Hostess Brands, Inc. Announces First Quarter 2019 Financial Results

May 08, 2019 04:05 PM Eastern Daylight Time

KANSAS CITY, Mo.--(BUSINESS WIRE)--Hostess Brands, Inc. (NASDAQ: TWNK) (NASDAQ: TWNKW) (the “Company”), today reported its financial results for the first quarter ended March 31, 2019.

Business Highlights for the Quarter¹

• Net revenue increased $14.0 million, or 6.7%, to $222.7 million. Organic growth contributed $7.2 million or 345 basis points of incremental net revenue primarily from strong growth in the club channel and higher revenue due to price increases. The acquisition of the Cloverhill business contributed $6.8 million or 326 basis points of incremental net revenue.
• Total Company point of sale in tracked channels increased 1.6% and market share of 18.2% was unchanged from the first quarter of 2018.
• Net income was $26.6 million, compared to $29.3 million. Diluted EPS was $0.21 per share, compared to $0.23 per share.
• Adjusted net income was $20.3 million, compared to $20.5 million in the first quarter of 2018.
• Adjusted EPS was $0.14 per share, unchanged from the first quarter of 2018.
• Adjusted EBITDA increased $2.4 million, or 5.1%, to $49.4 million, or 22.2% of net revenue.
• Cash and cash equivalents were $160.5 million as of March 31, 2019 with a leverage ratio of 4.4x, both driven by first quarter operating cash flows of $28.4 million.

Reaffirms Full Year 2019 Outlook

• The Company expects continued revenue growth well above the Sweet Baked Goods (“SBG”) category in 2019 driven by innovation from Hostess®-branded breakfast and other core products as well as expanded distribution and improved merchandising execution over the course of the year.
• Full year 2019 adjusted EBITDA guidance is $200 million to $210 million, an increase of 7% to 13% over 2018, primarily driven by revenue growth, the realization of already executed multi-faceted pricing and merchandising programs and achievement of operational efficiencies.
• The Company expects a leverage ratio of 3.5x to 3.7x at the end of 2019, driven by strong operating cash flows.

“We are encouraged by our strong start to 2019 fueled by the breadth and depth of our sweet baked goods product offerings,” commented Andy Callahan, President and Chief Executive Officer. “Our team is executing on our 2019 pillars for growth, including the strengthening of our core Hostess brand, expansion of breakfast and accelerating growth of our value brands fueled by the acquisition of the Cloverhill business.”

Mr. Callahan continued, “In executing on our pillar to drive agility and efficiency, we have made the decision to relocate our primary distribution center from Illinois to Kansas by the first quarter of 2020. We expect this geographic move will support profitable growth, better service to our customers and increase cost efficiencies. Looking ahead, we continue to believe we are well positioned to achieve our 2019 annual outlook.”

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