Hostess financial results again exceed expectations

By Gill Hyslop contact

- Last updated on GMT

The strong performance of its core Hostess branded products propelled the American bakery company's second quarter financial results. Pic: Hostess Brands
The strong performance of its core Hostess branded products propelled the American bakery company's second quarter financial results. Pic: Hostess Brands

Related tags: Hostess brands, earnings report, Voortman Cookies, coronavirus

Hostess Brands has topped consensus revenue estimates four times over the past four quarters, again surpassing the Zachs Consensus Estimate by 1.38% for the quarter ended June 2020.

The American bakery company posted revenues of $256.23m for the quarter, an 11.7% increase on the year-ago revenues of $241.06m, beating estimates by $2.85m.

According to president and CEO Andy Callahan, the changes to its core Hostess product mix and production schedules in response to the dynamically changing consumer demands – especially amid the pandemic – as well as the successful integration of recently acquired Voortman Cookies​ helped propel the second quarter financial results ahead of expectations.

“In a dynamic operating environment resulting from the on-going COVID-19 pandemic, we executed very well, supported by a strong team, our core competencies and nimble culture,”​ said Callahan.

“We supported strong demand by collaboratively working with retail and distribution partners to adjust the nature and timing of our merchandising programmes as we continued to advance our innovation pipeline to drive long-term growth.

“We are confident that we can leverage the company's leading brands, category-leading distribution and agile operating network to satisfy evolving consumer behaviours and create an even stronger company in the future.”

  • Adjusted net revenue was $263m, an increase of 14.7%.
  • Gross profit rose 10.5% to $89.4m, while adjusted gross profit grew by 21.1% to $98.1m due to the accretive margin expansion generated from the Voortman integration.
  • Net income was $17.4m – or $0.13 per diluted share – compared to $16.7m - $0.10 per diluted share – the year prior. Adjusted net income increased $5.1m, or 21.2%, to $29.2m, resulting in $0.22 adjusted EPS compared to $0.17 adjusted EPS in the prior year period, beating estimates by $0.07.
  • Adjusted EBITDA was $65.1 million, or 24.8% of adjusted net revenue, an increase of 22.6%.

Hostess said point of sale increased 7.4% and market share of the Sweet Baked Goods category remained the same at 19.3%. Hostess branded point of sale of 9.2% was ahead of the category growth.

The Twinkies, Sno Balls and CupCakes maker's outlook remains suspended due to the dynamic operating environment and the high degree of uncertainty caused by the pandemic. However, it did raise the outlook to an expected adjusted EBITDA of $240m from $230m, with Voortman EBITDA contributions of $30m from $25m.

Related topics: Manufacturers, Biscuits

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