Article Date 09/08/2018

Image from : Hostess Brands Inc.

Hostess second-quarter earnings dip under pressure

Source Food Business News

Even as the company continued to gain market share in the sweet baked foods category, earnings were under significant pressure in the second quarter at Hostess Brands, Inc. 

Net income at Hostess in the three months ended June 30 was $24,620,000, equal to 19c per share on the common stock, down 13% from $28,207,000, or 19c per share, in the second quarter of 2017. Sales were $215,849,000, up 6% from $203,178,000.

Adjusted EBITDA in the second quarter was $47.6 million, down 25% from $63.2 million.

“The decreases in adjusted earnings per share and adjusted EBITDA were primarily attributable to higher costs as a result of the integration of the Chicago bakery and higher transportation costs and other inflationary pressures,” Hostess said. “Reduced Hostess branded display volume also negatively impacted adjusted EBITDA.”

In early morning trading on the Nasdaq exchange, Hostess shares tumbled as much as 18%, trading at $11.50, down from $13.94 the previous day.

Andrew P. Callahan, who joined Hostess May 7 as president and chief executive officer, said the company was caught off guard by the degree to which cost pressures would weigh on earnings and by reduced sales to a major customer.

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