The company reported an increase of 18.5% in net revenue compared to the prior year period.
November 05, 2020 04:05 PM Eastern Standard Time
KANSAS CITY, Mo.--(BUSINESS WIRE)--Hostess Brands, Inc. (NASDAQ: TWNK, TWNKW) (the “Company”), today reported its financial results for the three and nine months ended September 30, 2020.
“We are very pleased with the double-digit revenue growth and continued EBITDA margin expansion in the quarter driven by the strong profit accretion from our Voortman business and continued growth of the Hostess®-branded business. We are encouraged by the steady return of the convenience channel and our achievement of year-over-year growth in our single-serve business which continues to reinforce the benefits of our operating model and ability to better service this important consumer group,” commented Andy Callahan, the Company's President and Chief Executive Officer. “We are also very excited about our 2021 innovation slate which establishes new platforms for incremental growth and we are confident that the investments we are making to support our continued growth momentum will drive increased shareholder value over the long-term.”
Financial Highlights for the Third Quarter 2020 as Compared to the Prior Year Period1
- Net revenue was $260.9 million, an increase of 18.5%*, driven primarily by strong performance of recently acquired Voortman Cookies Limited (“Voortman”) and Hostess® branded sales, partially offset by lower private-label and other non-Hostess branded sales.
- Gross profit was $91.2 million, an increase of 32.6%*. On an adjusted basis, gross profit increased 23.9%* primarily due to the accretive margin expansion generated from the successful integration of Voortman and increased Hostess® branded sales.
- Net income was $24.0 million, or $0.18 per diluted share, compared to $10.7 million, or $0.07 per diluted share, in the prior year period. Adjusted net income increased $6.1 million, or 31.8%, to $25.3 million, resulting in $0.19 adjusted EPS compared to $0.13 adjusted EPS in the prior year period. The increase in adjusted net income and adjusted EPS was primarily due to the accretion from the Voortman acquisition.
- Adjusted EBITDA was $60.2 million, or 23.1% of net revenue, an increase of 29.2%*. The increase was primarily driven by Voortman's adjusted EBITDA contribution and higher Hostess® branded sales.
- Cash and cash equivalents were $152.3 million as of September 30, 2020 with a proforma leverage ratio of 4.0x after factoring in the expected 2020 adjusted EBITDA contribution from Voortman.
∗ Excluding the In-Store Bakery business sold in 2019.
Operational Highlights for the Third Quarter 2020
- Developed exciting 2021 innovation slate which establishes platforms for incremental future growth in both the sweet baked goods and specialty better-for-you cookie segments with strong initial sell-in performance.
- Achieved strong profit accretion from Voortman while continuing to expand distribution following the completion of key integration activities.
- Executed key operational changes including completion of a new Donette production line during the third quarter in response to continuously increasing consumer demand while keeping our manufacturing and distribution facilities operational in the challenging environment caused by the COVID pandemic.
- Total Hostess manufacturer point of sale increased 6.7% and market share was 19.7% within the Sweet Baked Goods category driven by 8.5% Hostess® branded point of sale growth, which was ahead of the category growth of 7.5%
The full report may be viewed here.