Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast, Stock Sale/Buyback

Hostess Brands Delivers Strong Profits Driven by 16.1% Net Revenue Growth in the Fourth Quarter


Hostess Brands, Inc. (NASDAQ: TWNK) ("Hostess Brands" or the "Company") today reported its financial results for the fourth quarter and year ended December 31, 2021.

"The Hostess team once again showcased its resilience and tenacity by delivering record high quarterly sales and adjusted EBITDA, well-ahead of expectations. Our double-digit top-line growth and stable margins in the fourth quarter, and for the full year, reflect higher volumes, multiple pricing actions, increasingly impactful innovation, omni-channel presence and outstanding execution. We continue to perform at best-in-class levels while navigating inflation and supply chain challenges," commented Andy Callahan, the Company's President and Chief Executive Officer.

He continued, "Our strong 2022 financial guidance reflects our confidence in maintaining our ongoing profitable growth momentum. We are even more excited to share our long-term strategic vision and planned investments to continue to deliver top-tier shareholder returns at our Investor Day presentation, beginning at noon ET today."

Fourth Quarter 2021 Financial Highlights as Compared to the Prior Year Period1:

Other Highlights:

1 This press release contains certain non-GAAP financial measures, including adjusted net revenue, adjusted gross profit, adjusted gross margin, adjusted EBITDA, adjusted EBITDA margin, adjusted operating 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 fourth quarter of 2021. 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 or Cookie categories as reported by Nielsen but do not include other products sold outside of those categories. All market data in this press release refer to the 13-week period ended January 1, 2022 and the prior-year comparable period. The Company's leverage ratio is net debt (total long-term debt less cash) divided by adjusted EBITDA.

2022 Financial Guidance2

The Company's guidance for the full year 2022 is as follows:

Fourth Quarter 2021 Compared to Fourth Quarter 2020

Net revenue was $297.2 million, an increase of $41.2 million, or 16.1%, compared to $256.0 million with higher volumes accounting for approximately 10 percentage points of the quarterly growth. Sweet baked goods increased $39.3 million, or 17.3%, while Cookies net revenue of $30.6 million increased 6.6%, or $1.9 million.

Gross profit was $110.4 million, or 37.1% of net revenue compared to 37.4% in the same period last year. Adjusted gross profit increased 15.4% from year-ago levels. Adjusted gross margin of 37.2% was relatively unchanged from the prior year period as higher transportation costs and input cost inflation was effectively offset by pricing actions, volume leverage, productivity initiatives and favorable product mix.

Operating income was $54.0 million. Adjusted operating income of $56.9 million increased 19.3% from the same period last year as higher gross profit was partially offset by incremental workforce investments and higher selling expenses. Depreciation and amortization expense declined $0.3 million to $13.7 million while share-based compensation expense increased $0.5 million to $2.6 million in the quarter.

Adjusted EBITDA of $73.2 million, or 24.6% of net revenue, increased 14.9% from the same period last year driven by strong volume and favorable price/mix.

The Company's effective tax rate was 19.6% compared to 108.6% in the prior year. Effective tax rates were significantly impacted by non-taxable changes in the fair value of the warrant liabilities, which drove a $1.2 million gain in the current year period, compared to a $25.0 million loss in the prior year period. The effective tax rates, excluding discrete items, were 27.7% and 23.2% in the current year and prior year periods, respectively.

Net income was $36.5 million. Adjusted net income of $34.0 million increased 18.3% from the same period last year. Diluted EPS was $0.25. Adjusted EPS was $0.25 compared to $0.21 in the prior year period as higher income was partially offset by higher share dilution from the warrants.

Cash flow from operations for the twelve months ended December 31, 2021 was $203.0 million compared to $159.2 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.

Share Repurchase

The Company announced today that its Board of Directors has approved a stock repurchase authorization of up to $150 million shares of its Common Stock replacing its previous program, to provide additional flexibility to generate greater shareholder returns. The program has no expiration date and acquired shares of the Class A common stock will be held as treasury stock. The share repurchase program may be amended, suspended or discontinued at any time at the Company's discretion and does not commit the Company to repurchase shares of its Class A common stock. The actual timing, number and value of shares to be purchased under the program will be determined by the Company at its discretion and will depend on a number of factors, including the performance of the Company's stock price, general market and other conditions, applicable legal requirements, and compliance with the terms of the Company's outstanding indebtedness.

2 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, transformation expenses 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.

Conference Call and Webcast

The Company will host a virtual Investor Day on Tuesday, March 1, 2022, from noon to approximately 3:00pm Eastern Standard Time (EST). Andy Callahan, President and Chief Executive Officer, will be joined by other members of the senior leadership team to discuss the Company's quarterly and full year results, and review its long-term strategy to drive profitable growth based on its advantaged position in growing snacking occasions. A live question and answer session will follow management's presentations. Questions for presenters may be entered at any time during the event on the webcast dashboard.

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; supply chain disruptions; 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 that 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 for 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)

 

 

December 31,

 

December 31,

ASSETS

2021

 

2020

Current assets:

 

 

 

Cash and cash equivalents

$

249,159

 

 

$

173,034

 

Accounts receivable, net

 

148,180

 

 

 

125,550

 

Inventories

 

52,813

 

 

 

49,348

 

Prepaids and other current assets

 

10,564

 

 

 

21,614

 

Total current assets

 

460,716

 

 

 

369,546

 

Property and equipment, net

 

335,305

 

 

 

303,959

 

Intangible assets, net

 

1,944,392

 

 

 

1,967,903

 

Goodwill

 

706,615

 

 

 

706,615

 

Other assets, net

 

19,283

 

 

 

17,446

 

Total assets

$

3,466,311

 

 

$

3,365,469

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Long-term debt and lease obligations payable within one year

$

14,170

 

 

$

13,811

 

Tax receivable agreement obligations payable within one year

 

11,600

 

 

 

11,800

 

Accounts payable

 

68,104

 

 

 

61,428

 

Customer trade allowances

 

52,746

 

 

 

46,779

 

Warrant liabilities

 

?

 

 

 

861

 

Accrued expenses and other current liabilities

 

47,009

 

 

 

55,715

 

Total current liabilities

 

193,629

 

 

 

190,394

 

Long-term debt and lease obligations

 

1,099,975

 

 

 

1,113,037

 

Tax receivable agreement obligations

 

134,265

 

 

 

144,744

 

Deferred tax liability

 

317,847

 

 

 

295,009

 

Other long-term liabilities

 

1,605

 

 

 

1,560

 

Total liabilities

 

1,747,321

 

 

 

1,744,744

 

Class A common stock, $0.0001 par value, 200,000,000 shares authorized, 142,031,329 shares issued and 138,278,573 shares outstanding as of December 31, 2021 and 130,791,908 shares issued and 130,347,464 shares outstanding as of December 31, 2020

 

14

 

 

 

13

 

Additional paid in capital

 

1,303,254

 

 

 

1,281,018

 

Accumulated other comprehensive loss

 

(506

)

 

 

(10,407

)

Treasury stock

 

(59,172

)

 

 

(6,000

)

Retained earnings

 

475,400

 

 

 

356,101

 

Stockholders' equity

 

1,718,990

 

 

 

1,620,725

 

Total liabilities and stockholders' equity

$

3,466,311

 

 

$

3,365,469

 

HOSTESS BRANDS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

Three Months Ended

 

Year Ended

 

December 31,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Net revenue

$

297,161

 

 

$

256,043

 

 

$

1,142,036

 

 

$

1,016,609

 

Cost of goods sold

 

186,782

 

 

 

160,270

 

 

 

732,053

 

 

 

660,970

 

Gross profit

 

110,379

 

 

 

95,773

 

 

 

409,983

 

 

 

355,639

 

Operating costs and expenses:

 

 

 

 

 

 

 

Advertising and marketing

 

11,991

 

 

 

12,741

 

 

 

51,683

 

 

 

45,724

 

Selling

 

10,038

 

 

 

7,556

 

 

 

36,288

 

 

 

46,729

 

General and administrative

 

29,919

 

 

 

21,599

 

 

 

99,173

 

 

 

92,860

 

Amortization of customer relationships

 

5,877

 

 

 

6,177

 

 

 

23,510

 

 

 

26,510

 

Business combination transaction costs

 

?

 

 

 

?

 

 

 

?

 

 

 

4,282

 

Tax receivable agreement remeasurement

 

(1,409

)

 

 

150

 

 

 

(1,409

)

 

 

760

 

Other operating expense

 

?

 

 

 

3,318

 

 

 

?

 

 

 

3,464

 

Total operating costs and expenses

 

56,416

 

 

 

51,541

 

 

 

209,245

 

 

 

220,329

 

Operating income

 

53,963

 

 

 

44,232

 

 

 

200,738

 

 

 

135,310

 

Other expense:

 

 

 

 

 

 

 

Interest expense, net

 

9,863

 

 

 

10,256

 

 

 

39,762

 

 

 

42,826

 

Change in fair value of warrant liabilities

 

(1,249

)

 

 

25,037

 

 

 

(566

)

 

 

(39,941

)

Other expense (income)

 

(78

)

 

 

1,220

 

 

 

1,730

 

 

 

3,723

 

Total other expense

 

8,536

 

 

 

36,513

 

 

 

40,926

 

 

 

6,608

 

Income before income taxes

 

45,427

 

 

 

7,719

 

 

 

159,812

 

 

 

128,702

 

Income tax expense

 

8,899

 

 

 

8,383

 

 

 

40,513

 

 

 

20,405

 

Net income (loss)

 

36,528

 

 

 

(664

)

 

 

119,299

 

 

 

108,297

 

Less: Net income attributable to the non-controlling interest

 

?

 

 

 

761

 

 

 

?

 

 

 

3,621

 

Net income (loss) attributable to Class A shareholders

$

36,528

 

 

$

(1,425

)

 

$

119,299

 

 

$

104,676

 

 

 

 

 

 

 

 

 

Earnings (Losses) per Class A share:

 

 

 

 

 

 

 

Basic

$

0.27

 

 

$

(0.01

)

 

$

0.91

 

 

$

0.84

 

Diluted

$

0.25

 

 

$

(0.01

)

 

$

0.86

 

 

$

0.51

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

134,247,010

 

 

 

127,959,039

 

 

 

131,571,733

 

 

 

124,927,535

 

Diluted

 

138,435,782

 

 

 

128,352,959

 

 

 

138,198,176

 

 

 

127,723,488

 

HOSTESS BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, amounts in thousands)

 

 

Year Ended

 

December 31,
2021

 

December 31,
2020

Operating activities

 

 

 

Net income

$

119,299

 

 

$

108,297

 

Depreciation and amortization

 

51,681

 

 

 

54,940

 

Impairment and loss on sale of assets

 

?

 

 

 

3,329

 

Debt discount (premium) amortization

 

1,238

 

 

 

1,289

 

Tax receivable agreement remeasurement

 

(1,409

)

 

 

760

 

Change in fair value of warrant liabilities

 

(566

)

 

 

(39,941

)

Unrealized loss (gain) on foreign currency

 

(503

)

 

 

2,061

 

Non-cash lease expense

 

1,247

 

 

 

571

 

Share-based compensation

 

9,585

 

 

 

8,671

 

Deferred taxes

 

18,995

 

 

 

16,806

 

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

 

 

 

Accounts receivable

 

(22,728

)

 

 

4,434

 

Inventories

 

(3,465

)

 

 

5,824

 

Prepaids and other current assets

 

9,876

 

 

 

(5,301

)

Accounts payable and accrued expenses

 

13,723

 

 

 

1,900

 

Customer trade allowances

 

6,056

 

 

 

(4,397

)

Net cash provided by operating activities

 

203,029

 

 

 

159,243

 

 

 

 

 

Investing activities

 

 

 

Purchases of property and equipment

 

(60,803

)

 

 

(51,983

)

Acquisition of business, net of cash

 

?

 

 

 

(316,013

)

Acquisition and development of software assets

 

(4,622

)

 

 

(6,269

)

Net cash used in investing activities

 

(65,425

)

 

 

(374,265

)

 

 

 

 

Financing activities

 

 

 

Repayments of long-term debt and financing lease obligations

 

(11,167

)

 

 

(11,168

)

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

 

?

 

 

 

136,888

 

Distributions to non-controlling interest

 

?

 

 

 

(3,422

)

Repurchase of warrants

 

?

 

 

 

(2,000

)

Repurchase of common stock

 

(53,172

)

 

 

(6,000

)

Payment of taxes related to the net issuance of employee stock awards

 

(1,767

)

 

 

(1,440

)

Payments on tax receivable agreement

 

(9,270

)

 

 

(10,327

)

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

 

14,121

 

 

 

690

 

Net cash provided by (used in) financing activities

 

(61,255

)

 

 

103,221

 

Effect of exchange rate changes on cash and cash equivalents

 

(224

)

 

 

(252

)

Net increase (decrease) in cash and cash equivalents

 

76,125

 

 

 

(112,053

)

Cash and cash equivalents at beginning of period

 

173,034

 

 

 

285,087

 

Cash and cash equivalents at end of period

$

249,159

 

 

$

173,034

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

Cash paid during the period for:

 

 

 

Interest

$

38,567

 

 

$

41,776

 

Taxes paid

$

12,081

 

 

$

5,825

 

Supplemental disclosure of non-cash investing:

 

 

 

Accrued capital expenditures

$

2,244

 

 

$

4,718

  

HOSTESS BRANDS, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Adjusted net revenue, adjusted gross profit, adjusted gross margin, adjusted operating income, adjusted net income, adjusted net income margin, adjusted Class A net income, adjusted EBITDA, adjusted EBITDA margin, adjusted diluted shares 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 margin, net income attributed to Class A stockholders, diluted shares outstanding 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:

HOSTESS BRANDS, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

 

 

Three Months Ended December 31, 2021

 

Gross
Profit

 

Gross
Margin

 

Operating
Income

 

Net
Income

 

Net Income
Margin

 

Diluted
EPS

GAAP results

$

110,379

 

37.1

%

 

$

53,963

 

 

$

36,528

 

 

12.3

%

 

$

0.25

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

Foreign currency remeasurement

 

?

 

 

?

 

 

 

?

 

 

 

(327

)

 

(0.1

)

 

 

?

 

Project consulting costs (1)

 

?

 

 

?

 

 

 

3,578

 

 

 

3,578

 

 

1.2

 

 

 

0.03

 

Change in fair value of warrant liabilities

 

?

 

 

?

 

 

 

?

 

 

 

(1,249

)

 

(0.4

)

 

 

(0.01

)

Tax receivable agreement remeasurement

 

?

 

 

?

 

 

 

(1,409

)

 

 

(1,409

)

 

(0.5

)

 

 

?

 

Other (2)

 

176

 

 

0.1

 

 

 

755

 

 

 

1,004

 

 

0.3

 

 

 

0.01

 

Remeasurement of tax liabilities

 

?

 

 

?

 

 

 

?

 

 

 

(3,357

)

 

(1.1

)

 

 

(0.02

)

Tax impact of adjustments

 

?

 

 

?

 

 

 

?

 

 

 

(769

)

 

(0.3

)

 

 

(0.01

)

Adjusted Non-GAAP results

$

110,555

 

 

37.2

%

 

$

56,887

 

 

 

33,999

 

 

11.4

 

 

$

0.25

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

13,025

 

 

4.4

 

 

 

Interest expense

 

 

 

 

 

 

 

9,863

 

 

3.3

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

13,689

 

 

4.6

 

 

 

Share-based compensation

 

 

 

 

 

 

 

2,580

 

 

0.9

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

$

73,156

 

 

24.6

%

 

 

(1)

Project consulting costs are included in general and administrative on the consolidated statement of operations.

(2)

 

Costs related to certain corporate initiatives, including $0.5 million of Voortman acquisition related costs. Of the total $1.0 million, $0.2 million is included in cost of goods sold, $0.6 million is included in general and administrative and $0.2 million is included in other non-operating expenses.

HOSTESS BRANDS, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

 

 

Three Months Ended December 31, 2020

 

Gross
Profit

 

Gross
Margin

 

Operating
Income

 

Net
Income (Loss)

 

Net Income
(Loss)
Margin

 

Class A
Net Income
(Loss)

 

Diluted
Shares

 

Diluted
EPS

GAAP results

$

95,773

 

37.4

%

 

$

44,232

 

$

(664

)

 

(0.3

)%

 

$

(1,425

)

 

128,353

 

$

(0.01

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency remeasurement

 

?

 

 

?

 

 

 

?

 

 

 

671

 

 

0.3

 

 

 

649

 

 

?

 

 

 

0.01

 

Acquisition, disposal and integration related costs (1)

 

?

 

 

?

 

 

 

309

 

 

 

309

 

 

0.1

 

 

 

299

 

 

?

 

 

 

?

 

Tax receivable agreement remeasurement

 

?

 

 

?

 

 

 

150

 

 

 

150

 

 

0.1

 

 

 

150

 

 

?

 

 

 

?

 

Impairment of property and equipment, intangible assets and goodwill

 

?

 

 

?

 

 

 

3,009

 

 

 

3,009

 

 

1.2

 

 

 

2,909

 

 

?

 

 

 

0.02

 

Change in fair value of warrant liabilities

 

?

 

 

?

 

 

 

?

 

 

 

25,037

 

 

9.8

 

 

 

25,037

 

 

4,050

 

 

 

0.19

 

Other

 

?

 

 

?

 

 

 

?

 

 

 

549

 

 

0.2

 

 

 

531

 

 

?

 

 

 

?

 

Remeasurement of tax liabilities

 

?

 

 

?

 

 

 

?

 

 

 

767

 

 

0.3

 

 

 

767

 

 

?

 

 

 

0.01

 

Tax impact of adjustments

 

?

 

 

?

 

 

 

?

 

 

 

(1,089

)

 

(0.4

)

 

 

(1,089

)

 

?

 

 

 

(0.01

)

Adjusted Non-GAAP results

$

95,773

 

 

37.4

%

 

$

47,700

 

 

 

28,739

 

 

11.3

 

 

$

27,828

 

 

132,403

 

 

$

0.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

8,705

 

 

3.4

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

10,256

 

 

4.0

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

13,941

 

 

5.4

 

 

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

2,088

 

 

0.8

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

$

63,729

 

 

24.9

%

 

 

 

 

 

 

(1)

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

HOSTESS BRANDS, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

 

 

Year Ended December 31, 2021

 

 

Gross
Profit

 

Gross
Margin

 

Operating
Income

 

Net
Income

 

Net Income
Margin

 

Diluted
EPS

GAAP Results

 

$

409,983

 

35.9

%

 

$

200,738

 

 

$

119,299

 

 

10.4

%

 

$

0.86

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency remeasurement

 

 

?

 

 

?

 

 

 

?

 

 

 

(505

)

 

?

 

 

 

?

 

Project consulting costs (1)

 

 

?

 

 

?

 

 

 

6,081

 

 

 

6,081

 

 

0.5

 

 

 

0.04

 

Change in fair value of warrant liabilities

 

 

?

 

 

?

 

 

 

?

 

 

 

(566

)

 

?

 

 

 

?

 

Tax receivable agreement remeasurement

 

 

?

 

 

?

 

 

 

(1,409

)

 

 

(1,409

)

 

(0.1

)

 

 

(0.01

)

Other (2)

 

 

704

 

 

0.1

 

 

 

2,107

 

 

 

4,338

 

 

0.4

 

 

 

0.03

 

Remeasurement of tax liabilities

 

 

?

 

 

?

 

 

 

?

 

 

 

(3,357

)

 

(0.3

)

 

 

(0.03

)

Tax impact of adjustments

 

 

?

 

 

?

 

 

 

?

 

 

 

(1,871

)

 

(0.2

)

 

 

(0.01

)

Adjusted Non-GAAP results

 

$

410,687

 

 

36.0

%

 

$

207,517

 

 

 

122,010

 

 

10.7

 

 

$

0.88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

 

45,741

 

 

4.0

 

 

 

Interest expense

 

 

 

 

 

 

 

 

39,762

 

 

3.5

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

51,681

 

 

4.5

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

9,585

 

 

0.8

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

$

268,779

 

 

23.5

%

 

 

(1)

Project consulting costs are included in general and administrative on the consolidated statement of operations.

(2)

 

Costs related to certain corporate initiatives, including $2.8 million of Voortman acquisition related costs. Of the total $4.3 million, $0.7 million is included in cost of goods sold, $1.4 million is included in general and administrative and $2.2 million is included in other non-operating expenses.

HOSTESS BRANDS, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

 

 

Year Ended December 31, 2020

 

Net
Revenue

 

Gross
Profit

 

Gross
Margin

 

 

Operating
Income

 

Net
Income

 

Net Income
Margin

 

Class A
Net Income

 

Diluted
EPS

GAAP results

$

1,016,609

 

$

355,639

 

35.0

%

 

$

135,310

 

$

108,297

 

 

10.7

%

 

$

104,676

 

 

$

0.51

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency remeasurement

 

?

 

 

 

?

 

 

?

 

 

 

?

 

 

 

2,065

 

 

0.2

 

 

 

1,966

 

 

 

0.02

 

Acquisition, disposal and integration related costs (1)

 

6,821

 

 

 

7,963

 

 

0.5

 

 

 

29,166

 

 

 

29,166

 

 

2.7

 

 

 

27,569

 

 

 

0.22

 

Facility transition costs (2)

 

?

 

 

 

3,681

 

 

0.4

 

 

 

5,710

 

 

 

5,710

 

 

0.6

 

 

 

5,396

 

 

 

0.04

 

Impairment of property and equipment

 

?

 

 

 

?

 

 

?

 

 

 

3,009

 

 

 

3,009

 

 

0.3

 

 

 

2,909

 

 

 

0.02

 

Tax receivable agreement remeasurement

 

?

 

 

 

?

 

 

?

 

 

 

760

 

 

 

760

 

 

0.1

 

 

 

760

 

 

 

?

 

COVID-19 costs (3)

 

?

 

 

 

2,082

 

 

0.2

 

 

 

2,388

 

 

 

2,388

 

 

0.2

 

 

 

2,257

 

 

 

0.02

 

Change in fair value of warrant liabilities

 

?

 

 

 

?

 

 

?

 

 

 

?

 

 

 

(39,941

)

 

(3.9

)

 

 

(39,941

)

 

 

?

 

Other

 

?

 

 

 

?

 

 

?

 

 

 

100

 

 

 

1,766

 

 

0.2

 

 

 

1,681

 

 

 

0.01

 

Remeasurement of tax liabilities

 

?

 

 

 

?

 

 

?

 

 

 

?

 

 

 

(455

)

 

(0.1

)

 

 

(455

)

 

 

?

 

Tax impact of adjustments

 

?

 

 

 

?

 

 

?

 

 

 

?

 

 

 

(10,961

)

 

(1.1

)

 

 

(10,961

)

 

 

(0.09

)

Adjusted Non-GAAP results

$

1,023,430

 

 

$

369,365

 

 

36.1

%

 

$

176,443

 

 

 

101,804

 

 

9.7

 

 

$

95,857

 

 

$

0.75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

 

 

 

31,821

 

 

3.1

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

 

42,826

 

 

4.2

 

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

54,940

 

 

5.4

 

 

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

8,671

 

 

0.9

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

$

240,062

 

 

23.5

%

 

 

 

 

(1)

 

Adjustments to net revenue represent initial slotting fees paid to customers to obtain space in customer warehouses for the Voortman transition. Adjustments to operating costs included $8.0 million of selling expense, $8.9 million of general and administrative expenses and $4.3 million of business combination transaction costs on the consolidated statement of operations.

(2)

Facility transition costs are included in general and administrative expenses on the consolidated statement of operations.

(3)

 

COVID-19 costs are included in costs of goods sold and 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 in the first half of 2020.

 


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