Hostess Brands (TWNK) Financial Report Summaries

Risks

• Maintaining, extending and expanding our reputation and brand images are essential to our business success.
• We may be unable to leverage our brand value to compete against lower-priced alternative brands.
• We may be limited in our ability to pass cost increases on to our customers in the form of price increases.
• We may realize a decrease in sales volume in the event price increases are implemented.
• We may be unable to correctly predict, identify and interpret changes in consumer preferences and demand and offer new products or methods of distribution to meet those changes.
• Our intellectual property rights are valuable, and our failure to protect them could reduce the value of our products and brands.
• We operate in a highly competitive industry.
• Our growth may be limited by our inability to get, maintain or add additional shelf or retail space for our products.
• We may not successfully identify or complete strategic acquisitions, alliances, divestitures or joint ventures.
• We may not successfully integrate and manage our acquired businesses or brands.
• We may not successfully integrate and manage capital investments, including new bakery facilities in order to achieve anticipated growth.
• Our growth may be limited if we do not 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.
• We may be unable to drive revenue growth in our key products or add products that are faster-growing and more profitable.
• The loss of one or more of our current co-manufacturing arrangements could adversely affect our business.
• The ability to distribute our products is subject to significant changes in the availability and pricing of transportation.
• Climate change may negatively affect our business and operations.
• If we lose one or more of our major customers, or if any of our major customers experience significant business interruption, our operating results could be adversely affected.
• Our results could be adversely impacted as a result of increased labor and employee-related expenses.
• A portion of our workforce belongs to unions. Failure to successfully negotiate collective bargaining agreements, or strikes or work stoppages could cause our business to suffer.
• We may be subject to product liability claims should the consumption of any of our products cause injury, illness or death.
• Our success will depend on our continued ability to produce and successfully market products with extended shelf life.
• Product recalls may increase our costs, negatively impact our brands’ reputation, and adversely affect our business.
• We rely on third parties for services related to sales, marketing and distribution.
• Pandemics or outbreaks of other highly infectious or contagious diseases, including the COVID-19 pandemic, could adversely impact or cause disruption to our business, financial condition, results of operations and cash flows. Further, the COVID-19 pandemic, which has caused severe disruptions in the U.S. and global economy, may further disrupt financial markets and could potentially create widespread business continuity issues.
• Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy caused by the ongoing conflict between Russia and Ukraine or other geopolitical conflict.
• The consolidation of retail customers could adversely affect us.
• Unsuccessful implementation of business strategies to reduce costs may adversely affect our business, financial condition, results of operations and cash flows.
• Legal claims or other regulatory enforcement actions could subject us to civil and criminal penalties.
• We are subject to laws and regulations relating to protection of the environment, worker health, and workplace safety. Costs to comply with these laws and regulations, or claims with respect to environmental, health and safety matters, could have a significant negative impact on our business.
• Our operations are subject to regulation by the FDA, FTC and other governmental entities, and such regulations are subject to change from time to time which could impact how we manage our production and sale of products.
• Significant additional labeling or warning requirements or limitations on the marketing or sale of our products may reduce demand for such products and could adversely affect our business or operating results.
• A material impairment in the carrying value of acquired goodwill or other intangible assets could negatively affect our consolidated operating results and net worth.
• Our business operations could be disrupted if our information technology systems fail to perform adequately.
• We may be unable to hire or retain and develop key personnel or a highly skilled and diverse workforce or manage changes in our workforce.
• Our existing and future debt may adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt, and prevent us from meeting our obligations under our indebtedness.
• Changes in interest rates may adversely affect our earnings and/or cash flows.
• We may be unable to obtain additional financing to fund our operations and growth.
• Our only significant asset is our ownership interest in our operating subsidiaries and such ownership may not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or satisfy our other financial obligations, including our obligations under the tax receivable agreement.
• Our stock price may be volatile.
• Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
• The restatement of certain of our financial statements may subject us to risks and uncertainties, including the increased possibility of legal proceedings.