, gross profit increased 16.9 percent to USD 116.1 million, or 33.5 percent of net revenue. Third quarter gross margins declined by 105 basis points, 93 basis points on an adjusted basis, from year-ago levels as favorable price/mix and productivity were more than offset by 18.5 percent inflation and inefficiencies caused by continued supply-chain fragility.
  • Net income was USD 66.3 million or USD 0.48 per diluted share driven in part by a USD 33.0 million gain on receipt of Voortman insurance proceeds. Adjusted net income and adjusted EPS, which exclude the receipt of Voortman insurance proceeds, were USD 32.2 million, and USD 0.23, respectively, both increased in comparison to the same period last year.
  • Adjusted Ebitda increased 12.2 percent to USD 72.7 million. Adjusted Ebitda margin of 21.0 percent declined from 22.5 percent in the prior year period due to lower gross margins and higher operating expenses.
  • Cash and cash equivalents and short-term investments were USD 232.7 million as of September 30, 2022, resulting in a net leverage ratio of 2.9x.
  • Capital expenditures increased to USD 63.8 million from USD 36.7 million in the prior-year period. The Company now expects capital expenditures to be in the USD 125 – USD 135 million range in 2022.
  • Raising full year 2022 net revenue guidance to 17 percent – 19 percent growth, as well as raising full year adjusted Ebitda and adjusted EPS guidance to USD 290 – USD 293 million and USD 0.96 – USD 0.98, respectively.

Other Highlights

  • The Company’s Sweet Baked Goods point-of-sale (POS) increased 17.0 percent, maintaining its share of category dollar sales at 21.4 percent.
  • «Voortman» branded POS grew 28.8 percent and its share of the Cookie category increased by 26 basis points driven in part by the ongoing momentum in the faster-growing sugar-free sub-segment.
  • Full year inflation is expected to be in the high teens for the full year, in-line with previous estimates.
  • Repurchased USD 94.1 million of shares year-to-date through September 30, 2022, the majority of which were under the previously announced USD 150 million share repurchase program.
  • Year-to-date planned increase in advertising and marketing driving consumer demand. Incremental investments planned in the fourth quarter to support the launch of our Bouncers™ innovation.

For additional information please read the company’s PDF file below (207 KB):

20221102-HOSTESS-BRANDS-Q3-2022
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