11.6% Growth
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into everything we do!
DEAR FELLOW STOCKHOLDERS,
Hostess Brands completed 2021 as a more profitable, capable and sustainable company as we continued our journey to becoming the most respected snack company. We believe our record financial performance is a testament to the power of our brands, our advantaged business model, and our team's agility as we executed at a high level in an exceedingly dynamic environment. Our broad-based sales growth across multiple occasions and sales channels was driven by strong new product innovation, increased marketing investments, and excellent retail execution. We delivered outstanding service to our retail partners and maintained industry leading margins while navigating multi-year high inflation headwinds given one of the toughest operating environments in decades. We are proud of the resiliency and passion of the Hostess Brands team and look forward to another successful year in 2022.
Key accomplishments in 2021 included:
• Adjusted net revenue growth of 11.6% and adjusted EBITDA growth of 12.0%*;
• Hostess Brands point-of-sale (POS) growth of 14.4% in the Sweet Baked Goods category, leading to 187 basis points increase in our market share**;
• Expanded Voortman® distribution, leading to 18% POS growth, more than 4x the Cookie category**;
• Significant growth from recent innovation, including Baby Bundts, the #1 new product launch in the Sweet Baked Goods category in 2021**;
• Successful implementation of multiple pricing actions and other revenue management initiatives to offset high inflation and maintain our industry-leading margin structure;
• Operating cash flow of $203.0 million, 27.5% above year-ago levels; and net leverage of 3.1x at the end of 2021, improving from 3.9x at the end of 2020;
• Installation of a new cake production line, while announcing plans in early 2022 to build a new more efficient and capable bakery to support growth;
• Cashless settlement of all remaining warrants, significantly simplifying our capital structure; and
• Issuance of our 1st Corporate Responsibility Report.
We delivered these results due largely to the hard work and dedication of our great people, who work relentlessly to make Hostess Brands the great company it is today. Our people are our greatest asset, and I am extremely proud that we have made our already industry-leading safety record^ even better in 2021. We continue to invest in upgrading capabilities and talent throughout the organization, and although we have much more to accomplish on this journey, I know we are heading in the right direction as we were recently named as one of Forbes top places to work for mid-sized companies and one of the top 100 places to work for Veterans.
The foundation of Hostess Brands has never been stronger, and I have never been more excited about our capabilities to catapult to our next phase of growth. We are just getting started. We recognize that success is not just about goals but sustained and measured progress year after year. As we look forward, we are confident in our ability to generate top-tier shareholder returns as we work to deliver our long-term growth algorithm of mid-single digit organic revenue growth, 5-7% EBITDA growth and 7-9% EPS growth. We are committed to accomplishing this in a responsible way for all our stakeholders.
Andrew P. Callahan
President & Chief Executive Officer
Certain Statements herein are forward looking statements. See "Cautionary Note Regarding Forward Looking Statements" in our Form 10-K included in this Annual Report.
* Adjusted measures above are non-GAAP financial measures that exclude certain items which affect comparability. Refer to Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K included in this Annual Report for a reconciliation of non-GAAP financial measures to their respective comparable GAAP measures.
** Source: Total Nielsen Universe for the Company ^ Source: Total incident reports for manufacturing
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 001-37540
HOSTESS BRANDS, INC.
(Exact name of registrant as specified in its charter)
Delaware
47-4168492
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
7905 Quivira Road, Lenexa,KS
66215
(Address of principal executive offices)
(zip code)
(816) 701-4600
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act
Name of Each Exchange on WhichTitle of Each Class
Ticker Symbol Registered
Class A Common Stock, par value of $0.0001 per share
TWNK
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨ Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes x No o
Indicate by check mark whether the registrant has submitted electronically and every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.:Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on June 30, 2021, computed by reference to the closing price reported on the Nasdaq Capital Market on such date was $2,109,473,508 (130,294,843 shares at a closing price per share of $16.19).
Shares of Class A common stock outstanding - 138,564,542 shares at February 21, 2022
Shares of Class B common stock outstanding - no shares at February 21, 2022
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive proxy statement relating to its 2022 annual meeting of stockholders (the "2022 Proxy Statement") are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2022 Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.
HOSTESS BRANDS, INC.
FORM 10-K
FOR THE YEAR ENDED December 31, 2021
INDEX
PagePartI
Item1. | 4 | |
Item 1A. | 12 | |
Item 1B. | 26 | |
Item 2. | 27 | |
Item3. | 27 | |
Item4. | 27 | |
Part II | ||
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of | ||
Item 5. | Equity Securities | 28 |
Item6. | Selected Financial Data | 31 |
Item7. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 31 |
Item7A. | Quantitative and Qualitative Disclosures about Market Risk | 41 |
Item8. | Financial Statements and Supplementary Data | 43 |
Item9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 76 |
Item9A. | Controls and Procedures | 77 |
Item9B. | Other Information | 77 |
Item9C | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 77 |
PartIII | ||
Item 10. | Directors, Executive Officers and Corporate Governance | 77 |
Item 11. | Executive Compensation | 78 |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder | ||
Item 12. | Matters | 78 |
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 78 |
Item 14. | Principal Accounting Fees and Services | 78 |
Item 15. | 78 |
PartIV
Business Risk Factors
Unresolved Staff Comments Properties
Legal Proceedings Mine Safety DisclosuresExhibits, Financial Statement Schedules
Cautionary Note Regarding Forward Looking Statements
This Annual Report on Form 10-K ("Annual Report") contains statements reflecting our views about our future performance that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties. All statements contained in this Annual Report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. Statements that constitute 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 addressing our future operating performance and statements addressing events and developments that we expect or anticipate will occur are also considered as forward-looking statements. All forward-looking statements included herein are made only as of the date hereof. It is routine for our internal projections and expectations to change throughout the year, and any forward-looking statements based upon these projections or expectations may change prior to the end of the next quarter or year. Readers of this Annual Report are cautioned not to place undue reliance on any such forward-looking statements. As a result of a number of known and unknown risks and uncertainties, our 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 this Annual Report. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these risk factors. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise. The discussion and analysis of our financial condition and results of operations included in Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and related notes included in Item 8 of this Annual Report.
Explanatory Note
Hostess Brands, Inc. (f/k/a Gores Holdings, Inc.) was originally incorporated in Delaware on June 1, 2015 as a special purpose acquisition company and consummated its initial public offering, on August 19, 2015, following which its shares began trading on the Nasdaq Capital Market ("Nasdaq").
On November 4, 2016, in a transaction referred to as the "Hostess Business Combination," Gores Holdings, Inc. acquired a controlling interest in Hostess Holdings, L.P. ("Hostess Holdings"), an entity owned indirectly by C. Dean Metropoulos (the "Metropoulos Entities") and certain equity funds managed by affiliates of Apollo Global Management, LLC.
In connection with the closing of the Hostess Business Combination, Gores Holdings, Inc. changed its name to Hostess Brands, Inc. and its trading symbols on Nasdaq from "GRSH" and "GRSHW," to "TWNK" and "TWNKW".
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Hostess Brands Inc. published this content on 29 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 April 2022 20:27:09 UTC.