Hostess Brands Inc (TWNK) Reports 1.9% Increase in Net Revenue for Q3 2023
Hostess Brands Inc (NASDAQ:TWNK) reported a 1.9% increase in net revenue for Q3 2023, amounting to $352.8 million.
Gross profit rose by 3.8% to $119.8 million, representing 34.0% of net revenue.
Net income was $22.8 million, a decrease from the same period last year due to a one-time gain in the previous year and current year merger transaction costs.
The company recently announced a definitive merger agreement with The J. M. Smucker Company.
On November 7, 2023, Hostess Brands Inc (NASDAQ:TWNK) released its financial results for the third quarter and nine months ended September 30, 2023. The company reported a 1.9% increase in net revenue, amounting to $352.8 million, compared to the same period last year. This increase was attributed to a favorable price/mix of 1.2% and higher volume.
Financial Highlights
Hostess Brands Inc (NASDAQ:TWNK) reported a gross profit increase of 3.8% to $119.8 million, representing 34.0% of net revenue. On an adjusted basis, gross profit increased 3.5% to $120.2 million, or 34.1% of net revenue. The 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 reported at $22.8 million, or $0.17 per diluted share, a decrease from $66.3 million, or $0.48 per diluted share, in the same period last year. This decrease was attributed in part to a $33.0 million gain on receipt of Voortman Cookies Ltd. 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.
Merger Agreement and Future Outlook
On September 10, 2023, Hostess Brands entered into a definitive merger agreement with The J. M. Smucker Co. 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 companys financial results for the third quarter and year-to-date ended September 30, 2023.
Operating Cash Flows and Capital Expenditures
Operating cash flows for the nine months ended September 30, 2023 were $143.2 million, compared to $164.2 million for the same period last year. The decrease in operating cash flows was 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. Capital expenditures were $86.6 million, including the build-out of the new bakery in Arkadelphia, Arkansas.
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 their heart into everything they do. The company is proud to make Americas No. 1 cupcake, mini donut, and zero sugar cookie brands.
Explore the complete 8-K earnings release (here) from Hostess Brands Inc for further details.
This article first appeared on GuruFocus.
