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Hostess Brands Reports Third Quarter 2023 Results

Company Recently Announced a Definitive Agreement to be Acquired by The J. M. Smucker Company

Hostess Brands, Inc. (NASDAQ: TWNK) (the “Company,” “Hostess Brands,” “we,” “us,” and “our”) today reported its financial results for the three and nine months ended September 30, 2023.

“I am extremely proud of the entire Hostess Brands team for building a premier snacking company focused on attractive snacking occasions, a portfolio of iconic brands, and outstanding execution to deliver long-term, sustainable profitable growth,” commented Andy Callahan, President and Chief Executive Officer, Hostess Brands.

Recent Merger Announcement

On September 10, 2023, Hostess Brands entered into a definitive merger agreement (the “Merger Agreement”) with The J. M. Smucker Co. (“Smucker”) to acquire Hostess Brands for $34.25 per share in a cash and stock transaction representing a total enterprise value of approximately $5.6 billion, including assumption of debt. As such, the Company will not provide its outlook for 2023 or longer-term targets and will not hold a conference call to discuss the Company’s financial results for the third quarter and year-to-date ended September 30, 2023.

Third Quarter 2023 Financial Highlights as Compared to the Prior-Year Period1

  • Net revenue of $352.8 million increased 1.9% from the same period last year, reflecting favorable price/mix of 1.2% and higher volume.
  • Gross profit increased 3.8% to $119.8 million, or 34.0% of net revenue. On an adjusted basis, gross profit increased 3.5% to $120.2 million, or 34.1% of net revenue. Gross margin increased by 63 basis points, 53 basis points on an adjusted basis, from year-ago levels due to favorable net price realization and productivity.
  • Net income was $22.8 million, or $0.17 per diluted share, as compared to $66.3 million, or $0.48 per diluted share, in the same period last year due in part to a $33.0 million gain on receipt of Voortman Cookies Ltd. (“Voortman”) insurance proceeds in the prior year and current year merger transaction costs. Adjusted net income and adjusted EPS increased to $32.4 million and $0.24 compared to $32.2 million and $0.23 in the prior period.
  • Adjusted EBITDA of $72.7 million was flat compared to the prior year. Adjusted EBITDA margins decreased by 39 basis points to 20.6%.
  • Cash and cash equivalents were $127.8 million as of September 30, 2023, resulting in a net leverage ratio of 2.8x.
  • Capital expenditures were $86.6 million, including the build-out of the new bakery in Arkadelphia, Arkansas.
  • Repurchased shares for an aggregate purchase price of $19.4 million year-to-date through September 30, 2023.

1 This press release contains certain non-GAAP financial measures, including adjusted gross profit, adjusted gross margin, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, adjusted net income and adjusted earnings per share (“EPS”). Please refer to the schedules in this press release for reconciliations of non-GAAP financial measures to the comparable GAAP measure. Unless otherwise stated, all comparisons of financial measures in this press release are to the third quarter of 2022. The Company’s leverage ratio is net debt (total long-term debt less cash and short-term investments) divided by the trailing twelve months adjusted EBITDA.

Investor Call and Guidance Update

Due to the pending transactions with Smucker, Hostess Brands will not host an investor call to discuss quarterly and year-to-date results and will not provide further updates to forward-looking guidance for 2023.

Third Quarter 2023 Compared to Third Quarter 2022

Net revenue was $352.8 million, an increase of 1.9%, or $6.6 million, from the prior-year period. Favorable price/mix provided 1.2% of the net revenue growth, while volume contributed to 0.7% of the growth. Sweet baked goods net revenue increased $8.1 million, or 2.6%, while cookies net revenue decreased $1.5 million, or 3.9%.

Gross profit increased 3.8% and was 34.0% of net revenue, an increase of 63 basis points from a gross margin of 33.3% for the same period last year. The increase in gross profit was due to productivity benefits and favorable net price realization, which more than offset inflation. Adjusted gross profit increased 3.5% and adjusted gross margin increased 53 basis points.

Operating income was $43.5 million, a decrease of 20.0% from the prior-year period, primarily due to $11.3 million of transaction costs related to the pending merger with Smucker, as well as higher advertising investments, partially offset by lower general and administrative costs. Adjusted operating income of $54.7 million decreased 0.9% from the same period last year.

Adjusted EBITDA of $72.7 million, or 20.6% of net revenue, was flat as compared to the same period last year.

Our effective tax rate for the three months ended September 30, 2023 was 30.6% compared to 12.8% for the three months ended September 30, 2022. The current year effective tax rate was impacted by non-deductible merger transaction costs, while the prior year was impacted by the non-taxable gain related to receipt of insurance proceeds in connection with the Voortman acquisition. The current period effective tax rate, excluding discrete items, was 26.8% compared to 26.7% in the prior-year period.

Net income was $22.8 million, a decrease of 65.6% from $66.3 million in the prior-year period due to the $33.0 million gain from receipt of the Voortman insurance proceeds recognized during three months ended September 30, 2022. Adjusted net income of $32.4 million increased $0.2 million, as compared to the same period last year. Diluted EPS was $0.17 compared to $0.48 in the prior-year period. Adjusted EPS of $0.24 increased from $0.23 in the prior period largely due to lower shares outstanding.

Operating cash flows for the nine months ended September 30, 2023 were $143.2 million, as compared to $164.2 million for the same period last year. Operating cash flows were lower primarily due to the Voortman insurance proceeds received in the prior year, higher transaction costs and payment of accrued interest, partially offset by higher EBITDA and lower working capital.

About Hostess Brands, Inc.

Hostess Brands, Inc. (NASDAQ: TWNK) is a premier snacking company with a portfolio of iconic brands and a mission to inspire moments of joy by putting our heart into everything we do. Hostess Brands is proud to make America’s No. 1 cupcake, mini donut and zero sugar cookie brands. With annual sales of $1.4 billion and approximately 3,000 dedicated team members, Hostess Brands produces new and classic snacks, including Hostess® Donettes®, Twinkies®, CupCakes, Ding Dongs® and Zingers®, as well as a variety of Voortman® cookies and wafers. For more information about Hostess Brands please visit hostessbrands.com.

Forward-Looking Statements

This press release contains statements regarding the pending transactions with Smucker and statements reflecting the Company’s views about its future performance that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. Forward-looking statements are generally identified through the inclusion of words such as “believes,” “expects,” “intends,” “estimates,” “projects,” “anticipates,” “will,” “plan,” “may,” “should,” or similar language. Statements regarding the pending transactions with Smucker, statements addressing the Company’s future operating and financial performance and statements addressing events and developments that the Company expects or anticipates will occur are also considered as forward-looking statements. All forward-looking statements included herein are made only as of the date hereof.

These statements inherently involve risks and uncertainties that could cause actual results to differ materially from those anticipated in such forward-looking statements. These risks and uncertainties include, but are not limited to, maintaining, extending and expanding the Company’s reputation and brand image; leveraging the Company’s brand value to compete against lower-priced alternative brands; the ability to pass cost increases on to our customers; correctly predicting, identifying and interpreting changes in consumer preferences and demand and offering new products to meet those changes; protecting intellectual property rights; operating in a highly competitive industry; the ability to maintain or add additional shelf or retail space for the Company’s products; the ability to identify or complete strategic acquisitions, alliances, divestitures or joint ventures; our ability to successfully integrate, achieve expected synergies and manage our acquired businesses and brands; the ability to integrate and manage capital investments; the ability to manage changes in our manufacturing processes resulting from the expansion of our business and operations, including with respect to cost-savings initiatives and the introduction of new technologies and products; the ability to drive revenue growth in key products or add products that are faster-growing and more profitable; volatility in commodity, energy, and other input prices due to inflationary pressures and the ability to adjust pricing to cover increased costs; loss of one or more of our co-manufacturing arrangements; significant changes in the availability and pricing of transportation; negative impacts of climate change; dependence on major customers; increased labor and employee related costs; strikes or work stoppages; product liability claims, product recalls, or regulatory enforcement actions; the ability to produce and successfully market products with extended shelf life; dependence on third parties for significant services; unanticipated business disruptions; adverse impact or disruption to our business caused by pandemics or outbreaks of highly infectious or contagious diseases; disruptions in global economy due to the Russia and Ukraine conflict; geographic focus could make the Company particularly vulnerable to economic and other events and trends in North America; consolidation of retail customers; unsuccessful implementation of business strategies to reduce costs; increased costs to comply with governmental regulation; failures, unavailability, or disruptions of the Company’s information technology systems; dependence on key personnel or a highly skilled and diverse workforce; the Company’s ability to finance indebtedness on terms favorable to the Company; adverse impact to our business from not completing the pending transactions with Smucker within the timeframe we anticipate or at all and other risks as set forth from time to time in the Company’s Securities and Exchange Commission (the “SEC”) filings.

As a result of a number of known and unknown risks and uncertainties, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Risks and uncertainties are identified and discussed in Item 1A-Risk Factors in the Company’s Annual Report on Form 10-K for 2022, filed on February 21, 2023 and as revised and updated in our subsequent filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company’s behalf are expressly qualified in their entirety by these risk factors. Except as may be required by law, the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

HOSTESS BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands, except shares and per share data)

 

 

September 30,

2023

 

 

December 31,

2022

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

127,762

 

 

 

$

98,584

 

Short-term investments

 

 

 

 

 

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

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

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

 

 

 

 

 

 

Class A common stock, $0.0001 par value, 200,000,000 shares authorized, 143,198,402 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

 

HOSTESS BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, amounts in thousands, except shares and per share data)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

2023

 

September 30,

2022

 

September 30,

2023

 

September 30,

2022

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

 

 

 

 

 

 

11,288

 

 

 

 

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

 

 

 

 

 

 

 

7,472

 

 

 

 

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

$

0.17

 

 

$

0.49

 

 

$

0.70

 

 

$

0.95

 

Diluted

$

0.17

 

 

$

0.48

 

 

$

0.70

 

 

$

0.95

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

133,092,888

 

 

 

136,436,428

 

 

 

133,232,204

 

 

 

137,636,441

 

Diluted

 

134,359,376

 

 

 

137,604,256

 

 

 

134,375,246

 

 

 

138,702,172

 

HOSTESS BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, amounts in thousands)

 

 

Nine Months Ended

 

September 30, 2023

 

 

September 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

 

 

 

 

 

Non-cash lease expense

 

187

 

 

 

 

375

 

Share-based compensation

 

10,006

 

 

 

 

7,600

 

Realized and unrealized gains on short-term investments

 

(99

)

 

 

 

 

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

 

 

 

 

 

(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

)

 

 

 

 

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

)

 

 

 

 

Proceeds from origination of long-term debt

 

336,663

 

 

 

 

 

Payments related to settlement of long-term debt

 

(334,883

)

 

 

 

 

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

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

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

 

HOSTESS BRANDS, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Adjusted gross profit, adjusted gross margin, adjusted operating income, adjusted net income, adjusted EBITDA, adjusted EBITDA margin and adjusted EPS (collectively referred to as “Non-GAAP Financial Measures”) are commonly used in the Company’s industry and should not be construed as an alternative to net revenue, gross profit, operating income, net income or earnings per share as indicators of operating performance (as determined in accordance with GAAP). These Non-GAAP Financial Measures may not be comparable to similarly-titled measures reported by other companies. The Company has included these Non-GAAP Financial Measures because it believes that the measures provide management and investors with additional information to measure the Company’s performance, estimate the Company’s value and evaluate the Company’s ability to service debt.

Non-GAAP Financial Measures are adjusted to exclude certain items that affect comparability. The adjustments are itemized in the tables below. You are encouraged to evaluate these adjustments and the reason the Company considers them appropriate for supplemental analysis. In evaluating adjustments, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments set forth below. The presentation of Non-GAAP Financial Measures should not be construed as an inference that future results will be unaffected by unusual or recurring items.

The Company defines adjusted EBITDA as net income adjusted to exclude (i) interest expense, net, (ii) depreciation and amortization, (iii) income taxes and (iv) share-based compensation, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of its ongoing operating performance. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of the Company’s results as reported under GAAP. For example, adjusted EBITDA:

  • does not reflect the Company’s capital expenditures, future requirements for capital expenditures or contractual commitments;
  • does not reflect changes in, or cash requirements for, the Company’s working capital needs;
  • does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s debt; and
  • does not reflect payments related to income taxes or the tax receivable agreement.

HOSTESS BRANDS, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited, amounts in thousands, except percentages and per share data)

 

 

 

Three Months Ended September 30, 2023

 

 

Gross Profit

 

Gross

Margin

 

Operating

Income

 

Net Income

 

Net Income

Margin

 

Diluted EPS

GAAP Results

 

$

119,780

 

34.0

%

 

$

43,477

 

 

$

22,812

 

 

6.5

%

 

$

0.17

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency remeasurement

 

 

 

 

 

 

 

 

 

173

 

 

 

 

 

 

Tax receivable agreement remeasurement

 

 

 

 

 

 

(504

)

 

 

(504

)

 

(0.1

)

 

 

 

Accelerated depreciation related to network optimization

 

 

398

 

0.1

 

 

 

398

 

 

 

398

 

 

0.1

 

 

 

 

Merger transaction costs

 

 

 

 

 

 

11,288

 

 

 

11,288

 

 

3.2

 

 

 

0.08

 

Other (1)

 

 

 

 

 

 

 

 

 

(11

)

 

 

 

 

 

Remeasurement of tax liabilities

 

 

 

 

 

 

 

 

 

(1,294

)

 

(0.4

)

 

 

(0.01

)

Discrete income tax expense

 

 

 

 

 

 

 

 

 

(21

)

 

 

 

 

 

Tax impact of adjustments

 

 

 

 

 

 

 

 

 

(453

)

 

(0.1

)

 

 

 

Adjusted Non-GAAP results

 

$

120,178

 

34.1

%

 

$

54,659

 

 

 

32,388

 

 

9.2

 

 

$

0.24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

 

11,837

 

 

3.4

 

 

 

Interest expense

 

 

 

 

 

 

 

 

10,434

 

 

3.0

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

14,622

 

 

4.0

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

3,468

 

 

1.0

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

$

72,749

 

 

20.6

%

 

 

(1) Costs related to certain corporate initiatives and are included in other (income) expense on the condensed consolidated statement of operations.

 

Three Months Ended September 30, 2022

 

 

Gross Profit

 

Gross

Margin

 

Operating

Income

 

Net Income

 

Net Income

Margin

 

Diluted EPS

GAAP Results

 

$

115,421

 

33.3

%

 

$

54,389

 

 

$

66,269

 

 

19.1

%

 

$

0.48

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency remeasurement

 

 

 

 

 

 

 

 

 

1,009

 

 

0.3

 

 

 

0.01

 

Tax receivable agreement remeasurement

 

 

 

 

 

 

(860

)

 

 

(860

)

 

(0.2

)

 

 

(0.01

)

Gain on Voortman insurance proceeds (1)

 

 

 

 

 

 

 

 

 

(32,970

)

 

(9.5

)

 

 

(0.24

)

Accelerated depreciation related to network optimization

 

 

681

 

0.2

 

 

 

681

 

 

 

681

 

 

0.2

 

 

 

0.01

 

Other

 

 

 

 

 

 

(17

)

 

 

23

 

 

 

 

 

 

Remeasurement of tax liabilities

 

 

 

 

 

 

 

 

 

(2,161

)

 

(0.6

)

 

 

(0.02

)

Discrete income tax expense

 

 

 

 

 

 

 

 

 

644

 

 

0.2

 

 

 

 

Tax impact of adjustments

 

 

 

 

 

 

 

 

 

(462

)

 

(0.1

)

 

 

 

Adjusted Non-GAAP results

 

$

116,102

 

33.5

%

 

$

54,193

 

 

 

32,173

 

 

9.3

 

 

$

0.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

 

11,744

 

 

3.4

 

 

 

Interest expense

 

 

 

 

 

 

 

 

10,276

 

 

3.0

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

15,869

 

 

4.5

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

2,613

 

 

0.8

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

$

72,675

 

 

21.0

%

 

 

(1) Gain from receipt of insurance proceeds under the representation and warranty insurance policy purchased in connection with the Voortman acquisition in 2020 included in other (income) expense on the condensed consolidated statement of operations.

 

 

Nine Months Ended September 30, 2023

 

 

Gross Profit

 

Gross

Margin

 

Operating

Income

 

Net Income

 

Net Income

Margin

 

Diluted EPS

GAAP Results

 

$

366,491

 

34.9

%

 

$

167,289

 

 

$

93,587

 

 

8.9

%

 

$

0.70

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency remeasurement

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

Tax receivable agreement remeasurement

 

 

 

 

 

 

(504

)

 

 

(504

)

 

 

 

 

 

Accelerated depreciation related to network optimization

 

 

1,194

 

0.1

 

 

 

1,194

 

 

 

1,194

 

 

0.1

 

 

 

 

Loss on modification and extinguishment of debt

 

 

 

 

 

 

 

 

 

7,472

 

 

0.7

 

 

 

0.06

 

Merger transaction costs

 

 

 

 

 

 

11,288

 

 

 

11,288

 

 

1.1

 

 

 

0.08

 

Other (1)

 

 

 

 

 

 

 

 

 

392

 

 

 

 

 

 

Remeasurement of tax liabilities

 

 

 

 

 

 

 

 

 

(1,294

)

 

(0.1

)

 

 

(0.01

)

Discrete income tax expense

 

 

 

 

 

 

 

 

 

(1,170

)

 

(0.1

)

 

 

(0.01

)

Tax impact of adjustments

 

 

 

 

 

 

 

 

 

(2,694

)

 

(0.3

)

 

 

(0.02

)

Adjusted Non-GAAP results

 

$

367,685

 

35.0

%

 

$

179,267

 

 

 

108,290

 

 

10.3

 

 

$

0.80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

 

40,075

 

 

3.8

 

 

 

Interest expense

 

 

 

 

 

 

 

 

30,902

 

 

2.9

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

43,879

 

 

4.2

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

10,006

 

 

1.0

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

$

233,152

 

 

22.2

%

 

 

(1) Costs related to certain corporate initiatives and are included in other (income) expense on the condensed consolidated statement of operations.

 

Nine Months Ended September 30, 2022

 

 

Gross Profit

 

Gross Margin

 

Operating Income

 

Net Income

 

Net Income Margin

 

Diluted EPS

GAAP Results

 

$

343,745

 

33.7

%

 

$

163,707

 

 

$

131,303

 

 

12.9

%

 

$

0.95

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency remeasurement

 

 

 

 

 

 

 

 

 

789

 

 

0.1

 

 

 

0.01

 

Project consulting costs (1)

 

 

 

 

 

 

3,887

 

 

 

3,887

 

 

0.4

 

 

 

0.03

 

Tax receivable agreement remeasurement

 

 

 

 

 

 

(860

)

 

 

(860

)

 

(0.1

)

 

 

(0.01

)

Gain on Voortman insurance proceeds (2)

 

 

 

 

 

 

 

 

 

(32,970

)

 

(3.2

)

 

 

(0.24

)

Accelerated depreciation related to network optimization

 

 

776

 

0.1

 

 

 

776

 

 

 

776

 

 

0.1

 

 

 

0.01

 

Other (3)

 

 

161

 

 

 

 

161

 

 

 

350

 

 

 

 

 

 

Remeasurement of tax liabilities

 

 

 

 

 

 

 

 

(2,161

)

 

(0.2

)

 

 

(0.02

)

Discrete income tax expense

 

 

 

 

 

 

 

 

 

1,156

 

 

0.1

 

 

 

0.01

 

Tax impact of adjustments

 

 

 

 

 

 

 

 

 

(1,566

)

 

(0.2

)

 

 

(0.01

)

Adjusted Non-GAAP results

 

$

344,682

 

33.8

%

 

$

167,671

 

 

 

100,704

 

 

9.9

 

 

$

0.73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

 

37,284

 

 

3.7

 

 

 

Interest expense

 

 

 

 

 

 

 

 

29,683

 

 

2.9

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

43,726

 

 

4.3

 

 

 

Share-based compensation

 

 

 

 

 

 

 

 

7,600

 

 

0.7

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

$

218,997

 

 

21.5

%

 

 

(1) Project consulting costs are included in general and administrative on the condensed consolidated statement of operations.

(2) Gain from receipt of insurance proceeds under the representation and warranty insurance policy purchased in connection with the Voortman acquisition in 2020 included in other (income) expense on the condensed consolidated statement of operations.

(3) Costs related to certain corporate initiatives, of which $0.2 million is included in costs of goods sold and $0.2 million is included in other (income) expense on the condensed consolidated statement of operations.

 

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