Hostess Brands, Inc. Announces Second Quarter 2017 Results

KANSAS CITY, Mo.--(BUSINESS WIRE)--Hostess Brands, Inc. (NASDAQ: TWNK) (NASDAQ: TWNKW) (the “Company”), a leading manufacturer and marketer in the United States of sweet baked goods, including Hostess®, Twinkies®, Ding Dongs®, Ho Hos®, Donettes® and a variety of other new and classic treats, today reported financial results for the second quarter and six months ended June 30, 2017.

Hostess® is the second leading brand by market share within the Sweet Baked Goods (“SBG”) category. For the 52-week period ended July 15, 2017 the Company's market share was 17.1% per Nielsen’s U.S. SBG category data. The Company has a #1 leading market position within the two largest SBG Segments: Donut Segment and Snack Cake Segment, and has a #2 leading market position in total Sweet Baked Goods, according to Nielsen U.S. total universe for the 52 weeks ended July 15, 2017. The Donut and Snack Cake Segments together account for 50.4% of the Sweet Baked Goods category's total dollar sales.

The Company's results include those of Superior Cake Products, Inc. (“Superior”), which was acquired on May 10, 2016. Through Superior, the Company competes in the in-store bakery section of retailers.

On November 4, 2016, the Company completed the acquisition of a controlling interest in Hostess Holdings, L.P. (“Hostess Holdings”) and changed its name from Gores Holdings, Inc. to Hostess Brands, Inc. (the “Business Combination”). Hostess Holdings is the Company's "Predecessor" for accounting purposes. As a result, the Company's consolidated financial results are presented: (i) as of June 30, 2017 and December 31, 2016 (Successor); (ii) for the three and six months ended June 30, 2017 (Successor); and (iii) for the three and six months ended June 30, 2016 (Predecessor).

The Company has also presented supplemental unaudited pro forma financial information for the three and six months ended June 30, 2016, giving effect to the Business Combination as if it had occurred on January 1, 2016. The pro forma financial information does not include the operations of Superior prior to the May 10, 2016 acquisition date. All references in this press release to results for the three and six months ended June 30, 2016, refer to such unaudited pro forma results. The Company believes this unaudited pro forma information provides helpful supplemental information with respect to the performance of the Hostess business during this period.

The Company has also supplemented its discussion with a presentation of adjusted EBITDA, a non-GAAP financial measure. Please refer to the schedules in this press release for explanations and reconciliations of this and other non-GAAP financial measures.

Second Quarter 2017 Financial Highlights

• Net revenue of $203.2 million increased 5.6%, or $10.8 million from pro forma second quarter 2016
• Net income was $28.2 million, an increase of $6.3 million, compared to $21.9 million for the pro forma second quarter 2016
• EPS on a fully diluted basis was $0.18 per share, compared to $0.15 for the pro forma second quarter 2016
• Adjusted EBITDA increased 7.7%, or $4.5 million, to $63.2 million from $58.7 million for the pro forma second quarter 2016

Year-To-Date 2017 Financial Highlights

• Net revenue of $387.7 million increased 10.0%, or $35.2 million from the pro forma six months ended June 30, 2016
• Net income was $52.4 million, an increase of $18.2 million, compared to $34.2 million for the pro forma six months ended June 30, 2016
• EPS on a fully diluted basis was $0.33 per share, compared to $0.23 for the pro forma six months ended June 30, 2016
• Adjusted EBITDA increased 10.2%, or $10.9 million, to $117.7 million from $106.8 million for the pro forma six months ended June 30, 2016

“We are pleased with our continued ability to gain market share, achieve mid-single digit net sales growth and drive profitability in a challenging retail environment, particularly as we cycled very strong results in the prior-year period,” commented Bill Toler, President and Chief Executive Officer of Hostess. “Our second quarter results were driven by new product initiatives and growing traction of white space opportunities, led by In-Store Bakery, Food Service, and International channel expansion. We are on-track to achieve our annual revenue and adjusted EBITDA outlook and remain focused on the execution of our three growth drivers: to further rebuild our core business, deliver compelling product innovation and line extensions, and pursue significant white space opportunities. These efforts will fuel future increases in net sales and profitability as well as enhance shareholder value.”

Full report.