Hostess maintains worthwhile progress momentum

LENEXA, KAN. — The resiliency of its advantaged enterprise mannequin propelled Hostess Manufacturers, Inc. to a different robust fiscal yr, because the Lenexa-based firm posted full-year revenue within the yr ended Dec. 31, 2022, of $164.2 million, equal to $1.20 per share on the frequent inventory, up 38% from $119.3 million, or 91¢ per share, in 2021. Web income for the yr was $1.36 billion, up 19% from $1.14 billion.

The double-digit achieve in full-year internet revenue got here regardless of a fourth quarter through which internet revenue slipped 10% to $32.89 million from $36.53 million in the identical interval a yr in the past. Adjusted internet revenue was $33.85 million within the fourth quarter, just about unchanged from $33.99 million in the identical interval a yr in the past, whereas adjusted EBITDA moved as much as $75.11 million from $73.16 million. Gross sales elevated 14% to $339.46 million from $297.2 million.

“Hostess Manufacturers delivered one other yr of robust top- and bottom-line leads to 2022, highlighting our engaging snacking portfolio and the resiliency of our advantaged enterprise mannequin,” mentioned Andrew P. Callahan, president and chief government officer. “I’m very happy with the main target, agility, and dedication of the Hostess Manufacturers workforce as they proceed to execute with excellence towards our key strategic progress initiatives in a dynamic atmosphere.

“Our observe file of top-tier internet income and earnings progress during the last three years, operational excellence and continued investments in our advertising and marketing and innovation capabilities give us the arrogance to take care of our worthwhile progress momentum and ship progress forward of our long-term targets in 2023, as outlined by our preliminary steerage.”

A 2.6% enhance in adjusted EBITDA in the course of the fourth quarter mirrored increased gross revenue, partially offset by a deliberate enhance in working prices, notably promoting and advertising and marketing.

In the course of the quarter, Hostess’ point-of-sale elevated 9.2%, however the firm misplaced 150 foundation factors of share within the candy items class.

Regardless of shedding share within the candy items class, Mr. Callahan was upbeat concerning the firm’s efficiency, noting the class is “extremely expandable” and that there’s a lot of curiosity in baked meals proper now.

One product that has him excited is Hostess Bouncers, a “poppable” tackle the corporate’s traditional baked snacks. Launched within the spring of 2022, the bite-size Bouncers have resonated with clients.

“We’re actually inspired with Bouncers,” Mr. Callahan mentioned throughout a Feb. 21 convention name with analysts. “Our clients and what we hear from customers by way of the preliminary trial part makes us really feel nothing however inspired, and I really feel actually good concerning the visibility we’ve got with each our clients and what we’re listening to from customers as we have a look at the plans we’ve got in FY ’23.”

He mentioned the early response has been that Bouncers “matches what they want.”

“We’re additionally capable of appeal to their millennial mother and father in a disproportionate approach,” he mentioned. “So it’s all cranking the best way we anticipate. And we’ve got designed that for a skew towards the lunchbox event. So … that appears to be working.

“It’s a reimagination of … a few of our icons, Twinkies, Ding Dongs, Donettes, in a two-bite poppable model. That’s all resonating with these customers. It’s reimagining what our Hostess model might be with the entire new technology, placing it in a kind that they will do and actually attaining a part of our technique and core to our technique, which is taking these iconic baked items and placing them in a extra related kind for a $65 billion snacking universe. So we’re actually enthusiastic about our early indications of its potential to do this. But it surely does over-skew to the lunchbox. With that being mentioned, as soon as it will get within the family, we do see our merchandise consumed at a number of events, however that one over-indexes to the lunchbox.”

Voortman branded level of gross sales rose 28.2% within the quarter, almost 1.5 instances the expansion charge of the general cookie class. Hostess mentioned the robust efficiency mirrored “ongoing momentum within the faster-growing sugar-free sub-segment.”

Hostess has owned Voortman for 3 years, and Mr. Callahan mentioned what has pushed progress for the model has been “velocity principally associated to our potential to have the ability to present extra compelling and better product high quality versus competitors.”

“Velocity pushed by our execution of our merchandising mannequin that we realized from Hostess,” Mr. Callahan mentioned. “Velocity pushed by the macro developments behind decreased sugar inside a cookie class, now most well-liked place, and our innovation launches. That … after I look and dissect our mannequin, that reveals us that, that’s what’s driving progress even if we’ve been aggressive with our value/combine on this to guard the margins over time.

“So as soon as once more, similar to Hostess, I anticipate these macro developments of velocity to proceed on Voortman as we proceed to construct this sub-segment of the cookie class into a bigger piece of it, and we lap the elasticity impacts of the pricing. There’s nothing however great things forward of Voortman, nevertheless it’s principally virtually fully as a result of velocity drivers of the enterprise.”

Along with projecting earnings per share of $1.08 to $1.13 in 2023, a rise of 10% to fifteen% from adjusted EPS in 2022, Hostess mentioned its internet revenues can be up 4% to six% from final yr. Adjusted EBITDA was forecast at $315 million to $325 million, up 7% to 10% from 2022.

Hostess mentioned its capital expenditures in 2023 would whole $150 million to $170 million.