Hostess Brands (TWNK) Tops Q4 EPS by 2c, Revenues Beat; Offers FY19 EPS Guidance Below Consensus

Hostess Brands (NASDAQ: TWNK) reported Q4 EPS of $0.17, $0.02 better than the analyst estimate of $0.15. Revenue for the quarter came in at $214.8 million versus the consensus estimate of $210.95 million.

• Net revenue increased $18.6 million, or 9.5%, to $214.8 million, driven by $20.0 million from the recently acquired Cloverhill Business partially offset by slightly lower organic net revenue.
• Total Company point of sale increased 4.0% and market share was 17.4%, up 44 basis points, primarily from the addition of the Cloverhill Business.
• Net income was $16.4 million, compared to $189.6 million. Diluted EPS was $0.12 per share, compared to $1.74 per share. The 2017 results benefited from a one-time tax reform gain of $163.1 million.
• Adjusted EPS was $0.17 per share, flat as compared with the fourth quarter of 2017.
• Adjusted EBITDA was $51.4 million, or 23.9% of net revenue, in-line with the Company\'s expectations.
• Cash and cash equivalents were $146.4 million as of December 31, 2018 with a leverage ratio of 4.5x, both driven by year-to-date operating cash flows of $143.7 million.

“We are pleased with our solid finish to the year. The team executed on our plan to advance our business in a dynamic operating environment. Our achievements have created a strong foundation for Hostess to build on in the future. We are excited to be celebrating Hostess’ 100-year anniversary and the iconic brand strength we bring to market with our entrepreneurial spirit, energy and enthusiasm. As we move forward into 2019, we are confident that our enhanced capabilities, strategic insights and capital investments will drive future innovation, sustainable growth and increased shareholder value,” commented Andy Callahan, Hostess' President and Chief Executive Officer.

GUIDANCE:

Hostess Brands sees FY2019 EPS of $0.57-$0.62, versus the consensus of $0.64.

The Company expects the following financial results for the full year 2019:

• Net revenue growth well above the SBG category;
• Adjusted EBITDA of $200 million to $210 million, an increase of 7% to 13% from 2018;
• Adjusted EPS of $0.57 to $0.62, an increase of 6% to 15% from 2018;
• The net expected increase in cash of $90 million to $100 million would result in a leverage ratio of 3.5x to 3.7x at the end of 2019, absent any additional acquisitions or optional debt reductions, compared to 4.5x at December 31, 2018;
• Cash provided by operations of $150 million to $160 million;
• Capital expenditures of approximately $30 million to $35 million;
• Income tax rate of 21% to 22% giving effect to the non-controlling interest.

For earnings history and earnings-related data on Hostess Brands (TWNK) click here.

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