Hostess Brands, Inc.

CIK:0001644406|SEC Filings

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Net revenue	$ 352,798	$ 346,226	$ 1,050,561	$ 1,018,749
Cost of goods sold	233,018	230,805	684,070	675,004
Gross profit	119,780	115,421	366,491	343,745
Operating costs and expenses:
Advertising and marketing	22,145	15,816	56,220	43,353
Selling	10,575	9,696	31,249	29,610
General and administrative	26,921	30,502	83,315	90,301
Amortization of customer relationships	5,878	5,878	17,634	17,634
Tax receivable agreement remeasurement	(504)	(860)	(504)	(860)
Merger transaction costs	11,288	0	11,288	0
Total operating costs and expenses	76,303	61,032	199,202	180,038
Operating income	43,477	54,389	167,289	163,707
Other (income) expense
Interest expense, net	10,434	10,276	30,902	29,683
Loss on modification and extinguishment of debt	0	0	7,472	0
Other (income) expense	162	(31,921)	411	(31,992)
Total other (income) expense	10,596	(21,645)	38,785	(2,309)
Income before income taxes	32,881	76,034	128,504	166,016
Income tax expense	10,069	9,765	34,917	34,713
Net income	$ 22,812	$ 66,269	$ 93,587	$ 131,303
Earnings per Class A share:
Basic (in usd per share)	$ 0.17	$ 0.49	$ 0.70	$ 0.95
Diluted (in usd per share)	$ 0.17	$ 0.48	$ 0.70	$ 0.95
Weighted-average shares outstanding:
Basic (in shares)	133,092,888	136,436,428	133,232,204	137,636,441
Diluted (in shares)	134,359,376	137,604,256	134,375,246	138,702,172

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Operating activities
Net income	$ 93,587	$ 131,303
Depreciation and amortization	45,073	44,500
Debt discount amortization	1,000	921
Tax receivable agreement remeasurement	(504)	(860)
Unrealized foreign exchange gains	19	790
Loss on debt extinguishment	721	0
Non-cash lease expense	187	375
Share-based compensation	10,006	7,600
Realized and unrealized gains on short-term investments	(99)	0
Deferred taxes	21,827	12,104
Change in operating assets and liabilities:
Accounts receivable	(19,390)	(51,904)
Inventories	3,355	(12,631)
Prepaids and other current assets	6,479	(468)
Accounts payable and accrued expenses	(22,779)	16,332
Customer trade allowances	3,733	16,143
Net cash provided by operating activities	143,215	164,205
Investing activities
Purchases of property and equipment	(80,140)	(55,240)
Acquisition of short-term investments	0	(62,891)
Proceeds from maturity of short-term investments	18,000	21,000
Acquisition and development of software assets	(6,439)	(8,578)
Other investments	(750)	0
Net cash used in investing activities	(69,329)	(105,709)
Financing activities
Repayments of long-term debt and lease obligations	(2,463)	(8,375)
Debt fees paid	(10,778)	0
Proceeds from origination of long-term debt	336,663	0
Payments related to settlement of long-term debt	(334,883)	0
Repurchase of common stock	(19,427)	(94,050)
Tax payments related to issuance of shares to employees	(5,953)	(5,582)
Cash received from exercise of options	3,286	2,541
Payments on tax receivable agreement	(11,135)	(9,313)
Net cash used in financing activities	(44,690)	(114,779)
Effect of exchange rate changes on cash and cash equivalents	(18)	(2,048)
Net increase (decrease) in cash and cash equivalents	29,178	(58,331)
Cash and cash equivalents at beginning of period	98,584	249,159
Cash and cash equivalents at end of period	127,762	190,828
Cash paid during the period for:
Interest, net of amounts capitalized	38,195	29,342
Net taxes paid	12,668	19,023
Supplemental disclosure of non-cash investing:
Accrued capital expenditures	$ 12,119	$ 23,103

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 127,762	$ 98,584
Short-term investments	0	17,914
Accounts receivable, net	188,161	168,783
Inventories	62,051	65,406
Prepaids and other current assets	10,948	16,375
Total current assets	388,922	367,062
Property and equipment, net	484,408	425,313
Intangible assets, net	1,903,246	1,920,880
Goodwill	706,615	706,615
Other assets, net	71,412	72,329
Total assets	3,554,603	3,492,199
Current liabilities:
Long-term debt and lease obligations payable within one year	12,866	3,917
Tax receivable agreement payments payable within one year	7,400	12,600
Accounts payable	89,541	85,667
Customer trade allowances	65,907	62,194
Accrued expenses and other current liabilities	36,594	59,933
Total current liabilities	212,308	224,311
Long-term debt and lease obligations	978,537	999,089
Tax receivable agreement obligations	116,653	123,092
Deferred tax liability	368,423	347,030
Other long-term liabilities	1,332	1,593
Total liabilities	1,677,253	1,695,115
Commitments and Contingencies (Note 10)
Class A common stock, $0.0001 par value, 200,000,000 shares authorized, 143,198,402 shares issued and 132,872,993 shares outstanding as of September 30, 2023 and 142,650,344 shares issued and 133,117,224 shares outstanding as of December 31, 2022	14	14
Additional paid in capital	1,318,967	1,311,629
Accumulated other comprehensive income	33,846	35,078
Retained earnings	733,182	639,595
Treasury stock	(208,659)	(189,232)
Stockholders’ equity	1,877,350	1,797,084
Total liabilities and stockholders’ equity	$ 3,554,603	$ 3,492,199