Press Release

<< Back
Hostess Brands, Inc. Announces Strong Third Quarter 2021 Financial Results
11/09/21

Ten Percent Net Revenue Growth Signaling Continued Momentum
Raises 2021 Net Revenue Guidance
Announces Chief Financial Officer Departure

LENEXA, Kan.--(BUSINESS WIRE)--Nov. 9, 2021-- Hostess Brands, Inc. (NASDAQ: TWNK) (the “Company”, “we”, “our”) today reported its financial results for the three and nine months ended September 30, 2021.

“Our solid momentum continued in the third quarter enabling us to exceed our top and bottom-line expectations. Third quarter sales increased by 10% as strong execution across our retail network and exciting innovation generated meaningful volume growth in both Hostess® and Voortman® branded portfolios. I am proud of the way in which our team is performing in a dynamic and challenging operating environment as productivity initiatives and higher price realization offset rising inflation allowing us to maintain our attractive margin structure,” commented Andy Callahan, the Company’s President and Chief Executive Officer.

He continued, “We are raising our full-year net revenue guidance while maintaining our EBITDA and EPS outlook as we continue to invest in our capabilities, advertising and marketing to generate top-tier growth and shareholder value over the long-term.”

Third Quarter 2021 Financial Highlights1

  • Net revenue of $288.0 million increased 10.4% from the same period last year, reflecting strong Hostess® and Voortman® branded growth across multiple channels.
  • Gross profit increased 8.6% to $99.0 million. On an adjusted basis, gross profit increased 8.9% to $99.3 million, or 34.5% of net revenues, as higher volume, favorable product mix, pricing and productivity offset rising inflation.
  • Net income was $26.2 million or $0.19 per diluted share. Adjusted net income increased 14.2% to $28.9 million and resulted in adjusted EPS of $0.21 compared to $0.19 in the prior year period.
  • Adjusted EBITDA increased 7.6% to $64.8 million, or 22.5% of net revenue, as higher gross profits were partially offset by higher advertising and marketing spend.
  • Cash and cash equivalents were $228.1 million as of September 30, 2021. Net leverage ratio declined to 3.3x driven by improved operating cash flow.
  • Raising full year 2021 guidance for net revenue growth to 9.0% - 10.0% and reiterating adjusted EBITDA and adjusted EPS guidance of $260 million - $268 million and $0.83 - $0.87.

Other Highlights

  • Hostess manufacturer point-of-sale (“POS”) increased 13.7% and its share of the Sweet Baked Goods category increased by 179 basis points to 21.6% driven by solid core performance and strong contribution from new product innovation, including Hostess® Baby Bundts and Hostess® Muff'n Stix.
  • Voortman® branded POS grew 20.5% reflecting expanded distribution and robust consumer demand.
  • Pricing actions taken through third quarter benefited quarterly margins and this positive impact is expected to increase through the fourth quarter.
  • Completed cashless settlement of remaining warrants in early November, simplifying the Company's capital structure. Total warrants exercised during the year resulted in the issuance of 10.7 million shares, which is factored into our 139 million average shares outstanding estimate for the full year.
  • Repurchased $50 million of shares year-to-date under our previously authorized $100 million share repurchase authorization.
 

1 This press release contains certain non-GAAP financial measures, including adjusted net revenue, adjusted gross profit, adjusted gross profit margin, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, adjusted net 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 third quarter of 2020. 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 category as reported by Nielsen but do not include other products sold outside of the SBG category. All market data in this press release refer to the thirteen-week period ended October 2, 2021 and reflects a scheduled one-week shift in current and prior-year reporting periods performed by Nielsen in April 2021 to better coincide with calendar periods. The Company's leverage ratio is net debt (total long-term debt less cash) divided by the trailing twelve months adjusted EBITDA.

Guidance and Outlook

The Company is raising its full year 2021 net revenue guidance from 7.5% - 9.0% to 9.0% - 10.0%. The updated guidance is as follows:

 

 

Updated Guidance

Adjusted net revenue growth

 

9.0% - 10.0%

Adjusted EBITDA

 

$260 - $268 million

Adjusted EPS (diluted)

 

$0.83 - $0.87*

Leverage ratio

 

~3x

Capital expenditures

 

$60 - $65 million

Effective tax rate

 

27.5%

*Based on weighted average shares outstanding of 139 million.

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, 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.

Third Quarter 2021 Compared to Third Quarter 20201

Net revenue was $288.0 million, an increase of 10.4%, or $27.1 million, compared to $260.9 million. Net revenue growth was primarily driven by sweet baked goods net revenue, which increased $24.7 million or 10.6%. This growth was led by gains in the club, dollar, convenience, drug and grocery channels with continued momentum of single-serve products driving favorable product mix. Cookies net revenue of $29.2 million increased 9.0% or $2.4 million due to expanded distribution and strong point of sale growth.

Gross profit was $99.0 million, or 34.4% of net revenue compared to 35.0% in the same period last year. Adjusted gross profit margin of 34.5% declined from 35.0% in the same period last year due to transportation and input cost inflation partially offset by favorable product mix, pricing actions and productivity initiatives. Adjusted gross profit increased 8.9% on higher volume and expanded distribution.

Operating income was $46.6 million. Adjusted operating income of $49.4 million increased 13.3% from the same period last year as higher gross profit was partially offset by higher advertising and marketing spending to support top-line growth.

Adjusted EBITDA of $64.8 million, or 22.5% of adjusted net revenue, increased 7.6% from the same period last year driven by strong Hostess® branded volume and favorable product mix. Depreciation and amortization expense declined $1.7 million to $12.8 million while share-based compensation expense increased $0.5 million to $2.6 million in the quarter.

The Company's effective tax rate was 27.4% compared to 19.3% in the prior year. The prior year period's effective tax rate reflected a $2.3 million non-taxable gain on change in fair value of warrant liabilities. The effective tax rate, excluding discrete items was 26.7% in the current quarter.

Net income was $26.2 million consistent with the prior year period. Adjusted net income of $28.9 million increased 14.2% from the same period last year. Diluted EPS was $0.19. Adjusted EPS was $0.21 compared to $0.19 in the prior year period as higher income was partially offset by higher share dilution from the warrants.

Cash from operations for the nine months ended September 30, 2021 was $147.6 million compared to $108.0 million for the same period last year. Operating cash flow benefited from increased profitability as well as lapping prior-year costs related to the integration and conversion of Voortman's operations, partially offset by an increase in working capital.

1 This press release contains certain non-GAAP financial measures, including adjusted net revenue, adjusted gross profit, adjusted gross margin, adjusted operating income, adjusted EBITDA, adjusted EBITDA 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 third quarter of 2020.

Management Changes

The Company also announced that Brian T. Purcell, Executive Vice President, Chief Financial Officer, resigned from the Company, effective November 9, 2021 and that the Company’s Board of Directors has appointed Michael J. Gernigin, the Company’s Senior Vice President and Corporate Controller, as the Company’s Chief Accounting Officer and Interim Chief Financial Officer until a permanent successor has been named.

“We appreciate Brian’s contributions to Hostess and wish him the best in his future endeavors,” commented Andy Callahan. He continued, “Mike, who has been with the Company since 2016, is a strong finance and accounting executive and is well positioned to lead the talented finance organization while we search for a new permanent CFO.”

Conference Call and Webcast

The Company will host a conference call and webcast with an accompanying presentation today, November 9, 2021 at 4:30 p.m. ET to discuss the results for the third quarter. Investors interested in participating in the live call can dial 800-430-8332 from the U.S. and 856-344-9206 internationally. A telephone replay will be available approximately two hours after the call concludes through Tuesday, November 23, 2021, by dialing 844-512-2921 from the U.S., or 412-317-6671 from international locations, and entering confirmation code 3009366. The simultaneous, live webcast and presentation 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. is a leading sweet snacks company focused on developing, manufacturing, marketing, selling and distributing snacks in North America sold under the Hostess® and Voortman® brands. The Company produces a variety of new and classic treats including iconic Hostess® Donettes®, Twinkies®, CupCakes, Ding Dongs® and Zingers®, as well as a variety of Voortman® cookies and wafers. For more information about Hostess Brands, Inc. please visit 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; protecting intellectual property rights; leveraging the Company’s brand value to compete against lower-priced alternative brands; correctly predicting, identifying and interpreting changes in consumer preferences and demand and offering new products to meet those changes; operating in a highly competitive industry; the continued ability to produce and successfully market products with extended shelf life; the ability to pass cost increases on to our customers; the ability to maintain or add additional shelf or retail space for the Company’s products; our 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 drive revenue growth in key products or add products that are faster-growing and more profitable; adverse impact or disruption to our business caused by COVID-19 or future outbreaks of highly infectious or contagious diseases; volatility in commodity, energy, and other input prices and the ability to adjust pricing to cover increased costs; significant changes in the availability and pricing of transportation; dependence on major customers; increased labor and employee related costs; strikes or work stoppages; product liability claims, product recalls, or regulatory enforcement actions; dependence on third parties for significant services; unanticipated business disruptions; 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/A for 2020 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 to be filed today. 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)

 

 

September 30,
2021

 

 

December 31,
2020

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

228,096

 

 

 

$

173,034

 

Accounts receivable, net

156,720

 

 

 

125,550

 

Inventories

49,309

 

 

 

49,348

 

Prepaids and other current assets

7,624

 

 

 

21,614

 

Total current assets

441,749

 

 

 

369,546

 

Property and equipment, net

318,492

 

 

 

303,959

 

Intangible assets, net

1,950,270

 

 

 

1,967,903

 

Goodwill

706,615

 

 

 

706,615

 

Other assets, net

17,861

 

 

 

17,446

 

Total assets

$

3,434,987

 

 

 

$

3,365,469

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Long-term debt and lease obligations payable within one year

$

14,171

 

 

 

$

13,811

 

Tax receivable agreement payments payable within one year

10,000

 

 

 

11,800

 

Accounts payable

71,139

 

 

 

61,428

 

Customer trade allowances

55,157

 

 

 

46,779

 

Warrant liabilities

1,249

 

 

 

861

 

Accrued expenses and other current liabilities

46,541

 

 

 

55,715

 

Total current liabilities

198,257

 

 

 

190,394

 

Long-term debt and lease obligations

1,103,327

 

 

 

1,113,037

 

Tax receivable agreement obligations

137,274

 

 

 

144,744

 

Deferred tax liability

315,544

 

 

 

295,009

 

Other long-term liabilities

1,595

 

 

 

1,560

 

Total liabilities

1,755,997

 

 

 

1,744,744

 

 

 

 

 

 

Class A common stock, $0.0001 par value, 200,000,000 shares authorized, 132,741,603 issued and 129,170,487 shares outstanding as of September 30, 2021 and 130,791,908 shares issued and 130,347,464 shares outstanding as of December 31, 2020

13

 

 

 

13

 

Additional paid in capital

1,300,329

 

 

 

1,281,018

 

Accumulated other comprehensive loss

(4,161

)

 

 

(10,407

)

Retained earnings

438,872

 

 

 

356,101

 

Treasury stock

(56,063

)

 

 

(6,000

)

Stockholders’ equity

1,678,990

 

 

 

1,620,725

 

Total liabilities and stockholders’ equity

$

3,434,987

 

 

 

$

3,365,469

 

HOSTESS BRANDS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,
2021

 

September 30,
2020

 

September 30,
2021

 

September 30,
2020

Net revenue

$

287,969

 

 

$

260,855

 

 

$

844,875

 

 

$

760,566

 

Cost of goods sold

188,990

 

 

169,700

 

 

545,271

 

 

500,700

 

Gross profit

98,979

 

 

91,155

 

 

299,604

 

 

259,866

 

Operating costs and expenses:

 

 

 

 

 

 

 

Advertising and marketing

14,767

 

 

11,762

 

 

39,692

 

 

32,983

 

Selling expense

8,166

 

 

8,675

 

 

26,250

 

 

39,173

 

General and administrative

23,565

 

 

21,913

 

 

69,254

 

 

71,261

 

Amortization of customer relationships

5,877

 

 

6,739

 

 

17,633

 

 

20,333

 

Business combination transaction costs

 

 

 

 

 

 

4,282

 

Other operating expense

 

 

729

 

 

 

 

756

 

Total operating costs and expenses

52,375

 

 

49,818

 

 

152,829

 

 

168,788

 

Operating income

46,604

 

 

41,337

 

 

146,775

 

 

91,078

 

Other expense (income):

 

 

 

 

 

 

 

Interest expense, net

9,928

 

 

10,265

 

 

29,899

 

 

32,570

 

Change in fair value of warrant liabilities

228

 

 

(2,260

)

 

683

 

 

(64,978

)

Other expense

378

 

 

818

 

 

1,808

 

 

2,503

 

Total other expense (income)

10,534

 

 

8,823

 

 

32,390

 

 

(29,905

)

Income before income taxes

36,070

 

 

32,514

 

 

114,385

 

 

120,983

 

Income tax expense

9,878

 

 

6,281

 

 

31,614

 

 

12,022

 

Net income

26,192

 

 

26,233

 

 

82,771

 

 

108,961

 

Less: Net income attributable to the non-controlling interest

 

 

1,368

 

 

 

 

2,860

 

Net income attributable to Class A stockholders

$

26,192

 

 

$

24,865

 

 

$

82,771

 

 

$

106,101

 

 

 

 

 

 

 

 

 

Earnings per Class A share:

 

 

 

 

 

 

 

Basic

$

0.20

 

 

$

0.20

 

 

$

0.63

 

 

$

0.86

 

Diluted

$

0.19

 

 

$

0.18

 

 

$

0.60

 

 

$

0.33

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

129,846,551

 

 

124,905,538

 

 

130,679,974

 

 

123,889,306

 

Diluted

138,058,866

 

 

127,586,881

 

 

138,036,371

 

 

126,079,472

 

HOSTESS BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, amounts in thousands)

 

 

Nine Months Ended

 

September 30, 2021

 

 

September 30, 2020

Operating activities

 

 

 

 

Net income

$

82,771

 

 

 

$

108,961

 

Depreciation and amortization

37,992

 

 

 

40,999

 

Debt discount amortization

931

 

 

 

977

 

Tax receivable agreement remeasurement

 

 

 

610

 

Change in fair value of warrant liabilities

683

 

 

 

(64,978

)

Unrealized foreign exchange losses

(177

)

 

 

1,392

 

Non-cash lease expense

971

 

 

 

358

 

Share-based compensation

7,005

 

 

 

6,583

 

Deferred taxes

18,280

 

 

 

8,575

 

Loss on sale of assets

 

 

 

317

 

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

 

 

 

 

Accounts receivable

(31,240

)

 

 

(7,106

)

Inventories

39

 

 

 

7,462

 

Prepaids and other current assets

13,991

 

 

 

(4,334

)

Accounts payable and accrued expenses

7,949

 

 

 

2,186

 

Customer trade allowances

8,441

 

 

 

5,989

 

Net cash provided by operating activities

147,636

 

 

 

107,991

 

 

 

 

 

 

Investing activities

 

 

 

 

Purchases of property and equipment

(33,360

)

 

 

(33,382

)

Acquisition of business, net of cash acquired

 

 

 

(316,013

)

Acquisition and development of software assets

(3,330

)

 

 

(4,994

)

Net cash used in investing activities

(36,690

)

 

 

(354,389

)

 

 

 

 

 

Financing activities

 

 

 

 

Repayments of long-term debt and lease obligations

(8,375

)

 

 

(8,375

)

Proceeds from long-term debt origination, net of fees paid

 

 

 

136,888

 

Distributions to non-controlling interest

 

 

 

(3,423

)

Repurchase of common stock

(50,063

)

 

 

 

Tax payments related to issuance of shares to employees

(1,277

)

 

 

(1,383

)

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

13,285

 

 

 

565

 

Payments on tax receivable agreement

(9,270

)

 

 

(10,327

)

Net cash provided by (used in) financing activities

(55,700

)

 

 

113,945

 

Effect of exchange rate changes on cash and cash equivalents

(184

)

 

 

(337

)

Net increase (decrease) in cash and cash equivalents

55,062

 

 

 

(132,790

)

Cash and cash equivalents at beginning of period

173,034

 

 

 

285,087

 

Cash and cash equivalents at end of period

$

228,096

 

 

 

$

152,297

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

Cash paid during the period for:

 

 

 

 

Interest

$

29,019

 

 

 

$

31,883

 

Net taxes paid

$

1,568

 

 

 

$

5,403

 

Supplemental disclosure of non-cash investing:

 

 

 

 

Accrued capital expenditures

$

5,603

 

 

 

$

3,124

 

HOSTESS BRANDS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Adjusted net revenue, adjusted gross profit, adjusted gross profit margin, adjusted operating income, adjusted net income, adjusted net income margin, adjusted EBITDA, adjusted EBITDA margin 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 attributed to Class A stockholders 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, the tax receivable agreement or distributions to the non-controlling interest to reimburse its tax liability.

HOSTESS BRANDS, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

 

 

 

Three Months Ended September 30, 2021

 

 

Gross
Profit

 

Gross
Margin

 

Operating
Income

 

Net Income

 

Net Income
Margin

 

Diluted EPS

GAAP Results

 

$

98,979

 

 

34.4

%

 

$

46,604

 

 

$

26,192

 

 

9.1

%

 

$

0.19

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency impacts

 

 

 

 

 

 

 

(249

)

 

(0.1

)

 

 

Project consulting costs

 

 

 

 

 

1,604

 

 

1,604

 

 

0.6

 

 

0.01

 

Change in fair value of warrant liabilities

 

 

 

 

 

 

 

228

 

 

0.1

 

 

 

Other (1)

 

370

 

 

0.1

 

 

1,185

 

 

1,810

 

 

0.6

 

 

0.01

 

Tax impact of adjustments

 

 

 

 

 

 

 

(674

)

 

(0.2

)

 

 

Adjusted Non-GAAP results

 

$

99,349

 

 

34.5

%

 

$

49,393

 

 

28,911

 

 

10.1

 

 

$

0.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

10,552

 

 

3.7

 

 

 

Interest expense

 

 

 

 

 

 

 

9,928

 

 

3.4

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

12,769

 

 

4.4

 

 

 

Share-based compensation

 

 

 

 

 

 

 

2,642

 

 

0.9

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

$

64,802

 

 

22.5

%

 

 

(1)

Costs related to certain corporate initiatives, of which $0.4 million is included in cost of goods sold, $0.8 million is included in general and administrative and $0.6 million is included in other non-operating expenses.

 

Three Months Ended September 30, 2020

 

 

Gross
Profit

 

Gross
Margin

 

Operating
Income

 

Net Income

 

Net Income
Margin

 

Diluted EPS

GAAP Results

 

$

91,155

 

 

35.0

%

 

$

41,337

 

 

$

26,233

 

 

10.1

%

 

$

0.18

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency impacts

 

 

 

 

 

 

 

398

 

 

0.2

 

 

 

Acquisition, disposal and integration related costs (1)

 

 

 

 

 

1,556

 

 

1,556

 

 

0.6

 

 

0.01

 

Tax receivable agreement remeasurement

 

 

 

 

 

610

 

 

610

 

 

0.2

 

 

0.01

 

Change in fair value of warrant liabilities

 

 

 

 

 

 

 

(2,260

)

 

(0.9

)

 

 

Other

 

 

 

 

 

120

 

 

541

 

 

0.2

 

 

 

Remeasurement of deferred taxes

 

 

 

 

 

 

 

(1,222

)

 

(0.5

)

 

(0.01

)

Tax impact of adjustments

 

 

 

 

 

 

 

(601

)

 

(0.2

)

 

 

Adjusted Non-GAAP results

 

$

91,155

 

 

35.0

%

 

$

43,623

 

 

25,255

 

 

9.7

 

 

$

0.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

8,104

 

 

3.1

 

 

 

Interest expense

 

 

 

 

 

 

 

10,265

 

 

3.9

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

14,522

 

 

5.6

 

 

 

Share-based compensation

 

 

 

 

 

 

 

2,080

 

 

0.8

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

$

60,226

 

 

23.1

%

 

 

(1)

Acquisition, disposal and integration operating costs are included in general and administrative expenses on the consolidated statement of operations.

 

 

Nine Months Ended September 30, 2021

 

 

Net
Revenue

 

Gross
Profit

 

Gross
Margin

 

Operating
Income

 

Net
Income

 

Net Income
Margin

 

Diluted
EPS

GAAP Results

 

$

844,875

 

 

$

299,604

 

 

35.5

%

 

$

146,775

 

 

$

82,771

 

 

9.8

%

 

$

0.60

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency impacts

 

 

 

 

 

 

 

 

 

(178

)

 

 

 

 

Project consulting costs

 

 

 

 

 

 

 

2,503

 

 

2,503

 

 

0.3

 

 

0.02

 

Change in fair value of warrant liabilities

 

 

 

 

 

 

 

 

 

683

 

 

0.1

 

 

 

Other (1)

 

 

 

528

 

 

 

 

1,352

 

 

3,334

 

 

0.4

 

 

0.03

 

Tax impact of adjustments

 

 

 

 

 

 

 

 

 

(1,102

)

 

(0.1

)

 

(0.01

)

Adjusted Non-GAAP results

 

$

844,875

 

 

$

300,132

 

 

35.5

%

 

$

150,630

 

 

88,011

 

 

10.5

 

 

$

0.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

 

 

32,716

 

 

3.9

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

29,899

 

 

3.5

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

37,992

 

 

4.5

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

 

7,005

 

 

0.8

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

$

195,623

 

 

23.2

%

 

 

(1)

Costs related to certain corporate initiatives, of which $0.5 million is included in cost of goods sold, $0.8 million is included in general and administrative and $2.0 million is included in other non-operating expenses.

 

 

Nine Months Ended September 30, 2020

 

 

Net
Revenue

 

Gross
Profit

Gross
Margin

 

Operating
Income

 

Net
Income

 

Net Income
Margin

 

Diluted
EPS

GAAP Results

 

$

760,566

 

 

$

259,866

 

34.2

%

 

$

91,078

 

 

$

108,961

 

 

14.3

%

 

$

0.33

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency impacts

 

 

 

 

 

 

 

 

1,394

 

 

0.2

 

 

0.01

 

Acquisition, disposal and integration related costs (1)

 

6,821

 

 

7,963

 

0.7

 

 

28,857

 

 

28,857

 

 

3.6

 

 

0.22

 

Facility transition costs

 

 

 

3,681

 

0.5

 

 

5,710

 

 

5,710

 

 

0.8

 

 

0.04

 

Tax receivable agreement remeasurement

 

 

 

 

 

 

610

 

 

610

 

 

0.1

 

 

 

COVID-19 Costs (2)

 

 

 

2,082

 

0.3

 

 

2,388

 

 

2,388

 

 

0.3

 

 

0.02

 

Change in fair-value of warrant liabilities

 

 

 

 

 

 

 

 

(64,978

)

 

(8.5

)

 

 

Other

 

 

 

 

 

 

100

 

 

1,217

 

 

0.2

 

 

0.01

 

Remeasurement of tax liabilities

 

 

 

 

 

 

 

 

(1,222

)

 

(0.2

)

 

(0.01

)

Tax impact of adjustments

 

 

 

 

 

 

 

 

(9,894

)

 

(1.4

)

 

(0.08

)

Adjusted Non-GAAP results

 

$

767,387

 

 

$

273,592

 

35.7

%

 

$

128,743

 

 

73,043

 

 

9.4

 

 

$

0.54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

 

23,138

 

 

3.0

 

 

 

Interest expense

 

 

 

 

 

 

 

 

32,570

 

 

4.3

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

40,999

 

 

5.4

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

6,582

 

 

0.9

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

$

176,332

 

 

23.0

%

 

 

(1)

Acquisition, disposal and integration operating costs include $8.0 million of selling expense, $8.6 million of general and administrative expenses and $4.3 million of business combination transaction costs on the consolidated statement of operations.

(2)

COVID-19 costs are included in general and administrative expenses on the consolidated statement of operations. Total COVID-19 non-GAAP adjustments primarily consist of costs of incremental cleaning and sanitation, personal protective equipment and employee bonuses.

 

Investors, please contact:
Amit Sharma
816-701-4662
asharma@hostessbrands.com

Media, please contact:
Hannah Arnold and Marie Espinel
The LAKPR Group
harnold@lakpr.com and mespinel@lakpr.com

Source: Hostess Brands, Inc.