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    Hostess Brands Reports Strong Sales and Earnings Growth in 2022

    2/21/23 4:05:00 PM ET
    $TWNK
    Packaged Foods
    Consumer Staples
    Get the next $TWNK alert in real time by email

    2023 Guidance Shows Continued Profitable Growth

    Hostess Brands, Inc. (NASDAQ:TWNK) ("Hostess Brands" or the "Company") today reported its financial results for the fourth quarter and year ended December 31, 2022.

    "Hostess Brands delivered another year of strong top and bottom-line results in 2022, highlighting our attractive snacking portfolio and the resiliency of our advantaged business model. I am very proud of the focus, agility, and commitment of the Hostess Brands team as they continue to execute with excellence against our key strategic growth initiatives in a dynamic environment," commented Andy Callahan, the Company's President and Chief Executive Officer.

    He added, "Our track record of top-tier net revenue and earnings growth over the last three years, operational excellence and continued investments in our marketing and innovation capabilities give us the confidence to maintain our profitable growth momentum and deliver growth ahead of our long-term targets in 2023, as outlined by our initial guidance."

    Fourth Quarter 2022 Financial Highlights as Compared to the Prior Year Period1:

    • Net revenue of $339.5 million increased 14.2% from the same period last year, as 20.5% contribution from price/mix more than offset lower volumes in the quarter.
    • Gross profit increased 10.4% to $121.9 million, or 35.9% of net revenue, while on an adjusted basis, gross profit increased 11.3% to $123.1 million, or 36.3% of net revenue. Fourth quarter gross margin declined by 124 basis points, 95 basis points on an adjusted basis, from year-ago quarter largely due to 20.2% inflation.
    • Net income was $32.9 million, or $0.24 per diluted share compared to $36.5 million, or $0.25 in the same period last year. Adjusted net income remained relatively flat at $33.9 million, resulting in $0.25 adjusted EPS in both periods.
    • Adjusted EBITDA increased 2.6% to $75.1 million as higher gross profit was partially offset by the planned increase in operating costs, particularly advertising and marketing. Adjusted EBITDA margin of 22.1% declined 249 basis points from 24.6% in the prior year period.

    Full Year 2022 Financial Highlights as Compared to the Prior Year Period1:

    • Net revenue of $1,358.2 million increased 18.9% from last year driven by positive volume growth of 2.6% and 16.3% contribution from price/mix.
    • Gross profit increased 13.6% from the year-ago period to $465.7 million, or 34.3% of net revenue, while on an adjusted basis, gross profit increased 13.9% to $467.7 million, or 34.4% of net revenue. Annual gross margin declined by 161 basis points, 152 basis points on an adjusted basis.
    • Net income of $164.2 million, or $1.19 per diluted share increased from $119.3 million, or $0.86 per diluted share in the same period last year. Adjusted net income and adjusted EPS, which exclude the receipt of Voortman insurance proceeds, increased by double-digits to $134.6 million, and $0.98, respectively.
    • Adjusted EBITDA increased 9.4% to $294.1 million. Adjusted EBITDA margin of 21.7% declined from 23.5% in the prior year period due to lower gross margins and higher operating expenses.
    • Cash and cash equivalents and short-term investments were $116.5 million as of December 31, 2022. Net leverage ratio improved from 3.1x to 2.9x.
    • Capital expenditures increased to $130.5 million from $65.4 million in the prior-year period as a result of the ongoing investments, including the addition of a new bakery in Arkadelphia, to support growth.
    ___________________________________________

    1 This press release contains certain non-GAAP financial measures, including adjusted gross profit, adjusted gross margin, adjusted EBITDA, adjusted EBITDA margin, adjusted operating income, adjusted net income margin and adjusted earnings per share ("EPS"). Please refer to the schedules in the press release for reconciliations of non-GAAP financial measures to the comparable GAAP measure. Unless otherwise stated, all comparisons of financial measures in this press release are to the fourth quarter or full year of 2021. All measures of market performance contained in this press release, including point of sale and market share, include all Company branded products within the SBG or Cookie categories as reported by Nielsen but do not include other products sold outside of those categories. All market data in this press release refer to the 13-week or 52-week period ended December 31, 2022 and the prior-year comparable period. The Company's leverage ratio is net debt (total long-term debt less cash and cash equivalents and short-term investments) divided by adjusted EBITDA.

    Other Highlights:

    • Hostess Brands' Sweet Baked Goods point-of-sale ("POS") increased by 9.2% and 16.4% for the quarter and year respectively. Its share of the Sweet Baked Goods category decreased by 150 basis points to 20.1% during the quarter and remained relatively stable at 21.2% for the year.
    • Voortman® branded POS grew 28.2% for the quarter, nearly 1.5x faster than the overall Cookie category, and 27.7% for the year, driven in part by the ongoing momentum in the faster-growing sugar-free sub-segment.
    • Repurchased $130.1 million of shares in 2022.
    • Prepaid $100.0 million on its term loan.

    2023 Financial Guidance2

    The Company's guidance for the full year 2023 is as follows:

    • Adjusted net revenue growth of 4% to 6%
    • Adjusted EBITDA of $315 million to $325 million, an increase of 7% to 10% from 2022
    • Adjusted EPS of $1.08 to $1.13, an increase of 10% to 15% from 2022
    • Weighted average diluted shares outstanding of approximately ~135 million
    • Capital expenditures of approximately $150 million to $170 million
    • Income tax rate of approximately ~27%

    Fourth Quarter 2022 Compared to Fourth Quarter 2021

    Net revenue was $339.5 million, an increase of $42.3 million, or 14.2%, compared to the same period last year. Contribution from previously taken pricing actions and favorable mix provided 20.5% of the growth, offset by a 6.3% decline in volume. Sweet baked goods net revenue increased $36.8 million, or 13.8%, while cookies net revenue increased $5.5 million, or 18.0%.

    Gross profit increased 10.4% and was 35.9% of net revenue for the quarter ended December 31, 2022, a decrease of 124 basis points from a gross margin of 37.1% for the same period last year. The decrease in gross margin was primarily due to inflation, partially offset by favorable price/mix, including revenue growth management initiatives.

    Operating income was $56.6 million. Adjusted operating income of $57.8 million increased 1.6% from the same period last year as higher gross profit was partially offset by higher advertising and marketing expense as well as higher investments in our workforce.

    Adjusted EBITDA of $75.1 million, or 22.1% of net revenue, increased 2.6% from the same period last year. The improvement in adjusted EBITDA was driven by higher gross profit, partially offset by the planned increase in operating costs, particularly advertising and marketing expense, as well as higher investments in our workforce.

    The Company's effective tax rate was 27.3% compared to 19.6% in the prior year. Effective tax rates were impacted by non-taxable changes in the fair value of the warrant liabilities in the prior year as well as a tax benefit related to revaluing our deferred tax liabilities due to a change in the estimated state tax rate. The effective tax rates, excluding discrete items, were 27.3% and 27.7% in the current year and prior year period, respectively.

    Net income was $32.9 million. Adjusted net income of $33.9 million remained relatively consistent as compared to the same period last year. Diluted EPS was $0.24 compared to $0.25 in the prior period. Adjusted EPS was $0.25 in both periods.

    Cash flow from operations for the twelve months ended December 31, 2022 was $248.8 million compared to $203.0 million for the same period last year. Operating cash flow benefited from current year improvement in profitability, including the insurance proceeds of $33.0 million, partially offset by an increase in tax payments and an increase in working capital.

    __________________________________________

    2 The Company provides guidance only on a non-generally accepted accounting principles (non-GAAP) basis and does not provide a reconciliation of the Company's forward-looking financial expectations to the most directly comparable GAAP financial measure because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation; including adjustments that could be made for deferred taxes; remeasurement of the tax receivable agreement, transformation expenses and other non-operating gains or losses reflected in the Company's reconciliation of historic non-GAAP financial measures, the amount of which could be material. Please refer to the Reconciliation of Non-GAAP Financial Measures included in this press release for further information about the use of these measures.

    Conference Call and Webcast

    The Company will post an earnings presentation and pre-recorded management discussion of its fourth quarter and full year 2022 results and business update to its website at www.hostessbrands.com.

    In addition, the Company will host a live question and answer session via conference call and webcast today, February 21, 2023 at 5:00 p.m. ET. Investors interested in participating in the live call can dial 877-451-6152 from the U.S. and +1-201-389-0879 internationally or use the following Call me™ link: https:/callme.viavid.com. A telephone replay will be available approximately two hours after the call concludes through March 7, 2023, by dialing 844-512-2921 from the U.S., or +1-412-317-6671 internationally, and entering confirmation code 13735597. The pre-recorded discussion, presentation and live Q&A webcast will be available on the Investor Relations section of the Company's website at www.hostessbrands.com. The webcast will be archived for 30 days.

    About Hostess Brands, Inc.

    Hostess Brands, Inc. (NASDAQ:TWNK) is a snacking powerhouse with a portfolio of iconic brands and a mission to inspire moments of joy by putting our heart into everything we do. Hostess Brands is proud to make America's No. 1 cupcake, mini donut and sugar-free cookie brands. With annual sales exceeding $1.3 billion and employing approximately 2,800 dedicated team members, Hostess Brands produces new and classic snacks, including Hostess® Donettes®, Twinkies®, CupCakes, Ding Dongs® and Zingers®, as well as a variety of Voortman® cookies and wafers. For more information about Hostess Brands please visit www.hostessbrands.com.

    Forward-Looking Statements

    This press release contains statements reflecting the Company's views about its future performance that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. Forward-looking statements are generally identified through the inclusion of words such as "believes," "expects," "intends," "estimates," "projects," "anticipates," "will," "plan," "may," "should," or similar language. Statements addressing the Company's future operating performance and statements addressing events and developments that the Company expects or anticipates will occur are also considered as forward-looking statements. All forward-looking statements included herein are made only as of the date hereof. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

    These statements inherently involve risks and uncertainties that could cause actual results to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include, but are not limited to, maintaining, extending and expanding the Company's reputation and brand image; leveraging the Company's brand value to compete against lower-priced alternative brands; the ability to pass cost increases on to our customers; correctly predicting, identifying and interpreting changes in consumer preferences and demand and offering new products to meet those changes; protecting intellectual property rights; operating in a highly competitive industry; the ability to maintain or add additional shelf or retail space for the Company's products; the ability to identify or complete strategic acquisitions, alliances, divestitures or joint ventures; our ability to successfully integrate, achieve expected synergies and manage our acquired businesses and brands; the ability to integrate and manage capital investments; the ability to manage changes in our manufacturing processes resulting from the expansion of our business and operations, including with respect to cost-savings initiatives and the introduction of new technologies and products; the ability to drive revenue growth in key products or add products that are faster-growing and more profitable; volatility in commodity, energy, and other input prices due to inflationary pressures and the ability to adjust pricing to cover increased costs; loss of one or more of our co-manufacturing arrangements; significant changes in the availability and pricing of transportation; negative impacts of climate change; dependence on major customers; increased labor and employee related costs; strikes or work stoppages; product liability claims, product recalls, or regulatory enforcement actions; the ability to produce and successfully market products with extended shelf life; dependence on third parties for significant services; unanticipated business disruptions; adverse impact or disruption to our business caused by pandemics or outbreaks of highly infectious or contagious diseases; disruptions in global economy due to the Russia and Ukraine conflict; geographic focus could make the Company particularly vulnerable to economic and other events and trends in North America; consolidation of retail customers; unsuccessful implementation of business strategies to reduce costs; increased costs to comply with governmental regulation; failures, unavailability, or disruptions of the Company's information technology systems; dependence on key personnel or a highly skilled and diverse workforce; the Company's ability to finance indebtedness on terms favorable to the Company; and other risks as set forth from time to time in the Company's Securities and Exchange Commission filings.

    As a result of a number of known and unknown risks and uncertainties, the Company's actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Risks and uncertainties are identified and discussed in Item 1A-Risk Factors in the Company's Annual Report on Form 10-K for 2022. All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company's behalf are expressly qualified in their entirety by these risk factors. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

    HOSTESS BRANDS, INC.

    CONSOLIDATED BALANCE SHEETS

    (Unaudited, amounts in thousands, except shares and per share data)

     

     

    December 31,

     

    December 31,

    ASSETS

    2022

     

    2021

    Current assets:

     

     

     

    Cash and cash equivalents

    $

    98,584

     

     

    $

    249,159

     

    Short-term investments

     

    17,914

     

     

     

    —

     

    Accounts receivable, net

     

    168,783

     

     

     

    148,180

     

    Inventories

     

    65,406

     

     

     

    52,813

     

    Prepaids and other current assets

     

    16,375

     

     

     

    10,564

     

    Total current assets

     

    367,062

     

     

     

    460,716

     

    Property and equipment, net

     

    425,313

     

     

     

    335,305

     

    Intangible assets, net

     

    1,920,880

     

     

     

    1,944,392

     

    Goodwill

     

    706,615

     

     

     

    706,615

     

    Other assets, net

     

    72,329

     

     

     

    19,283

     

    Total assets

    $

    3,492,199

     

     

    $

    3,466,311

     

     

     

     

     

    LIABILITIES AND STOCKHOLDERS' EQUITY

     

     

     

    Current liabilities:

     

     

     

    Long-term debt and lease obligations payable within one year

    $

    3,917

     

     

    $

    14,170

     

    Tax receivable agreement obligations payable within one year

     

    12,600

     

     

     

    11,600

     

    Accounts payable

     

    85,667

     

     

     

    68,104

     

    Customer trade allowances

     

    62,194

     

     

     

    52,746

     

    Accrued expenses and other current liabilities

     

    59,933

     

     

     

    47,009

     

    Total current liabilities

     

    224,311

     

     

     

    193,629

     

    Long-term debt and lease obligations

     

    999,089

     

     

     

    1,099,975

     

    Tax receivable agreement obligations

     

    123,092

     

     

     

    134,265

     

    Deferred tax liability

     

    347,030

     

     

     

    317,847

     

    Other long-term liabilities

     

    1,593

     

     

     

    1,605

     

    Total liabilities

     

    1,695,115

     

     

     

    1,747,321

     

    Class A common stock, $0.0001 par value, 200,000,000 shares authorized, 142,650,344 shares issued and 133,117,224 shares outstanding as of December 31, 2022 and 142,031,329 shares issued and 138,278,573 shares outstanding as of December 31, 2021

     

    14

     

     

     

    14

     

    Additional paid in capital

     

    1,311,629

     

     

     

    1,303,254

     

    Accumulated other comprehensive income (loss)

     

    35,078

     

     

     

    (506

    )

    Treasury stock

     

    (189,232

    )

     

     

    (59,172

    )

    Retained earnings

     

    639,595

     

     

     

    475,400

     

    Stockholders' equity

     

    1,797,084

     

     

     

    1,718,990

     

    Total liabilities and stockholders' equity

    $

    3,492,199

     

     

    $

    3,466,311

     

    HOSTESS BRANDS, INC.

    CONSOLIDATED STATEMENTS OF OPERATIONS

    (Unaudited, amounts in thousands, except shares and per share data)

     

     

    Three Months Ended

     

    Year Ended

     

    December 31,

     

    December 31,

     

    December 31,

     

    December 31,

    2022

    2021

    2022

    2021

    Net revenue

    $

    339,458

     

     

    $

    297,161

     

     

    $

    1,358,207

     

     

    $

    1,142,036

     

    Cost of goods sold

     

    217,524

     

     

     

    186,782

     

     

     

    892,528

     

     

     

    732,053

     

    Gross profit

     

    121,934

     

     

     

    110,379

     

     

     

    465,679

     

     

     

    409,983

     

    Operating costs and expenses:

     

     

     

     

     

     

     

     

    Advertising and marketing

     

    19,401

     

     

     

    11,991

     

     

     

    62,754

     

     

     

    51,683

     

    Selling

     

    10,932

     

     

     

    10,038

     

     

     

    40,542

     

     

     

    36,288

     

    General and administrative

     

    29,152

     

     

     

    29,919

     

     

     

    119,453

     

     

     

    99,173

     

    Amortization of customer relationships

     

    5,878

     

     

     

    5,877

     

     

     

    23,512

     

     

     

    23,510

     

    Tax receivable agreement remeasurement

     

    —

     

     

     

    (1,409

    )

     

     

    (860

    )

     

     

    (1,409

    )

    Total operating costs and expenses

     

    65,363

     

     

     

    56,416

     

     

     

    245,401

     

     

     

    209,245

     

    Operating income

     

    56,571

     

     

     

    53,963

     

     

     

    220,278

     

     

     

    200,738

     

    Other expense:

     

     

     

     

     

     

     

     

    Interest expense, net

     

    11,267

     

     

     

    9,863

     

     

     

    40,950

     

     

     

    39,762

     

    Change in fair value of warrant liabilities

     

    —

     

     

     

    (1,249

    )

     

     

    —

     

     

     

    (566

    )

    Other expense (income)

     

    36

     

     

     

    (78

    )

     

     

    (31,956

    )

     

     

    1,730

     

    Total other expense

     

    11,303

     

     

     

    8,536

     

     

     

    8,994

     

     

     

    40,926

     

    Income before income taxes

     

    45,268

     

     

     

    45,427

     

     

     

    211,284

     

     

     

    159,812

     

    Income tax expense

     

    12,376

     

     

     

    8,899

     

     

     

    47,089

     

     

     

    40,513

     

    Net income

     

    32,892

     

     

     

    36,528

     

     

     

    164,195

     

     

     

    119,299

     

     

     

     

     

     

     

     

     

     

    Earnings per Class A share:

     

     

     

     

     

     

     

     

    Basic

    $

    0.25

     

     

    $

    0.27

     

     

    $

    1.20

     

     

    $

    0.91

     

    Diluted

    $

    0.24

     

     

    $

    0.25

     

     

    $

    1.19

     

     

    $

    0.86

     

    Weighted-average shares outstanding:

     

     

     

     

     

     

     

     

    Basic

     

    134,177,696

     

     

     

    134,247,010

     

     

     

    136,768,310

     

     

     

    131,571,733

     

    Diluted

     

    135,564,487

     

     

     

    138,435,782

     

     

     

    137,924,471

     

     

     

    138,198,176

     

    HOSTESS BRANDS, INC.

    CONSOLIDATED STATEMENTS OF CASH FLOWS

    (Unaudited, amounts in thousands)

     

     

    Year Ended

     

    December 31,

     

    December 31,

    2022

    2021

    Operating activities

     

     

     

    Net income

    $

    164,195

     

     

    $

    119,299

     

    Depreciation and amortization

     

    60,086

     

     

     

    51,681

     

    Debt discount amortization

     

    1,514

     

     

     

    1,238

     

    Tax receivable agreement remeasurement

     

    (860

    )

     

     

    (1,409

    )

    Change in fair value of warrant liabilities

     

    —

     

     

     

    (566

    )

    Unrealized loss (gain) on foreign currency

     

    631

     

     

     

    (503

    )

    Non-cash lease expense

     

    462

     

     

     

    1,247

     

    Share-based compensation

     

    10,450

     

     

     

    9,585

     

    Realized and unrealized gains on short-term investments

     

    (490

    )

     

     

    —

     

    Deferred taxes

     

    16,511

     

     

     

    18,995

     

    Change in operating assets and liabilities, net of acquisitions and dispositions:

     

     

     

    Accounts receivable

     

    (20,763

    )

     

     

    (22,728

    )

    Inventories

     

    (12,593

    )

     

     

    (3,465

    )

    Prepaids and other current assets

     

    (5,959

    )

     

     

    9,876

     

    Accounts payable and accrued expenses

     

    26,072

     

     

     

    13,723

     

    Customer trade allowances

     

    9,546

     

     

     

    6,056

     

    Net cash provided by operating activities

     

    248,802

     

     

     

    203,029

     

     

     

     

     

    Investing activities

     

     

     

    Purchases of property and equipment

     

    (119,374

    )

     

     

    (60,803

    )

    Acquisition of short-term investments

     

    (80,424

    )

     

     

    —

     

    Proceeds from maturity of short-term investments

     

    63,000

     

     

     

    —

     

    Acquisition and development of software assets

     

    (11,123

    )

     

     

    (4,622

    )

    Net cash used in investing activities

     

    (147,921

    )

     

     

    (65,425

    )

     

     

     

     

    Financing activities

     

     

     

    Repayments of long-term debt and financing lease obligations

     

    (108,375

    )

     

     

    (11,167

    )

    Repurchase of common stock

     

    (130,060

    )

     

     

    (53,172

    )

    Payment of taxes related to the net issuance of employee stock awards

     

    (6,045

    )

     

     

    (1,767

    )

    Payments on tax receivable agreement

     

    (9,313

    )

     

     

    (9,270

    )

    Cash received from exercise of options and warrants, net of fees

     

    3,970

     

     

     

    14,121

     

    Net cash used in financing activities

     

    (249,823

    )

     

     

    (61,255

    )

    Effect of exchange rate changes on cash and cash equivalents

     

    (1,633

    )

     

     

    (224

    )

    Net increase (decrease) in cash and cash equivalents

     

    (150,575

    )

     

     

    76,125

     

    Cash and cash equivalents at beginning of period

     

    249,159

     

     

     

    173,034

     

    Cash and cash equivalents at end of period

    $

    98,584

     

     

    $

    249,159

     

     

     

     

     

    Supplemental Disclosures of Cash Flow Information:

     

     

     

    Cash paid during the period for:

     

     

     

    Interest paid, net of amounts capitalized

    $

    39,419

     

     

    $

    38,567

     

    Net taxes paid

    $

    28,003

     

     

    $

    12,081

     

    Supplemental disclosure of non-cash investing:

     

     

     

    Accrued capital expenditures

    $

    8,638

     

     

    $

    2,244

     

    HOSTESS BRANDS, INC.

    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

    Adjusted gross profit, adjusted gross margin, adjusted operating income, adjusted net income, adjusted net income margin, adjusted EBITDA, adjusted EBITDA margin, adjusted diluted shares and adjusted EPS collectively referred to as "Non-GAAP Financial Measures," are commonly used in the Company's industry and should not be construed as an alternative to net revenue, gross profit, operating income, net income, net income margin, diluted shares outstanding or earnings per share as indicators of operating performance (as determined in accordance with GAAP). These Non-GAAP Financial Measures may not be comparable to similarly titled measures reported by other companies. The Company has included these Non-GAAP Financial Measures because it believes the measures provide management and investors with additional information to measure the Company's performance, estimate the Company's value and evaluate the Company's ability to service debt.

    Non-GAAP Financial Measures are adjusted to exclude certain items that affect comparability. The adjustments are itemized in the tables below. You are encouraged to evaluate these adjustments and the reason the Company considers them appropriate for supplemental analysis. In evaluating adjustments, you should be aware that in the future, the Company may incur expenses that are the same as or similar to some of the adjustments set forth below. The presentation of Non-GAAP Financial Measures should not be construed as an inference that future results will be unaffected by unusual or recurring items.

    The Company defines adjusted EBITDA as net income adjusted to exclude (i) interest expense, net, (ii) depreciation and amortization (iii) income taxes and (iv) share-based compensation, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of its ongoing operating performance. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of the Company's results as reported under GAAP. For example, adjusted EBITDA:

    • does not reflect the Company's capital expenditures, future requirements for capital expenditures or contractual commitments;
    • does not reflect changes in, or cash requirements for, the Company's working capital needs;
    • does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debt; and
    • does not reflect payments related to income taxes or the tax receivable agreement.

    HOSTESS BRANDS, INC.

    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

    (Unaudited, amounts in thousands, except per share data)

       

     

    Three Months Ended December 31, 2022

     

    Gross

    Profit

     

    Gross

    Margin

     

    Operating

    Income

     

    Net

    Income

     

    Net

    Income

    Margin

     

    Diluted

    EPS

    GAAP results

    $

    121,934

     

    35.9

    %

     

    $

    56,571

     

     

    $

    32,892

     

     

    9.7

    %

     

    $

    0.24

     

    Non-GAAP adjustments:

     

     

     

     

     

     

     

     

     

     

     

     

     

    Foreign currency remeasurement

     

    —

     

    —

     

     

     

    —

     

     

     

    (159

    )

     

    —

     

     

     

    —

     

    Accelerated depreciation related to network optimization

     

    1,132

     

    0.4

     

     

     

    1,132

     

     

     

    1,132

     

     

    0.3

     

     

     

    0.01

     

    Other (1)

     

    —

     

    —

     

     

     

    104

     

     

     

    300

     

     

    0.1

     

     

     

    —

     

    Discrete income tax expense

     

    —

     

    —

     

     

     

    —

     

     

     

    32

     

     

    —

     

     

     

    —

     

    Tax impact of adjustments

     

    —

     

    —

     

     

     

    —

     

     

     

    (344

    )

     

    (0.1

    )

     

     

    —

     

    Adjusted Non-GAAP results

    $

    123,066

     

    36.3

    %

     

    $

    57,807

     

     

     

    33,853

     

     

    10.0

     

     

    $

    0.25

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Income tax

     

     

     

     

     

     

     

     

    12,688

     

     

    3.7

     

     

     

     

    Interest expense

     

     

     

     

     

     

     

     

    11,267

     

     

    3.3

     

     

     

     

    Depreciation and amortization

     

     

     

     

     

     

     

     

    14,452

     

     

    4.3

     

     

     

     

    Share-based compensation

     

     

     

     

     

     

     

     

    2,850

     

     

    0.8

     

     

     

     

    Adjusted EBITDA

     

     

     

     

     

     

     

    $

    75,110

     

     

    22.1

    %

     

     

     

    (1) Costs related to certain corporate initiatives, of which $0.1 million is included in general and administrative and $0.2 million is included in other expense (income) on the consolidated statement of operations.

    HOSTESS BRANDS, INC.

    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

    (Unaudited, amounts in thousands, except per share data)

     

     

    Three Months Ended December 31, 2021

     

    Gross

    Profit

     

    Gross

    Margin

     

    Operating

    Income

     

    Net

    Income

     

    Net

    Income

    Margin

     

    Diluted

    EPS

    GAAP results

    $

    110,379

     

    37.1

    %

     

    $

    53,963

     

     

    $

    36,528

     

     

    12.3

    %

     

    $

    0.25

     

    Non-GAAP adjustments:

     

     

     

     

     

     

     

     

     

     

     

    Foreign currency remeasurement

     

    —

     

    —

     

     

     

    —

     

     

     

    (327

    )

     

    (0.1

    )

     

     

    —

     

    Project consulting costs (1)

     

    —

     

    —

     

     

     

    3,578

     

     

     

    3,578

     

     

    1.2

     

     

     

    0.03

     

    Change in fair value of warrant liabilities

     

    —

     

    —

     

     

     

    —

     

     

     

    (1,249

    )

     

    (0.4

    )

     

     

    (0.01

    )

    Tax receivable agreement remeasurement

     

    —

     

    —

     

     

     

    (1,409

    )

     

     

    (1,409

    )

     

    (0.5

    )

     

     

    —

     

    Other (2)

     

    176

     

    0.1

     

     

     

    755

     

     

     

    1,004

     

     

    0.3

     

     

     

    0.01

     

    Remeasurement of tax liabilities

     

    —

     

    —

     

     

     

    —

     

     

     

    (3,357

    )

     

    (1.1

    )

     

     

    (0.02

    )

    Tax impact of adjustments

     

    —

     

    —

     

     

     

    —

     

     

     

    (769

    )

     

    (0.3

    )

     

     

    (0.01

    )

    Adjusted Non-GAAP results

    $

    110,555

     

    37.2

    %

     

    $

    56,887

     

     

     

    33,999

     

     

    11.4

     

     

    $

    0.25

     

     

     

     

     

     

     

     

     

     

     

     

     

    Income tax

     

     

     

     

     

     

     

    13,025

     

     

    4.4

     

     

     

    Interest expense

     

     

     

     

     

     

     

    9,863

     

     

    3.3

     

     

     

    Depreciation and amortization

     

     

     

     

     

     

     

    13,689

     

     

    4.6

     

     

     

    Share-based compensation

     

     

     

     

     

     

     

    2,580

     

     

    0.9

     

     

     

    Adjusted EBITDA

     

     

     

     

     

     

    $

    73,156

     

     

    24.6

    %

     

     

    (1) Project consulting costs are included in general and administrative on the consolidated statement of operations.

    (2) Costs related to certain corporate initiatives, including $0.5 million of Voortman acquisition related costs. Of the total $1.0 million, $0.2 million is included in costs of goods sold, $0.6 million is included in general and administrative and $0.2 million is included in other expense (income) on the consolidated statement of operations.

    HOSTESS BRANDS, INC.

    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

    (Unaudited, amounts in thousands, except per share data)

     

     

     

    Year Ended December 31, 2022

     

     

    Gross

    Profit

     

    Gross

    Margin

     

    Operating

    Income

     

    Net

    Income

     

    Net

    Income

    Margin

     

    Diluted

    EPS

    GAAP Results

     

    $

    465,679

     

    34.3

    %

     

    $

    220,278

     

     

    $

    164,195

     

     

    12.1

    %

     

    $

    1.19

     

    Non-GAAP adjustments:

     

     

     

     

     

     

     

     

     

     

     

     

    Foreign currency remeasurement

     

     

    —

     

    —

     

     

     

    —

     

     

     

    630

     

     

    —

     

     

     

    0.01

     

    Project consulting costs (1)

     

     

    —

     

    —

     

     

     

    3,887

     

     

     

    3,887

     

     

    0.3

     

     

     

    0.03

     

    Tax receivable agreement remeasurement

     

     

    —

     

    —

     

     

     

    (860

    )

     

     

    (860

    )

     

    (0.1

    )

     

     

    (0.01

    )

    Gain on Voortman insurance proceeds (2)

     

     

    —

     

    —

     

     

     

    —

     

     

     

    (32,970

    )

     

    (2.3

    )

     

     

    (0.24

    )

    Accelerated depreciation related to network optimization

     

     

    1,908

     

    0.1

     

     

     

    1,908

     

     

     

    1,908

     

     

    0.1

     

     

     

    0.02

     

    Other (3)

     

     

    161

     

    —

     

     

     

    265

     

     

     

    650

     

     

    —

     

     

     

    —

     

    Remeasurement of tax liabilities

     

     

    —

     

    —

     

     

     

    —

     

     

     

    (2,161

    )

     

    (0.2

    )

     

     

    (0.02

    )

    Discrete income tax expense

     

     

    —

     

    —

     

     

     

    —

     

     

     

    1,188

     

     

    0.1

     

     

     

    0.01

     

    Tax impact of adjustments

     

     

    —

     

    —

     

     

     

    —

     

     

     

    (1,910

    )

     

    (0.1

    )

     

     

    (0.01

    )

    Adjusted Non-GAAP results

     

    $

    467,748

     

    34.4

    %

     

    $

    225,478

     

     

     

    134,557

     

     

    9.9

     

     

    $

    0.98

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Income tax

     

     

     

     

     

     

     

     

    49,972

     

     

    3.7

     

     

     

    Interest expense

     

     

     

     

     

     

     

     

    40,950

     

     

    3.0

     

     

     

    Depreciation and amortization

     

     

     

     

     

     

     

     

    58,178

     

     

    4.3

     

     

     

    Share-based compensation

     

     

     

     

     

     

     

     

    10,450

     

     

    0.8

     

     

     

    Adjusted EBITDA

     

     

     

     

     

     

     

    $

    294,107

     

     

    21.7

    %

     

     

    (1) Project consulting costs are included in general and administrative on the consolidated statement of operations.

    (2) Gain from receipt of insurance proceeds under the representation and warranty insurance policy purchased in connection with the Voortman acquisition in 2020 included in other expense (income) on the consolidated statement of operations.

    (3) Costs related to certain corporate initiatives, of which $0.2 million is included in cost of goods sold, $0.1 million is included in general and administrative and $0.4 million is included in other expense (income) on the consolidated statement of operations.

    HOSTESS BRANDS, INC.

    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

    (Unaudited, amounts in thousands, except per share data)

     

     

    Year Ended December 31, 2021

     

    Gross

    Profit

     

    Gross

    Margin

     

    Operating

    Income

     

    Net

    Income

     

    Net

    Income

    Margin

     

    Diluted

    EPS

    GAAP results

    $

    409,983

     

    35.9

    %

     

    $

    200,738

     

     

    $

    119,299

     

     

    10.4

    %

     

    $

    0.86

     

    Non-GAAP adjustments:

     

     

     

     

     

     

     

     

     

     

     

    Foreign currency remeasurement

     

    —

     

    —

     

     

     

    —

     

     

     

    (505

    )

     

    —

     

     

     

    —

     

    Project consulting costs (1)

     

    —

     

    —

     

     

     

    6,081

     

     

     

    6,081

     

     

    0.5

     

     

     

    0.04

     

    Change in fair value of warrant liabilities

     

    —

     

    —

     

     

     

    —

     

     

     

    (566

    )

     

    —

     

     

     

    —

     

    Tax receivable agreement remeasurement

     

    —

     

    —

     

     

     

    (1,409

    )

     

     

    (1,409

    )

     

    (0.1

    )

     

     

    (0.01

    )

    Other (2)

     

    704

     

    0.1

     

     

     

    2,107

     

     

     

    4,338

     

     

    0.4

     

     

     

    0.03

     

    Remeasurement of tax liabilities

     

    —

     

    —

     

     

     

    —

     

     

     

    (3,357

    )

     

    (0.3

    )

     

     

    (0.03

    )

    Tax impact of adjustments

     

    —

     

    —

     

     

     

    —

     

     

     

    (1,871

    )

     

    (0.2

    )

     

     

    (0.01

    )

    Adjusted Non-GAAP results

    $

    410,687

     

    36.0

    %

     

    $

    207,517

     

     

     

    122,010

     

     

    10.7

     

     

    $

    0.88

     

     

     

     

     

     

     

     

     

     

     

     

     

    Income tax

     

     

     

     

     

     

     

    45,741

     

     

    4.0

     

     

     

    Interest expense

     

     

     

     

     

     

     

    39,762

     

     

    3.5

     

     

     

    Depreciation and amortization

     

     

     

     

     

     

     

    51,681

     

     

    4.5

     

     

     

    Share-based compensation

     

     

     

     

     

     

     

    9,585

     

     

    0.8

     

     

     

    Adjusted EBITDA

     

     

     

     

     

     

    $

    268,779

     

     

    23.5

    %

     

     

    (1) Project consulting costs are included in general and administrative on the consolidated statement of operations.

    (2) Costs related to certain corporate initiatives, including $2.8 million of Voortman acquisition related costs. Of the total $4.3 million, $0.7 million is included in cost of goods sold, $1.4 million is included in general and administrative and $2.2 million is included in other expense (income) on the consolidated statement of operations.

     

    View source version on businesswire.com: https://www.businesswire.com/news/home/20230221005665/en/

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      Company Recently Announced a Definitive Agreement to be Acquired by The J. M. Smucker Company Hostess Brands, Inc. (NASDAQ:TWNK) (the "Company," "Hostess Brands," "we," "us," and "our") today reported its financial results for the three and nine months ended September 30, 2023. "I am extremely proud of the entire Hostess Brands team for building a premier snacking company focused on attractive snacking occasions, a portfolio of iconic brands, and outstanding execution to deliver long-term, sustainable profitable growth," commented Andy Callahan, President and Chief Executive Officer, Hostess Brands. Recent Merger Announcement On September 10, 2023, Hostess Brands entered into a defi

      11/7/23 6:30:00 AM ET
      $TWNK
      Packaged Foods
      Consumer Staples
    • Hostess Brands to Be Acquired by the J.M. Smucker Co. for Approximately $5.6 Billion

      Hostess Brands, Inc. (NASDAQ:TWNK) (the "Company" or "Hostess Brands"), announced today that it has entered into a definitive agreement with The J.M. Smucker Co. (NYSE:SJM) to acquire all of the outstanding shares of Hostess Brands in a cash and stock transaction valued at $34.25 per Hostess Brands share, representing a transaction value of approximately $5.6 billion, including the assumption of debt. Under the terms of the agreement, Hostess Brands shareholders will receive $30.00 in cash and 0.03002 shares of The J.M. Smucker Co. common stock (valued at $4.25 as of September 8, 2023) for each share of Hostess Brands common stock. The purchase price represents a premium of approximately 54

      9/11/23 8:00:00 AM ET
      $SJM
      $TWNK
      Packaged Foods
      Consumer Staples
    • The J. M. Smucker Co. to Acquire Hostess Brands to Accelerate Focus on Convenient Consumer Occasions

      Expands the Company's family of beloved brands in attractive categories with the addition of iconic snacking brands. Furthers the Company's ability to delight consumers with convenient food options across more snacking and meal occasions. Enhances the Company's net sales growth, operating margin and earnings growth.Expected to be accretive to adjusted earnings per share in the first fiscal year. The Company will discuss the transaction during a conference call today at 9:00 a.m. Eastern Time. ORRVILLE, Ohio, Sept. 11, 2023 /PRNewswire/ -- The J. M. Smucker Co. (NYSE:SJM) ("Company") announced today the signing of a definitive agreement to acquire Hostess Brands, Inc. (NASDAQ:TWNK) ("Hostess

      9/11/23 8:00:00 AM ET
      $SJM
      $TWNK
      Packaged Foods
      Consumer Staples

    $TWNK
    Large Ownership Changes

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    • SEC Form SC 13G/A filed by Hostess Brands Inc. (Amendment)

      SC 13G/A - Hostess Brands, Inc. (0001644406) (Subject)

      2/9/24 9:59:01 AM ET
      $TWNK
      Packaged Foods
      Consumer Staples
    • SEC Form SC 13D/A filed by Hostess Brands Inc. (Amendment)

      SC 13D/A - Hostess Brands, Inc. (0001644406) (Subject)

      11/7/23 4:06:48 PM ET
      $TWNK
      Packaged Foods
      Consumer Staples
    • SEC Form SC 13G/A filed by Hostess Brands Inc. (Amendment)

      SC 13G/A - Hostess Brands, Inc. (0001644406) (Subject)

      2/13/23 3:45:12 PM ET
      $TWNK
      Packaged Foods
      Consumer Staples

    $TWNK
    Leadership Updates

    Live Leadership Updates

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    • MGP Hires Vice President of Investor Relations

      ATCHISON, Kan., May 20, 2024 /PRNewswire/ -- MGP Ingredients, Inc., (NASDAQ:MGPI), a leading provider of branded and distilled spirits as well as food ingredient solutions, is pleased to announce the hiring of Amit Sharma as its Vice President of Investor Relations. This strategic addition to our leadership team underscores our commitment to enhancing communication with our investors and stakeholders, and to strengthening our overall investor relations strategy. Sharma brings over 18 years of experience in investor relations and financial communications. He recently served as

      5/20/24 8:30:00 AM ET
      $MGPI
      $TWNK
      Beverages (Production/Distribution)
      Consumer Staples
      Packaged Foods
    • BARK Announces Appointment of Larry Bodner to Board of Directors

      Mr. Bodner Brings Over 35 Years of Consumer-Packaged Goods Experience to BARK BARK, Inc. ("BARK" or the "Company") (NYSE:BARK), a leading global omnichannel dog brand with the mission to Make All Dogs Happy, today announced that Larry Bodner has joined the Company's Board of Directors (the "Board"), effective immediately. Mr. Bodner brings over 35 years of operational and financial experience spanning the consumer-packaged goods industry, and currently serves as Chief Executive Officer of Bulletproof 360, a functional nutrition and wellness company. He is also a member of the Board of Directors of Hostess Brands, where he has served as a Director since 2016. "Larry brings extensive le

      9/20/23 8:00:00 AM ET
      $BARK
      $SOVO
      $TWNK
      Other Specialty Stores
      Consumer Discretionary
      Packaged Foods
      Consumer Staples
    • Hostess Brands Appoints Darryl Riley to Be Company's First Chief Sustainability Officer

      Reporting to the CEO, Position Underscores Hostess Brands' Focus on Sustainability Hostess Brands, Inc. (NASDAQ:TWNK), a leading sweet snacks company, today announced that Darryl Riley has been appointed to the newly created position of Chief Sustainability Officer, effective immediately. Riley, who most recently served as Senior Vice President, Quality, Food Safety and R&D, will report to Andy Callahan, President and CEO of Hostess Brands. "As Hostess Brands continues to focus on building a socially responsible, modern-day snacking powerhouse, we believe dedicating an executive leadership position to sustainability will drive continued progress and integration," said Callahan. "With his

      6/30/22 8:30:00 AM ET
      $TWNK
      Packaged Foods
      Consumer Staples