Demand for sweet snacks propels Hostess growth

LENEXA, KAN. — At the same time as Hostess Manufacturers, Inc. continued to come across pockets of provide chain fragility and elevated value inflation, within the third quarter ended Sept. 30, the corporate delivered its 11th consecutive quarter of at the very least 9% income progress and the sixth consecutive quarter of double-digit earnings progress.  

In a Nov. 3 convention name with analysts, Andrew Callahan, president and chief govt officer, highlighted the corporate’s place within the indulgent candy snacking phase, one of many largest and fastest-growing segments inside macro snacking.

“First, we now have distinctive entry to broad, fast-growing snacking events and a best-in-class enterprise mannequin that matches completely with our impulse-driven classes,” Mr. Callahan stated. “We’re attractively priced relative to different snack choices, offering shoppers an accessible possibility as they appear to stretch their purchasing {dollars}.

“Along with our presence in rising classes, we’re concentrating on essentially the most enticing snacking events the place Hostess and Voortman are uniquely positioned to win. We’re prioritizing 5 fast-growing events, that are greater than $50 billion in retail gross sales and supplies us a big and sustainable platform for our future progress.”

Hostess Manufacturers internet earnings within the third quarter ended Sept. 30 was $66.3 million, equal to 48¢ per share on the widespread inventory, in contrast with $26.2 million, or 19¢ per share, within the third quarter final 12 months. The rise was pushed partly by a $33 million achieve on receipt of Voortman insurance coverage proceeds, in line with the corporate.

Adjusted internet earnings, which excluded the receipt of Voortman insurance coverage proceeds, was $32.2 million, equal to 23¢ per share on the widespread inventory, an 11% improve from $28.9 million, or 21¢ per share, within the 12 months in the past interval.

Internet gross sales for the third quarter have been $346.2 million, a rise of 20.2%, from $288 million, the identical interval final 12 months. Contribution from pricing actions and product combine offered 20.1% of the expansion, whereas greater quantity accounted for 0.1% of the quarterly progress, the corporate stated.

A lot of the progress within the quarter was pushed by pricing. Quantity was basically flat.

Hostess internet income from cookies surged 33.2% to $38.9 million within the quarter. Voortman level of sale elevated by 28.8% within the quarter together with 28.1% progress within the sugar-free phase the place it gained 500 foundation factors of share in the course of the quarter.

Candy baked meals internet income climbed 18.7% to $307.3 million in the course of the quarter. Candy baked meals level of sale led by the Hostess model grew by 17% within the quarter, sustaining its share of class greenback gross sales at 21.4%.

The corporate just lately performed a survey to raised perceive the affect of the present atmosphere on shoppers in its core classes.

“Nearly all of the shoppers surveyed are certainly anxious concerning the economic system and plan to chop again spending,” Mr. Callahan stated. “Nonetheless, a overwhelming majority of the identical shoppers indicated they may proceed to search for new snacking choices and 82% say that candy snacks convey them pleasure, particularly throughout occasions of uncertainty. That is in line with different knowledge and analysis and reinforces our perception that the Hostess Manufacturers portfolio is nicely positioned as shoppers search for worth within the present atmosphere.”

Given the year-to-date outcomes, Hostess raised its full-year top- and bottom-line outlook. The corporate is now guiding 2022 internet gross sales to extend by 17% to 19%, whereas concentrating on full 12 months EBITDA and EPS progress at $290 million to $293 million and 96¢ to 98¢, respectively.

Hostess’ inventory worth on Nasdaq Nov. 3 jumped virtually 10% to a excessive of $28.15 from the day prior to this’s shut of $25.70.

Within the first 9 months of 2022, Hostess internet earnings was $131.3 million, equal to 95¢ per share, up 12.9% from $82.8 million, or 63¢. Gross sales have been $1.02 billion, up 20.7% from $844.9 million.

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