KANSAS CITY, Mo.--(BUSINESS WIRE)--Hostess Brands, Inc. (NASDAQ: TWNK) (NASDAQ: TWNKW) ("Hostess" or the “Company”), today reported its financial results for the third quarter ended September 30, 2017.
Business Highlights1:
Third quarter net revenue declined 2.0% from the pro forma prior year. While the Company's major brands remain strong, revenue was below prior year due to a difficult year over year comparison of revenue from 2016 innovation, product supply issues from a co-manufacturer of $3.2 million and point of sale and shipment disruption from hurricanes Harvey and Irma
- Top seven brands point of sale increased 7.7%. These brands represent 73% of the Company's net revenue
- The Company's market share year-to-date through October 7, 2017 was 17.2%, up 67 basis points from prior year
- In-store bakery net revenue grew 5.8%, an improvement from first half net revenue growth of 3.2%2
- Net income and adjusted net income each attributable to Class A shareholders of $9.5 million and $14.5 million, respectively
- Adjusted EBITDA of $54.7 million, or 28.4% as a percentage of revenue, flat margins to prior year
- Cash and cash equivalents at September 30, 2017 of $101.2 million with a pro forma combined leverage ratio of 3.96x both driven by operating cash flows of $117.8 million year-to-date
- Recently launched Hostess Bakery Petites™, a premium snacking platform made with no artificial flavors or colors, and no high fructose corn syrup
- Anticipate fourth quarter 2017 high single to double-digit growth in revenue and adjusted EBITDA
“We had solid underlying growth across our major brands in the third quarter, along with significant revenue contributions from 2017 innovation,” commented Bill Toler, President and Chief Executive Officer of Hostess. “We have entered the fourth quarter with strong top-line momentum, an improving category in sweet baked goods and robust product innovation. The sequence of the year has developed as we anticipated and for the full year we expect 6.5% to 7.3% of revenue growth, market share growth and 7.0% to 8.4% of adjusted EBITDA growth.”
Hostess® is the second leading brand by market share within the Sweet Baked Goods (“SBG”) category. For the 52-week period ended October 7, 2017 the Company's market share was 17.0% 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, according to Nielsen U.S. total universe for the 52 weeks ended October 7, 2017. The Donut and Snack Cake Segments together account for 49.6% of the Sweet Baked Goods category's total dollar sales. Year to date market share through October 7, 2017 has increased 0.7% to 17.2% of the total category.
