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Hostess Brands (TWNK) Tops Q1 EPS by 1c, Revenues Beat; Offers FY21 EPS Guidance

May 17, 2021 7:02 AM EDT

Hostess Brands (NASDAQ: TWNK) reported Q1 EPS of $0.20, $0.01 better than the analyst estimate of $0.19. Revenue for the quarter came in at $265.4 million versus the consensus estimate of $256.68 million.

Highlights for the First Quarter 2021 as Compared to the Prior Year Period1

  • Net revenue was $265.4 million, an increase of 9.0%, driven primarily by the strong performance of Hostess® and Voortman® branded products.
  • Gross profit was $95.5 million, an increase of 20.4%. On an adjusted basis, gross profit increased 13.3% primarily from favorable mix and realization of Voortman cost synergies.
  • Net income was $26.7 million, or $0.19 per diluted share, compared to $81.7 million, or $0.02 per diluted share, in the prior year period. Adjusted net income increased $8.3 million, or 44.6%, to $26.9 million, resulting in $0.20 adjusted EPS compared to $0.14 adjusted EPS in the prior year period. The increase in adjusted net income and adjusted EPS was primarily due to higher sales volume, favorable mix and realization of Voortman synergies.
  • Adjusted EBITDA was $62.5 million, or 23.5% of net revenue, an increase of 22.5%. The increase was primarily driven by higher Hostess® and Voortman® branded sales, realization of Voortman synergies and operating efficiencies.
  • Cash and cash equivalents were $197.8 million as of March 31, 2021. Continued reduction of net leverage ratio to 3.6x driven by strong operating cash flow.

“We had an excellent start to 2021 with strong net revenue and earnings growth across both Sweet Baked Goods and Voortman on top of strong growth in the prior year comparable period. Our brands’ strength drove impressive point-of-sale growth, leading to all-time high market share across several channels,” commented Andy Callahan, the Company’s President and Chief Executive Officer. “We continue to experience elevated at-home consumption, while at the same time, increased on-the-go snacking and consumer mobility are benefiting our profitable single-serve mix. Continued strong execution on productivity and pricing measures gives us the confidence to manage inflation and leaves us optimistic for the remainder of 2021.”

GUIDANCE:

Hostess Brands sees FY2021 EPS of $0.80-$0.85, versus the consensus of $0.84.

The Company reaffirms the following expected consolidated financial results for the full year 2021:

  • Adjusted net revenue growth of 3.0% to 4.5%;
  • Adjusted EBITDA of $255 million to $265 million, an increase of 6.3% to 10.4% from 2020;
  • Adjusted EPS of $0.80 to $0.85, an increase of 6.7% to 13.3% from 2020**;
  • Leverage ratio of approximately 3x at the end of 2021 compared to 3.9x at December 31, 2020**;
  • Capital expenditures of approximately $60 million to $65 million, which includes a $25 million investment to increase the Company's cake production capacity to support continued growth;
  • Income tax rate of approximately 27%, reflecting the elimination of the non-controlling interest in the fourth quarter of 2020 and higher state taxes.

Outlook assumes an effective net share settlement of outstanding warrants which expire in November 2021 and no other strategic uses of cash.

The Company reaffirms its long-term financial objectives of organic revenue growth, adjusted EBITDA margins and free cash flow conversion in the top-quartile of its peers.

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



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