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 (together with the Metropoulos Entities, the “Legacy Hostess Equityholders”).~~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”.

PART I

Item 1. Business

~~Hostess -~~ Who We Are

~~We are~~Hostess Brands, Inc. (together with its subsidiaries) (“We” or the “Company”) is a leading ~~packaged food~~sweet snacks company focused on developing, manufacturing, marketing, selling and distributing ~~snack products~~snacks in North ~~America.~~America primarily under the Hostess® and Voortman® brands. We produce a variety of new and classic ~~treats~~snacks, including iconic Hostess® ~~CupCakes,~~Donettes®, Twinkies®, ~~Donettes®,~~CupCakes, Ding Dongs®, and Zingers®, ~~Danishes, Honey Buns and Coffee Cakes,~~ as well as Voortman® branded cookies ~~wafer~~ and ~~sugar-free products.~~wafers. Our ~~strategic vision~~mission is to ~~be an iconic snack company that builds brands and categories to delight~~inspire moments of joy by putting our ~~consumers and customers.~~

into everything we do. We seek to leverage our ~~differentiated core competencies of strong brand equity, continuous~~iconic brands, pricing power, impactful innovation, efficient manufacturing and distribution model, collaborative customer and strategic sourcing partnerships, and ~~significant~~strong cash flows to drive profitable and ~~sustainable growth by engaging consumers with our products while seeking opportunities~~sustained growth.

Our business operates in ~~adjacent~~growing categories and snacking ~~categories.~~

~~We operate in the growing snacking market where indulgent, sweet snacking continues to be a top preference for consumers~~1.occasions. Our Sweet Baked Goods (“SBG”) products represented ~~19.5%~~21.2% of their category according to Nielsen total universe for the 52-weeks ended December ~~26, 2020.~~31, 2022. Our cookie and wafer products ~~provide~~represented 2.1% of the adjacent Cookie category, providing a significant opportunity ~~to grow in the adjacent cookie category.~~for growth. We believe our strong brand history and market position, ~~in the categories in which we compete,~~ combined with our innovative spirit and scalable operating model, provide a strong platform to execute our ~~strategic~~growth initiatives.

We have invested significantly in retailer and consumer data analytics to identify ~~distribution and pricing~~new opportunities ~~and~~ in ~~automated baking and packaging lines to enhance production efficiencies.~~the categories in which we compete. These investments, combined with our Direct-to-Warehouse (“DTW”) distribution model, support our leading brand position within the ~~$6.9~~$8.5 billion U.S. SBG category and ~~have increased our distribution channels,~~the adjacent $8.8 billion Cookie category according to Nielsen total universe for the 52-weeks ended December 31, 2022, paving a path towards future ~~sustainable,~~sustained, profitable growth.

Our DTW distribution model uses centralized distribution centers ~~and common carriers~~ to fill orders, with products generally delivered to our customers’ ~~warehouses.~~warehouses through the use of common carriers. This model has eliminated the need for ~~direct-store-delivery~~direct-store delivery (“DSD”) routes and drivers, which allows us to expand our core distribution while gaining access to new channels. During 2020, we successfully transitioned the distribution of Voortman® products, which were acquired as part of our acquisition of Voortman Cookies Limited, from a DSD model to our DTW distribution network. This transition created significant cost savings and unlocked opportunities to penetrate the convenience, drug store and dollar channels.

Brands and Products

Hostess® has been an iconic American brand for generations. Our extensive portfolio of timeless and universally recognized names such as Twinkies®, ~~HoHos® and~~ Ding Dongs® ~~evoke~~and Donettes® evokes an emotional affinity with consumers that has the potential to be further unlocked through effective marketing and consumer-insight based innovation. We produce cookie and creme wafer products, including sugar free varieties under our Voortman® brand, which we acquired in 2020. We also produce ~~Voortman®,~~ Dolly Madison®, Cloverhill® and Big Texas® branded products. ~~Each brand targets~~Our classic treats target different ~~markets~~snacking occasions and consumer needs.

1 ~~Mintel Snacking Motivations and Attitudes, January 2019~~

~~COVID-19~~

The COVID-19 pandemic and efforts to stem its spread have caused significant economic disruption. We continue to monitor the impact of the pandemic and adjust our operations in response. As discussed further below, as well as in “Risk Factors” included in Item 1A and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, we have taken action to respond to these disruptions to protect the health and well-being of our entire team, their families and the communities we serve.

Our Growth Strategy

We ~~are executing~~execute against our growth strategy and strengthen our Hostess® and Voortman® brands by ~~strengthening our core Hostess® brand and expanding into adjacent categories~~focusing on faster-growing snacking occasions through innovation, marketing, strategic sourcing partnerships and strong ~~partnerships~~relationships with our ~~customers, leveraging~~customers. We leverage our highly efficient and profitable business model and ~~executing~~productivity initiatives to maintain the momentum of our growth fly-wheel, while leveraging our strong balance sheet to pursue strategic ~~acquisitions~~opportunities.

Our Business Sits in Growing Spaces

We compete in growing snacking categories. The approximate $90 billion sweet snacking universe has grown at an annual rate of 8.5% over the last three years1.

The U.S. SBG and Cookie categories combined are a significant portion of this universe, with retail sales of $17 billion according to ~~accelerate growth, while effectively managing~~the Nielsen U.S. total universe for the 52-weeks ended December 31, 2022. Our Voortman® branded cookies and wafer products are included in the Cookie category and provide another platform to capitalize on the growing consumer snacking trends. Voortman® branded products are in the specialty cookie segment of the category and benefit from consumer demand for better-for-you ingredients. Within the SBG and Cookie categories, we are targeting large, fast growing snacking occasions. With consumers snacking to satisfy hunger, provide an emotional lift and increase social connection, we believe our ~~capital structure.~~

~~Optimize the core Hostess~~® ~~brand and expand into adjacent categories~~product portfolio is well positioned to benefit from these broader snacking trends.

We believe that we have maintained the Hostess® brand ~~power~~equity and ~~category~~high awareness for over a century by satisfying consumers’ ~~need~~needs for great-tasting sweet treats. We have established our leadership position in the SBG category through the strength and quality of our products, developing and promoting brands ~~which unite our loyal consumer base~~ and by pricing our products at a reasonable premium to other snacking alternatives. ~~Our acquisition of Voortman, another premium brand with a reputation for quality, enables us to leverage production capabilities and brand recognition to gain market share in the adjacent category.~~

We plan to capitalize on the strength of our brands and our effective retailer economics to drive ~~growth~~market share gains by attracting new consumers ~~and increasing the number of stores carrying~~within our ~~products. With the potential of extended reach under~~identified consumer occasions through our ~~DTW distribution model, our market share gains are expected to come from traditional channels (“core expansion”) through our~~continued investment in quality and wide-scale availability, meaningful innovation, targeted marketing ~~product innovation~~ and a focus on our most effective brands and products. Our brand strategy, combined with investments in highly effective marketing and brand-building, has resulted in what we believe to be one of the strongest brand equities in snacking, evidenced by our over 90% brand awareness for Hostess®2.

We continue to launch new partnerships and enter into licensing agreements that leverage our iconic brands. We have partnered with companies in various industries to bring our iconic brands and flavor profiles to complementary products, such as popcorn and ready‐to‐eat pudding. Our Voortman® branded products are sold throughout the U.S. and Canada. Both our Hostess® and Voortman® products are distributed by third parties internationally, including products packaged specifically for Mexico and the United Kingdom, among others. In addition, our products are sold on various e-commerce platforms.

We understand the need to continually evolve while maintaining the traditional offerings our loyal consumer base has come to know and love. We continue to invest in new product development, building our long-term innovation pipeline and leveraging our portfolio and commercialization process to bring new products to market in a timely fashion.

1 NielsenIQ Total Universe select categories through November 2022

2 Hostess Brand Health Tracking, US Adults 18+, N=1375, Time Period Oct-Dec 2022

Best in Class Business Model

Our business model is based on the wide availability of our products and go-to-market approach, both enabled by our DTW distribution model. The DTW model uses centralized distribution and common carriers. We ship the majority of our products from a centralized distribution center in Edgerton, Kansas. Centralizing our distribution improves visibility and control of distribution and is a key component of our operating model. We utilize other smaller distribution centers focused on certain products or geographic areas. The distribution centers allow us to consolidate inventory and fill customer orders, while reducing overall inventory on-hand as a result of this centralized consolidation of inventory. The majority of our products are delivered to customers’ warehouses from the distribution centers using common carriers.

The DTW model is enabled by our extended shelf life (“ESL”) technology. We do not keep a significant backlog of finished goods inventory, as our bakery products are promptly shipped to our distribution centers after being produced. Some of our products are shipped frozen at the request of certain customers.

We believe our DTW distribution model allows our products to be everywhere consumers shop for snacks. It provides greater reach into convenience, drug and dollar stores. Distributing to these channels under a DSD model can be inefficient due to small average drop size. Historically, DSD sweet baked goods companies have competed with candy and tobacco companies for distribution; however, under our DTW model, we partner with third-party distributors to profitably penetrate the convenience store, drug store and dollar store channels. In 2022, the convenience, drug and dollar channels accounted for 40.0% of our net revenue. We have established a strong presence and market share in the convenience, drug and dollar channels and are focused on continuously expanding coverage. These partnerships further expand our distribution reach in a highly efficient manner, and we believe they will add to our growth potential going forward.

We believe that impulse purchase decisions are another fundamental driver of our retail sales, which makes prominent in-store placement important. The DTW and centralized distribution model provides us with a competitive advantage through the ability to utilize retail-ready corrugate displays. These pre-built displays are visually impactful, economically produced and require minimal in-store labor to assemble or load; thus providing cost-efficient display vehicles that benefit both us and the retailer. Preloaded displays also allow us full control over our branded merchandising and the ability to execute retailer-wide campaigns regionally or nationally in a consistent manner, providing a unique competitive advantage across the entire SBG category, which our competitors predominantly serve through a DSD model.

We have a tailored channel-based go-to-market model that demonstrates key capabilities for growth. We continue to invest in data capabilities, which enable focus on store-level compliance and growth opportunities with our Hostess Partner Program (“HPP”). We also have a unique consortium retail merchandising approach where we partner with brokers to drive in-store performance at lower costs, ensuring strong shelf presence and sending a stream of retail and customer data back to our marketing and sales teams.

Our business model is supported by cost-advantaged distribution, expanded channel/retail store reach and enhanced in-store merchandising capabilities and offers our retail partners attractive margins that incentivize further distribution of our products.

We continue to invest in the business to further our strategic initiatives. Our disciplined capital investment plan focuses on operational capabilities that directly support or expand our growth and innovation with strong return on investment metrics. We are making targeted investments in the production capacity to enable further expansion of our fastest growing product forms. In 2022, we purchased a facility in Arkadelphia, Arkansas, which will become our sixth bakery upon completion of capital investments, including new production lines. Further, we anticipate continued investment in automation, which allows for improved product quality, consistency and efficiency.

Consumer Capabilities

We leverage our consumer capabilities to drive incremental growth above the category. We strive to meet our consumers at their need states with innovative products and cultivate top-of-mind awareness through efficient digital advertising.

Innovation is key to fueling our growth. We are devoted to maintaining our iconic brands while contemporizing them in order to stay relevant with our consumer base and attract new consumers. We believe that to support our market position, we must continually evolve with changing consumer preferences and trends. We are focused on continuing to innovate and expand our core products by launching new flavors of iconic products and expanding new product forms, pack-sizes and packaging to ~~leverage the brand’s power~~target faster growing snacking occasions and drive incremental revenue and profit. One example of our recent innovation is our Hostess® Bouncers™, which was launched in fall 2022 and provides the consumer the same iconic Hostess® cake and filling flavors in a fun, poppable, portable form targeting the lunchbox consumer snacking occasion. In 2023, we are also innovating on Voortman® branded products to improve the consumer experience by making our packaging resealable. The success of our product innovation is in part driven by deeper understanding ~~consumer preferences,~~of consumers’ snacking occasions and providing awareness and trials by partnering with our customers, all while maintaining our iconic brands and product quality.

2 ~~AYTM Awareness Study, July 2020~~

The addition of the Voortman® brand provides us opportunities to respond to additional consumer preferences. In 2021, our new Super Grains cookies will be introduced. We believe these cookies satisfy the consumer need for a baked indulgence with wholesome ingredients. Our new Crispy Minis products were introduced in late 2020 and leverage Voortman's production capacities, extending the Hostess® brand into a new bite-size wafer form.

We are driving incremental growth in the Hostess® brand through extensions of our core products and limited time offerings. Fun seasonal items such as Valentine Ding Dongs® and Mint Chocolate Twinkies®, and Key Lime and S'mores flavored CupCakes, continue to engage our target consumers and provide a fresh perspective to the brand.

During 2020, growth in the breakfast sub-category outpaced total sweet baked goods growth, as more consumers chose sweets in the morning. This consumption trend plays to our strengths as our products conveniently come packaged in both single-serve and multipack varieties. We believe our breakfast portfolio, which includes Hostess® Donettes®, Coffee Cakes, Cinnamon Rolls and Danishes as well as new product forms planned for 2021, including Baby Bundts, Pecan Spins and Muff'n Stix, meet the consumer demand for on-the-go sweet snacking.

We continue to ~~launch new partnerships~~increase our digital advertising to efficiently reach consumers. Our analysis shows that simply reminding consumers about Hostess® could drive incremental sales. As opposed to more traditional media, digital advertising provides us the flexibility and enter into licensing agreements that leverage our iconic brands. We have partnered with companies in various industries to bring our iconic brands and flavor profiles to products ranging from flavored coffees and creamers to protein powders and dessert mixes. Outside of the United States, our products are sold throughout Canada and are also distributed by third parties internationally, including products packaged specifically for Mexico and the United Kingdom, among others. In addition, our products are also sold on various e-commerce platforms.

~~We understand the need to continually evolve while maintaining the traditional offerings our loyal consumer base has come to know and love. We continue~~agility to invest in ~~new product development~~more targeted areas and ~~building our long-term pipeline, leveraging our innovation portfolio and commercialization process to bring new products to market in a timely fashion.~~

~~Leverage highly efficient and profitable business model~~

~~When~~demographics as we ~~relaunched~~learn about the Company, we set out to disrupt the status quo business model of the SBG category. We established our innovative DTW distribution model and heavily invested in our bakeries, which has resulted in energy, labor and time savings, along with the ability to produce quality products. These investments also paved the way for new product innovation.

~~The DTW model uses centralized distribution centers and common carriers. We ship the majority~~impact of our ~~products from a centralized distribution center~~programs. This results in Edgerton, Kansas. This centralization improves visibility and control of distribution and is a key component of our operating model. We utilize other smaller distribution centers for certain products and geographic areas. The distribution centers are able to fill customer orders and reduce inventory on-hand as a result of this centralized consolidation of inventory. Products are delivered to customers’ warehouses from the distribution centers using common carriers. A small number of our customers pick up their orders directly from our distribution centers.

~~The DTW model is enabled by our extended shelf life (“ESL”) technology. As a result of our DTW model,~~an efficient, high-return investment that we do not keep a significant backlog of finished goods inventory, as our bakery products are promptly shipped to our distribution centers after being produced. Some of our products are shipped frozen at the request of certain customers.

We believe our DTW distribution model enables access to a substantial whitespace opportunity. It provides greater reach into convenience, drug and dollar stores. Distributing to these channels under a DSD model can be inefficient due to small average drop size. Historically, DSD snack cake companies have competed with candy and tobacco companies for distribution; however, under our DTW model we partner with these third-party distributors to profitably penetrate both the convenience store and drug store channels and who are looking for opportunities to gain share in the SBG category. In 2020, convenience and drug stores accounted for 30.1% of our net revenues. We have established a strong presence and market share in the convenience and drug channels and are focused on

~~continuously expanding coverage. These partnerships further expand our distribution reach in a highly efficient manner, and we believe they~~expect will add to our growth potential going forward. The conversion of the Voortman operations to the DTW model provides an opportunity to introduce new product forms and pack-types into the convenience store channel, such as single-serve Mega Size wafer products, which will be available in stores in 2021.

~~We have a tailored channel-based go-to-market model that demonstrates key capabilities for~~drive continued growth. We continue to invest in data capabilities, which enables focus on store-level compliance and growth opportunities with our Hostess Partner Program (“HPP”). We also have a unique consortium retail merchandising approach where we partner with brokers to drive in-store performance at lower costs.

We believe that impulse purchase decisions are another fundamental driver of retail sales of our products, which makes prominent in-store placement an essential growth lever. The DTW and centralized distribution model provide us with a competitive advantage through the ability to utilize retail-ready corrugate displays. These pre-built displays are visually impactful, economically produced, and require minimal in-store labor to assemble or load; thus providing cost-efficient display vehicles that benefit both us and the retailer. Preloaded displays also allow us full control over our brand marketing and the ability to execute retailer-wide campaigns regionally or nationally in a consistent manner, providing a unique competitive advantage across the entire SBG category, which our competitors predominantly serve through a DSD model.

COVID-19 modified consumer behaviors, including increasing in-home consumption and disrupting the timing and extent of certain seasonal trends. In response, we made changes to certain merchandising efforts and promotional programs. In addition, our marketing efforts increased in key areas to accelerate growth, including developing new digital programming, which will continue to support our next phase of growth.

Our business model is supported by cost-advantaged manufacturing and distribution, expanded channel/retail store reach and enhanced in-store merchandising capabilities and offers our retail partners attractive margins that incentivize further distribution of our products.

We continue to invest in the business to further our strategic initiatives. Our disciplined capital investment focus will be on operational capabilities that directly support or expand our growth and innovation with strong return on investment metrics. Further, we anticipate continued investment in automation, which allows for improved product quality, consistency and efficiency.

Execute ~~strategic acquisitions~~Strategic Acquisitions to ~~accelerate growth~~Accelerate Growth

We have a solid platform for growth through acquisitions. Within the ~~fragmented consumer packaged goods market~~broader snacking universe, the opportunity exists to drive value creation through acquisitions by leveraging our brand, infrastructure and performance-driven management culture. We are committed to seeking out opportunities that add new capabilities to our already broad offerings.

The ~~acquisition of~~ Voortman ~~in January 2020~~acquisition diversified and expanded our product offerings and manufacturing capabilities in the attractive, adjacent ~~$6.9~~$8.8 billion ~~cookie~~Cookie category (based on Nielsen data as of December ~~26, 2020)~~31, 2022). ~~The Voortman® brand and its unique product offerings have the #1 share of the sugar-free and wafer segments within this category.~~ The acquisition also leverages our broad customer reach and lean and agile business model. During 2020, we integrated ~~Voortman's~~Voortman’s distribution model into our DTW structure, with all Voortman U.S. sales shipping through our centralized distribution center. In addition to sharing established, efficient infrastructure, ~~we can benefit~~sales of Voortman® branded products have benefited from the strengthening of collaborative retail partnerships in the United States and Canada.

As we explore other strategic acquisition opportunities, we will consider our ability to leverage our ~~existing brands~~core capabilities to reinvigorate or ~~reinvigorate~~develop acquired brands and further expand within the wider snacking ~~category.~~universe. We will also consider our ability to integrate acquisitions with our ~~existing~~ business and the opportunities to generate synergies through leveraging our ~~existing~~ assets and ~~warehouse~~DTW model. The successful integration of Voortman ~~during 2020~~ exhibits our ability to execute and integrate acquisitions in adjacent categories. We believe our scale, access to capital and management experience will allow us to execute and integrate additional acquisitions.

~~The Category: Large and Attractive~~Competitive Landscape

~~The average American consumer eats 2 to 3~~We compete in the broad snacking universe with a focus on sweet snacks ~~per day with snacking occasions spread throughout the day starting at breakfast. The U.S. SBG category is one of the largest categories~~ within the broader U.S. Total Snack category, with retail sales of $6.9 billion according to the Nielsen U.S. total universe for the 52-weeks ended December 26, 2020. The SBG category includes breakfast items (~~e.g., donuts, breakfast danishes and muffins) and all-day snacking items (e.g., snack cakes, pies, bars and brownies). With~~targeted consumer snacking ~~needs ranging from satisfying hunger, providing an emotional lift and increasing social connection, we believe our product portfolio is well positioned to benefit from these broader snacking trends.~~

Our expansion into the cookie category with the purchase of Voortman in 2020 provides another platform to capitalize on the growth in consumer snacking. Voortman's products are in the specialty cookie segment and play into consumer trends towards high quality and better-for-you ingredients.

~~Competitive landscape~~

occasions. Hostess® is the #2 brand and has the #1 cupcake and mini-donut product in the U.S. SBG ~~category.~~category, according to Nielsen retail data as of December 31, 2022. The top three brands, ~~Hostess®,~~ Little Debbie, Hostess® and ~~Entenmann's~~Entenmann’s account for ~~65.2%~~67% of the SBG retail sales, ~~according to Nielsen,~~ while the rest of the category remains fairly fragmented. With limited private label penetration in the SBG category, consumers have shown a strong preference for trusted ~~brands within the SBG category.~~brands. The leading positions are solidified through extensive product portfolios, strong brand awareness, established distribution capabilities and long-standing relationships with critical high-volume retailers. Furthermore, high levels of capital investment ~~are~~ required to establish manufacturing and distribution capabilities of meaningful scale, ~~providing~~provide additional barriers to entry.

Voortman® has the #1 creme wafer and ~~sugar-free~~sugar free cookie products within the larger ~~cookie category.~~Cookie category in the U.S. Nabisco® is the top brand with approximately ~~44%~~41.4% of the overall Cookie category according to ~~Nielsen.~~Nielsen retail data as of December 31, 2022. There is higher private label penetration in the ~~cookie~~Cookie category than the SBG category.

We face competition from other brands, large national bakeries, smaller regional operators and supermarket chains with their own private label brands. The key competitive factors in the industry include product quality, price, ~~customer service,~~ brand recognition and loyalty, promotional activities, access to retail outlets, sufficient shelf-space and ability to identify and satisfy consumer preferences. Some of our largest national SBG competitors include Flowers Foods, Inc., Grupo Bimbo, S.A., McKee Foods Corporation and Mondelez International, Inc. In addition, we also compete with regional manufacturers and other companies that produce cookies, candies and other snacks. At times, we experience pricing pressure in certain markets from competitor promotions and other pricing practices. However, we believe our brand recognition, product quality and innovation have generated consumer loyalty to many of our products, which helps mitigate this impact.

Seasonality

~~Sweet baked goods~~SBG revenues tend to be moderately seasonal, with declines during the early winter period, which we believe are attributable to altered consumption patterns during the holiday season. We expect this trend to continue to be applicable to our business. We strive to mitigate the seasonality by running certain targeted promotional campaigns. ~~Certain promotional campaigns, including Back~~

COVID-19

We continue to ~~School~~monitor the impact of the COVID-19 pandemic and ~~Halloween were modified~~adjust our operations in ~~2020~~response. As discussed further below, as well as in “Risk Factors” included in Item 1A and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, we have taken and continue to take actions to respond to ~~changes in consumer habits due~~the disruptions caused by the pandemic and to protect the ~~impact~~health and well-being of ~~COVID-19.~~

our entire team, their families and the communities we serve.

Production

We have ~~a lean,~~an efficient, agile, resilient and scalable model that delivers quality results. ~~We produce our~~Our products are primarily produced at five bakeries located in Emporia, Kansas; Columbus, Georgia; Indianapolis, Indiana; Chicago, Illinois; and Burlington, Ontario. ~~We have made significant efforts~~In 2022, we purchased a facility in Arkadelphia, Arkansas. The facility will become our sixth bakery upon completion of capital investments to ~~protect~~install production lines and other necessary improvements needed to make the ~~safety~~facility operational. The facility is expected to open in the fourth quarter of ~~our bakery employees during the COVID-19 pandemic through additional safety protocols and sanitation measures.~~ 2023.

Our investments in state of the art ~~auto-bake~~baking technologies have resulted in significant energy, labor and time savings. The ~~technology provides fully-automated industrial baking ovens~~majority of our products are shipped through a centralized distribution center in Edgerton, Kansas. This facility was opened in 2020 and ~~systems, combining cost efficient, compact~~expanded our distribution capacity by 75% and ~~continuous baking solutions that can be custom configured.~~ removed two million miles from our distribution network.

With the increase in demand for our ~~Hostess® branded~~ products, we continue to make adjustments to our production schedules, product assortment and equipment to maximize production capacity in our existing facilities. We are diligent in our efforts to find opportunities to reduce complexity and drive value within our supply chain. A portion of our products are manufactured and packaged by third parties under our brands and distributed through our facilities.

Raw Materials

Our principal raw materials are cooking oil, sugar, coatings, flour ~~sweeteners, edible oils~~ and ~~compound coating,~~eggs, as well as cartons, corrugate and films used to package our products. We utilize various buying strategies to lock in prices for certain raw materials and packaging to reduce the impact of commodity price fluctuations. In addition, we are dependent on natural gas as fuel for ~~firing~~ our ovens. Our third-party common carriers use gasoline and diesel as fuel for their trucks.

We approach sourcing with a holistic strategy to acquire the best quality ingredients and packaging materials at the lowest possible cost. We have strategic, long-term relationships with our key suppliers for our raw materials and packaging that help leverage our buying power. While the cost of some raw materials has, and may continue to increase ~~or decrease~~ over time, we believe that we will be able to purchase an adequate supply of raw materials as needed.We also sole source certain raw ~~materials.~~materials for efficiency. We have multiple vendors that meet our supply requirements for the ~~sole sourced materials, except in~~majority of our sole-sourced ingredients. With respect to the ~~case of~~sole-sourced ingredients for which we do not have multiple vendors to meet our supply requirements, including certain enzymes used in our ESL ~~technology. With respect to these enzymes,~~technology, we continue to evaluate ~~other~~alternative sources in order to maintain business continuity and flexibility. ~~Through cooperation with our suppliers, we have experienced no significant disruption to our supply chain during the COVID-19 pandemic.~~

Customers

Our top 10ten customers in ~~2020~~2022 accounted for 59.4% of total net revenue. During ~~2020,~~2022, our largest customer, Wal-Mart and related entities, represented ~~20.2%~~19.6% of our net revenue. No other customer accounted for more than 10% of ~~2020~~2022 net revenue. The loss of, or a material negative change in, our relationship with ~~Wal-Mart or~~ any of our ~~other~~ top 10 customers could have a material adverse effect on our business. Our customers include mass merchandisers, supermarkets and other retailers and distributors, convenience, drug and dollar stores.

Trademarks and Other Intellectual Property

We believe that our intellectual property has substantial value and has contributed to the success of our business. In particular, our trademarks, including our registered Hostess®, Voortman®, Dolly Madison®, Cloverhill®, and Big Texas® brand trademarks and our sub-brand trademarks, including Twinkies®, Ding Dongs®, Ho Hos®, Zingers®, Sno Balls®, and Donettes®, are valuable assets that we believe reinforce our consumers’ favorable perception of our products. These trademarks have a perpetual life, subject to renewal. This provides us the opportunity to sell our products at premium price points and pursue licensing opportunities.

From time to time, third parties have used names similar to ours, have applied to register trademarks similar to ours and, we believe, have infringed or misappropriated our intellectual property rights. Third parties have also, from time to time, opposed our trademarks and challenged our intellectual property rights. We respond to these actions on a case-by-case basis. We rely on laws and regulations, as well as contractual restrictions, to protect our intellectual property and proprietary rights.

Research and Development

The majority of our research and development spend is dedicated to ~~enhancing~~the development of innovative snack products based on consumer insights and ~~expanding our product lines, responding~~process technology. These products help address new user occasions and seek to bring new consumers into the category based on changing ~~consumer~~ preferences and ~~trends~~trends. Through the development timeline, research guidance testing to optimize attributes based on appropriate taste, flavor and ~~continuing to enhance the taste of~~texture combined with efficient cost management, helps support our ~~products.~~growth. In addition, our research and development organization provides technical support to our manufacturing team to ensure that our core products are consistently produced in accordance with our specifications and high standards of ~~quality and specifications.~~quality. Finally, our research and development department is charged with developing processes to ~~reduce~~optimize our costs without adversely affecting the quality of our products. ~~During 2020, we opened a new~~Our innovation lab within our Lenexa, Kansas corporate ~~office. This lab~~office provides us increased rapid prototyping, speed to market and small-scale batch process experimentation along with the testing capabilities, analytics and market research insights needed to support our growth objectives.

Information Technology

We rely heavily on information systems for management of our supply chain, inventory, payment of obligations, collection of cash, human capital management, financial tools and other business processes and procedures. Our ability to manage our business functions efficiently and effectively depends significantly on the reliability and capacity of these systems. We have instituted controls, including information technology governance controls that are intended to protect our computer systems and our information technology systems and networks. We also have business continuity plans that attempt to anticipate and mitigate failures. However, we cannot control or prevent every potential technology failure, adverse environmental event, third-party service interruption or cybersecurity risk.

We increasingly rely on cloud computing and other technologies that result in third parties holding customer, consumer or employee information on our behalf.

Except for limited information related to the usage of our websites, location data, or voluntarily submitted by users of our websites or others to our Consumer Affairs Team, we typically do not collect or store consumer data or personal information. However, third-party providers, including our licensees, co-manufacturers, e-commerce contractors and third-party sellers may do so. The website operations of such third parties may be affected by reliance on other third-party hardware and software providers, technology changes, risks related to the failure of computer systems through which these website operations are conducted, telecommunications failures, data security breaches and similar disruptions.

Corporate Sustainability

We published our second Corporate Responsibility Report (“CRR”) in May 2022, identifying four key areas of focus for the Company - Environment, Governance, Health and Safety, and Diversity, Equity, Inclusion & Belonging. We strive to be a responsible, caring member of the communities in which we operate by focusing on our environmental impact and community involvement. Some examples of this are our product and monetary donations and employee volunteer activities.

Environment

At Hostess Brands, we understand the need to ~~support innovation that meets consumer needs~~manage our environmental resources in a sustainable manner, which is why we are committed to the responsible sourcing of packaging and ~~expectations.~~ingredients, as well as water and energy conservation. We are emphasizing a “sustainability-first” approach as we design our next bakery in Arkansas and are developing a climate action plan with the assistance of a third-party specialist which we expect to complete during 2023.

Government Regulation

Our operations, including the manufacturing, processing, formulating, packaging, labeling and advertising of products, are subject to regulation by various federal agencies, including the Food and Drug Administration ~~(the “FDA”~~(“FDA”), the Federal Trade Commission ~~(the “FTC”~~(“FTC”), and the Environmental Protection Agency ~~(the “EPA”~~(“EPA”), as well as the Canadian Food Inspection Agency (“CFIA”) and Health Canada for our Canadian ~~Operations.~~operations. Our products are subject to various local, state or provincial, and federal laws, regulations and administrative practices affecting our business. We must comply with provisions regulating registrations and licensing, health and sanitation standards, ingredient standards, ~~current~~Current Good Manufacturing Practices ~~and~~(“CGMPs”), food traceability, hazard analysis and risk-based preventative controls, food labeling and advertising, hazard reporting and recall requirements, equal employment, wage and hour requirements, and environmental protection, among others. ~~Also, during 2020, we were subject to compliance with movement restrictions and other efforts by local governments to mitigate the spread of COVID-19.~~ We take compliance and the safety of our products and employees seriously and take all steps that we consider necessary or appropriate to comply with all applicable laws, rules and regulations.

Human Capital

As of December 31, ~~2020,~~2022, we employed approximately ~~3,000~~2,800 people. Of our total workforce, approximately 90% were located at our ~~bakery facilities.~~bakeries. The remaining workers comprised functions including operations management, sales and supply chain, among other corporate functions.

Our employees are critical to our success and allow us to continue to bring joy to our consumers and customers.

Health & Safety

Safety ~~is one of~~remains our top ~~priorities,~~priority, and we are proud to have ~~shown a 3-year track~~achieved the best total safety record ~~of improvement,~~in our over nine-year history during 2022. We have improved our total safety record five years running, with ~~2020~~2022 results for key metrics ~~ahead of industry benchmarks~~scoring best in class for categories consistent with Occupational Safety &and Heath Administration ~~(OSHA)~~(“OSHA”) standards. For the full year, we achieved a Total Incident Rate (“TIR”) of 1.08 vs. Commercial Bakery average of 4.23. We develop and maintain safety policies in our ~~operating~~ facilities and conduct periodic audits to ensure compliance.

Labor

Our ability to achieve sustained, profitable results is predicated on our ability to attract, retain, and engage a team of employees aligned to our common purpose to deliver products that create moments of joy for our customers and consumers. We believe new automation, safety investments and behavioral safety training have resulted in higher employee engagement and lower workers’ compensation costs. We have taken additional measures during 2020are committed to ~~maintain~~providing a safe ~~working~~work environment, ~~for~~competitive wage and benefits packages, career development and training opportunities to produce a more stable, informed and fulfilled workforce, and an inclusive culture that encourages each employee to bring their whole self to work.

There were continued labor challenges across the U.S. during 2022, and while this issue impacted us like virtually all employers, we have worked closely with our employees ~~amid~~to ensure we can deliver on the ~~COVID-19 pandemic, including remote work (where practical), enhanced safety~~promise of our Mission, Vision, and ~~sanitation protocols, employee health screenings~~Values in serving our customers and ~~providing face coverings.~~

consumers. We have entered into collective bargaining agreements with ~~the local unions of~~ the Bakery, Confectionery, Tobacco Workers and Grain Millers Union in Indianapolis, Indiana, Columbus, Georgia and ~~International (through our~~ Burlington, ~~Ontario facility);~~Ontario; and AFL-CIO and the Chemical Production Workers Union Local No. 30 in Chicago, Illinois. Approximately 1,200 employees are covered by these collective bargaining agreements. We consider our relations with employees to be good and have not experienced a strike or significant work stoppage.

~~Our ability to achieve sustained, profitable results is predicated on our ability to attract, retain,~~

3 Bureau of Labor Statistics, U.S. Department of Labor, Survey of Occupational Injuries and engage a team of employees aligned on a common purpose: to deliver products that create moments of joy for our customers and consumers. We are committed to providing a safe work environment, competitive wage and benefits packages, career development opportunities and an inclusive culture that encourages employees to bring their whole self to work.Illnesses, Commercial Bakeries

~~Maintaining~~We agreed to four-year contracts in our Burlington, Ontario and Columbus, Georgia locations in March and December 2022, respectively, and a ~~positive work culture is critical~~three-year contract for our Indianapolis bakery in January 2022.

We offer competitive wages and benefits, including medical, dental, vision, paid family leave, paid time off, 401(k) plan, Employee Stock Purchase Plan and a number of other programs to best suit the needs of our ~~ability~~employees. Beginning in 2023, we enhanced our 401(k) plan by increasing the employer match by 1% and converting to a safe harbor plan.

Diversity, Equity, Inclusion, & Belonging

To best achieve our ~~performance goals.~~desired results, it is vital that employees are comfortable bringing their whole selves to work. We believe diversity, equity, inclusion, and ~~inclusion~~belonging efforts are key to maintaining our positive culture. ~~We focus on our culture through a combination of regular~~In addition to training ~~for employees~~and education at all levels, ~~policies~~in 2022 we continued to develop our enterprise-wide DEI&B Team, which identifies opportunities to improve our culture, including the planning and ~~practices in support~~execution of ~~these goals,~~celebration and appreciation events for a variety of ~~internal~~groups, including the continuation of a Speaker Series, programming around culture and ~~community based~~appreciation events, and ~~actions that reinforce the power~~review and enhancement of our ~~shared Company values~~diversity policies and practices. Specifically, we sponsored celebrations of diversity and heritage events promoting MLK Day, Hispanic, Women’s History and LGBTQ Pride Months, among others. We also have developed employee resource groups (“ERG”) based on the ~~unique characteristics of each of our employees.~~

~~To ensure we know what is important to our employees, we conduct periodic engagement surveys, roundtable meetings with groups~~interest of employees, including our Veteran’s ERG established in 2022 and ~~action planning processes to track progress against identified themes. Many~~our Women’s ERG established in the first quarter of ~~these actions are~~2023.

As of December 31, 2022, our employee ~~developed and led; all employees can lead, regardless~~demographics in the U.S. were:


Total U.S. Hostess Brands
American Indian or Alaska Native	0.3	%
Asian	1.5	%
Black or African American	34.6	%
Decline to State	2.0	%
Hispanic or Latino	28.7	%
Native Hawaiian or Other Pacific Islander	0.6	%
Two or More Races	0.4	%
White	32.0	%


Management
American Indian or Alaska Native	0.5	%
Asian	3.3	%
Black or African American	16.1	%
Decline to State	1.5	%
Hispanic or Latino	11.3	%
Two or More Races	0.5	%
White	66.8	%

Our gender makeup as of ~~title.~~December 31, 2022, was:


Total U.S. Hostess Brands
Female	39.9	%
Male	59.9	%
Not declared	0.2	%


Management
Female	29.2	%
Male	70.8	%

Culture & Engagement

The Company’s culture is an integral part of our strategy, built on ~~innovation,~~creativity, commitment, collaboration, positive energy, and strong sense of ownership. We launched our Mission, Vision, and Values in May 2021 to ensure everyone on our team understands the purpose of our work. Our Mission: We inspire moments of joy by putting our

into everything we do. Our Vision: We envision a ~~competitive spirit.~~ world where the everyday is worth celebrating.

As a Company, we strive to achieve each of our six values every day:

•People: We rise together because every member of our diverse team has ownership and common purpose. Our team members are the heart of Hostess.

•Nimbleness: We overcome challenges and take advantage of opportunities by being quick to assess, decide and act.

•Integrity: We hold ourselves accountable to do the right thing for all stakeholders. Trust is the key ingredient to our recipe for successful relationships and reputation.

•Tenacity: We depend on our resilience and resolve to achieve the ambitious goals we set.

•Inclusivity: We are inclusive of ideas, individuals, and differing points of view. Everyone’s contributions are necessary for us to succeed.

•Quality: We do what it takes to deliver a great experience, from the quality of our products to a day in the life of our team members.

To better understand the full experience of our employees, to hear what they value, and what they believe could be improved, in May 2022, we conducted a Pulse of Hostess Brands engagement survey across our full employee base. As a result of this process and other activities, we are engaged in action planning to make our work environment even better. Using both live roundtable sessions with small groups of employees and virtual sessions with executive leadership, we regularly check in with our employees to identify issues needing attention, while sharing key messages with all employees through quarterly Town Hall meetings. In 2022, we also continued the Heart of Hostess and Hostess Hero awards, employee honors that recognize leadership and character.

To further demonstrate our commitment to our employees and increase belonging, we entered into a partnership with the National Alliance on Mental Illness (NAMI) during 2022. We are engaging in NAMI’s StigmaFree workplace program, which seeks to provide support and resources both in the workplace and in communities where Hostess operates.

Embodying ~~these tenets~~our mission, vision and values is a strong and experienced management team, led by Andy Callahan, our President and Chief Executive Officer. Members of the management team have extensive experience in the consumer packaged goods industry across the sales, operations, marketing, human resources, legal, and finance disciplines.

Our management team is complemented by an experienced Board of Directors, all of whom have senior executive leadership experience and bring with them extensive consumer products knowledge. Our board members and management include:


Board of Directors:						~~Management:~~Executive Officers:
Jerry D. Kaminski, Chairman						Andy P. Callahan, President and Chief Executive Officer
Andy P. Callahan, Director						~~Brian T. Purcell,~~Travis E. Leonard, Executive Vice President, Chief Financial Officer
Olu Beck, Director						Arist R. Mastorides, Executive Vice President, Chief Customer Officer
Laurence E. Bodner, Director						~~Michael~~Daniel J. ~~Cramer,~~O’Leary, Executive Vice President, Chief ~~Administrative~~Growth Officer
Gretchen R. Crist, Director						~~Andrew W. Jacobs, Executive~~Adrian Poretti, Senior Vice President, Chief ~~Operating~~Supply Chain Officer
Rachel P. Cullen, Director						~~John L. Kalal, Senior Vice President of Bakery Operations and Supply Chain~~
~~Ioannis Skoufalos, Director~~						Darryl P. Riley, Senior Vice President, ~~of Quality, Food Safety and R&D~~Chief Sustainability Officer
~~Craig D. Steeneck,~~Hugh G. Dineen, Director						Jolyn J. Sebree, Senior Vice President, General Counsel and Secretary
Ioannis Skoufalos, Director						Robert C. Weber, Senior Vice President, Chief ~~Human Resources~~People Officer
Craig D. Steeneck, Director

A detailed biography of each of our board members and key management team members can be found at www.hostessbrands.com. Unless expressly stated otherwise, the information contained on or accessible through our website is not incorporated by reference into this Annual Report on Form 10-K.

Available Information

This discussion of the business should be read in conjunction with, and is qualified by reference to, ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) under Item 7 herein. In addition, the information set forth under the headings “Forward Looking Statements,” and “Introduction” in the MD&A ~~and the segment and geographic information included in Item 8, Financial Statements and Supplementary Data - Note 6. Segment Reporting are~~is incorporated herein by reference in partial response to this Item 1.

The Company’s Internet website address is www.hostessbrands.com. The Company makes available free of charge (other than an investor’s own Internet access charges) through its Internet website its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, on the same day they are electronically filed with, or furnished to, the Securities and Exchange ~~Commission.~~ Commission (the “SEC”).

The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. The Company is not including the information contained on or available through its website or the ~~SEC's~~SEC’s website as part of, or incorporating such information by reference into, this Annual Report on Form 10-K.

1113

Item 1A. Risk Factors

You should carefully consider the following risk factors, together with all of the other information included in this Annual Report on Form 10-K. The risks described below are those which we believe are the material risks that we face. Additional risks not presently known to us or which we currently consider immaterial may also have an adverse effect on us. Any risk described below may have a material adverse impact on our business or financial condition. Under these circumstances, the trading price of our Class A common stock could decline, and you may lose all or part of your investment.

RISKS RELATED TO OUR BRANDS, REPUTATION AND COMPETITION

Maintaining, extending and expanding our reputation and brand ~~image~~images are essential to our business success.

We have many iconic brands with long-standing consumer recognition. Our success depends on our ability to maintain our brand ~~image~~images for our existing products, extend our brands to new platforms, and expand our brand image with new product offerings.

We seek to maintain, extend, and expand our brand ~~image~~images through marketing investments, including advertising, ~~and~~ consumer promotions, public relations initiatives, media coverage and product innovation. Increasing attention on the role of food marketing could adversely affect our brand ~~image.~~images. It could also lead to stricter regulations and greater scrutiny of marketing practices. Existing or increased legal or regulatory restrictions on our labeling, advertising, consumer promotions and marketing, or our response to those restrictions, could limit our efforts to maintain, extend and expand our brands. Moreover, regulatory or legal action against us, product recalls or other adverse publicity could damage our reputation and brand image, undermine our customers’ confidence and reduce long-term demand for our products, even if these actions are unfounded or not material to our operations.

Our reputation could be adversely impacted by the perception that we don’t maintain high ethical, social or environmental standards for all of our operations and activities or a perceived negative environmental impact, including use of agricultural materials, packaging, energy use, water use and waste management. Any such negative perceptions, or any negative publicity regarding our ESG practices, could impact our reputation with customers, consumers and other constituents, which could have a material impact on our business. In addition, our success in maintaining, extending, and expanding our brand image depends on our ability to adapt to a rapidly changing media environment. We increasingly rely on social media and online dissemination of advertising campaigns. Social and digital media increases the speed and extent that information or misinformation and opinions can be shared. Negative posts or comments about us, our brands or our products on social or digital media, whether or not valid, could seriously damage our brands and reputation. If we do not maintain, extend, and expand our brand image, then our product sales, financial condition and operating results could be materially and adversely affected.

We may be unable to leverage our brand value to compete against lower-priced alternative brands.

In most of our product categories, we compete with lower-priced alternative products. Our products must provide higher value and/or quality to our consumers than these alternatives, particularly during periods of economic uncertainty. Consumers may not buy our products if our products do not provide higher value and/or quality. If consumers choose the lower-priced brands, then we could lose market share and sales volumes, which could materially and adversely affect our product sales, financial condition, and operating results.

We may be limited in our ability to pass cost increases on to our customers in the form of price increases.

We may not be able to pass some or all of any increases in the price of raw materials, labor, energy, and other input costs to our customers by raising prices. In the event we increase our prices, customers and consumers may choose to purchase competing products or may shift purchases to private label or other lower-priced offerings, which may adversely affect our financial condition and operating results.

We may realize a decrease in sales volume in the event price increases are implemented.

of our branded products could be reduced or lead to a shift in sales mix toward our lower-margin offerings. As a result, decreased demand for our products may adversely affect our financial condition and operating results.

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.

Consumer preferences for food and snacking products continually change. Our success will depend on our ability to predict, identify and interpret the tastes, dietary habits, purchasing behavior and other preferences of consumers and to offer products that appeal to these preferences. Moreover, weak economic conditions, recession or other factors could affect consumer preferences and demand. If we do not offer products that appeal to consumers or if we misjudge consumer preferences and demand for our products, our sales and market share will decrease and our financial condition and operating results could suffer.

We continually introduce new products or product extensions and our operating results and growth will depend upon the market reception of such new products. There can be no assurance that new products will find widespread acceptance among consumers, and unsuccessful product launches may decrease our profitability and damage our brands’ reputation.

The continued prevalence of e-commerce and other methods of distribution outside of traditional retail shopping could also impact our sales and profitability if we are unable to adequately modify the marketing and distribution of our products in response.

In addition, prolonged negative perceptions concerning the health implications of certain food products could influence consumer preferences and acceptance of some of our products and marketing programs. For example, consumers are increasingly focused on health and wellness and are aware of product ingredients such as added sugar and artificial flavors or colors. We might be unsuccessful in our efforts to effectively respond to changing consumer preferences and social expectations.

Our intellectual property rights are valuable, and our failure to protect them could reduce the value of our products and brands.

We consider our intellectual property rights, including our trademarks, trade names, copyrights, trade secrets and trade dress, to be a significant and valuable part of our business. We attempt to protect our intellectual property rights by taking advantage of a combination of applicable laws, registrations of our intellectual property, third-party agreements (including non-disclosures, assignments, distribution and/or manufacturing, licenses, consents and co-existence) and policing and enforcement of third-party misuse or infringement of our intellectual property. Our failure to obtain or adequately protect our intellectual property rights, or any change in law or other changes that serve to lessen or remove the current legal protections of our intellectual property, may diminish our competitiveness and could materially harm our business. In addition, third-party claims of intellectual property infringement might require us to pay monetary damages or enter into costly license agreements. We also may be subject to injunctions against development and sale of certain of our products.

Any litigation regarding intellectual property (including third-party infringement claims or litigation initiated by us to protect our intellectual property rights) could be costly and time-consuming and could divert management’s and other key personnel’s attention from our business operations. Any of the occurrences outlined above could materially and adversely affect our reputation, product sales, financial condition and operating results.

~~We may be unable to leverage our brand value to compete against lower-priced alternative brands.~~

In most of our product categories, we compete with lower-priced alternative products. Our products must provide higher value and/or quality to our consumers than alternatives, particularly during periods of economic uncertainty. Consumers may not buy our products if relative differences in value and/or quality between our products and retailer or other economy brands change in favor of competitors’ products or if consumers perceive this type of change. If consumers choose the lower-priced brands, then we could lose market share or sales volumes, which could materially and adversely affect our product sales, financial condition, and operating results.

~~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.~~

Consumer preferences for food and snacking products change continually. Our success will depend on our ability to predict, identify and interpret the tastes, dietary habits, purchasing behavior and other preferences of consumers and to offer products that appeal to these preferences. Moreover, weak economic conditions, recession or other factors could affect consumer preferences and demand. If we do not offer products that appeal to consumers or if we misjudge consumer demand for our products, our sales and market share will decrease and our profitability could suffer.

In addition, prolonged negative perceptions concerning the health implications of certain food products could influence consumer preferences and acceptance of some of our products and marketing programs. For example, consumers are increasingly focused on health and wellness, and aware of product ingredients such as added sugar and artificial flavors or colors. We might be unsuccessful in our efforts to effectively respond to changing consumer preferences and social expectations. Negative perceptions regarding our products and failure to satisfy consumer preferences could materially and adversely affect our reputation, product sales, financial condition and operating results.

We operate in a highly competitive industry.

The snacking industry is highly competitive. Numerous brands and products compete for shelf space and sales, with competition based primarily on product quality, brand recognition and loyalty, price, trade promotion, consumer promotion, ~~customer service,~~ and the ability to identify and satisfy emerging consumer preferences. We face competition from other large national brands, smaller regional operators, supermarket chains with their own private labeled brands and diversified food companies. Our competitors include a significant number of companies of varying sizes, including divisions, subdivisions, or subsidiaries of larger companies. Many of these competitors have multiple product lines, substantially greater financial and other resources available to ~~them, and may be substantially less leveraged than us.~~them. We may not be able to compete successfully with these companies. Competitive pressures or other factors could cause us to lose market share, which may require us to lower prices, increase marketing and advertising expenditures, or increase the use of discounting or

promotional campaigns, each of which could materially and adversely affect our margins and could result in ~~a decrease in our operating results and profitability.~~

~~Our success will depend on our continued ability to produce and successfully market products with extended shelf life.~~

We have invested to extend our product shelf life, while maintaining our products’ taste, texture and quality. Extended shelf life, or ESL, is an important component of our DTW model. Our ability to produce and successfully market existing and new products with ESL, while maintaining taste, texture and quality, is essential to our success. If we are unable to continue to produce products with ESL or if the products are not accepted by consumers, we could be forced to make changes to our distribution model and that could have an adverse effect onto our ~~product sales,~~ financial condition and ~~operating results.~~

~~We may be limited in our ability to pass cost increases on to our customers in the form of price increases or may realize a decrease in sales volume in the event price increases are implemented.~~

We may not be able to pass some or all of any increases in the price of raw materials, energy, and other input costs to our customers by raising prices. In the event we increase our prices, customers and consumers may choose to purchase competing products or may shift purchases to private label or other lower-priced offerings, which may adversely affect our operating results.

Consumers may be less willing or able to pay a price differential for our branded products, and may increasingly purchase lower-priced offerings and may forego some purchases altogether, especially during economic downturns. Retailers may also increase levels of promotional activity for lower-priced offerings as they seek to maintain sales volumes during times of economic uncertainty. Accordingly, sales volumes of our branded products could be reduced or lead to a shift in sales mix toward our lower-margin offerings. As a result, decreased demand for our products may adversely affect our operating results.

RISKS RELATED TO OUR GROWTH STRATEGIES

Our growth may be limited by our inability to get, maintain or add additional shelf or retail space for our products.

Our results will depend on our ability to drive revenue growth, in part, by expanding the distribution channels for our products. However, our ability to do so may be limited by our inability to secure ~~additional~~ shelf, display, or other retail space for our products. Retail space for snacks is limited and subject to competitive and other pressures, and there can be no assurance that retail operators will provide us sufficient space for our products to enable us to meet our growth objectives. If we are unable to get, maintain or increase our retail space we could experience an adverse impact on our product sales, financial condition and operating results.

We may not successfully identify or complete strategic acquisitions, alliances, divestitures or joint ventures.

From time to time, we may evaluate acquisition candidates, alliances or joint ventures that may strategically fit our business objectives, or we may consider divesting businesses that ~~do not~~no longer meet our strategic objectives, growth or profitability targets. These activities may present financial, managerial, and operational risks, including, but not limited to, diversion of management’s attention from existing core businesses. In addition, to the extent we undertake acquisitions, alliances or joint ventures or other developments outside our core geography or in new categories, we may face additional risks related to such developments. ~~For example, the acquisition of Voortman in 2020 created new exposure to Canadian regulatory, market and currency exchange risks.~~ Any of these factors could materially and adversely affect our product sales, financial condition, and operating results.

~~If we do~~We may not successfully integrate and manage our acquired businesses or ~~brands, our operating results may be adversely affected.~~brands.

From time to time, we acquire businesses or brands to expand our product portfolio and distribution. We may incur unforeseen liabilities and obligations in connection with the acquisition, integration, or management of the acquired businesses or brands and may encounter unexpected difficulties and costs in integrating them into our operating and internal control structures. We may also experience delays in extending our internal control over financial reporting to a newly acquired business, which may increase the risk of failure to prevent misstatements in their financial records and in our consolidated financial statements. Our financial performance depends in large part on how well we can manage and improve the performance of acquired businesses or brands. We cannot assure you, however, that we will be able to achieve our strategic and financial objectives for such acquisitions. If we are unable to achieve such objectives or successfully integrate acquired businesses or brands, our financial condition and operating results could be negatively affected.

We may not successfully integrate and manage capital investments, including new bakery facilities in order to achieve anticipated growth.

We face risks in starting up new bakery facilities, including with respect to expanding our overall production capacity as well as moving production to such new facilities, that could increase costs, divert management attention and reduce our operating results. The establishment and operation of a new bakery facility, and any capacity expansion project, involves significant risks and challenges, including, but not limited to, design and construction delays and cost overruns. There can be no assurance that a new bakery facility will contribute the incremental production capacity that we anticipate and in a manner suitable to our goals or that any other expansion project will be operational on the timeline or contribute the incremental production capacity that we anticipate, and we cannot guarantee that any such facility will operate at costs acceptable to us or that demand for our products will remain at levels high enough to meet the return on investment necessary to justify our investment in these projects.

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 continually review our operations in an effort to achieve increased efficiencies, to integrate new technologies and to address changes in our product lines and in market demand. Periodic realignments and cost-savings programs and other changes could in the future adversely affect, our operating efficiency and results of operations during the periods in which such programs are being implemented. Such programs may include the addition of production lines

and the consolidation, integration and upgrading of facilities, functions, systems and procedures, including the introduction of new technologies and product innovations. These programs involve substantial planning, often require capital investments, and may result in charges for fixed asset impairments or obsolescence and substantial severance costs. Our ability to achieve cost savings or other benefits within the time frames we anticipate is subject to many estimates and assumptions, a number of which are subject to significant economic, competitive and other uncertainties. If we are unable to achieve our objectives, our financial condition and operating results could be negatively affected.

We may be unable to drive revenue growth in our key products or add products that are faster-growing and more profitable.

The ~~Snacking~~snacking industry’s overall growth is linked to population growth. Our future results will depend on our ability to drive revenue growth in our key products. Because our operations are concentrated in the North American snacking industry, our success also depends in part on our ability to enhance our portfolio by adding innovative new products. There can be no assurance that we will be able to effectively manufacture or source new products or that new products will find widespread acceptance among consumers. Our failure to drive revenue growth in our key products or develop innovative new products could materially and adversely affect our profitability, financial condition and operating results.

RISKS RELATED TO OUR OPERATIONS

The current COVID-19 pandemic, or the future outbreak of other highly infectious or contagious diseases, 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.

In response to the novel coronavirus (“COVID-19”), certain governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of the pandemic. More restrictive proclamations and/or directives may be issued in the future. As a food producer, we are an essential service and the majority of our employees continue to work within our production and distribution facilities. However, we have had increased labor costs resulting from the payment of overtime to certain of our employees while other employees have been on paid sick leave or unpaid leaves of absence. We have also incurred expenses related to additional sanitization and safety measures we have instituted throughout our facilities. Although the temporary reductions in production at our facilities to enable sanitization and implementation of our other safety and employee welfare programs have not materially affected our operations, other food producers have experienced significant shutdowns of production. COVID-19 has also led to delays in FDA inspections of food production facilities. We cannot assure you that our health and safety measures will prevent a widespread outbreak of COVID-19 at our facilities. Such an outbreak could lead to a suspension of production or increased labor and other costs, each of which could have a material adverse effect on our business, financial condition and results of operations.

We are actively monitoring the potential impact of the pandemic on our operations and distribution. Our products are manufactured in North America and we may experience disruptions to our operations. We are unable to accurately predict the impact that the coronavirus will have due to various uncertainties, including the severity of the disease and its potential variants, the duration of outbreaks, the effectiveness of vaccines or other treatments and actions that may be taken by governmental authorities. We also cannot predict the effects of any future outbreak of other highly infectious or contagious diseases.

~~The~~ cost to manufacture our products is subject to pricing ~~volatility.~~volatility, including that related to input cost inflation.

We purchase and use large quantities of commodities, including cooking oil, sugar, coatings, flour ~~sweeteners, edible oils~~ and ~~compound coating~~eggs to manufacture our products. In addition, we purchase and use significant quantities of corrugate and films to package our products.

Prices for commodities, labor, energy, transportation and other inputs are volatile and can fluctuate due to ~~conditions~~inflationary pressures that are difficult to predict, including global competition for resources, currency fluctuations, severe weather, the potential effects of climate change, consumer, industrial or investment demand, and changes in regulatory, trade, alternative energy, or agricultural policies. Rising commodity, energy, transportation and other input costs could materially and adversely affect our cost of operations, which could materially and adversely affect our financial condition and operating results.

We monitor our exposure to commodity prices as an integral part of our overall risk management program, and seek to utilize forward buying strategies through short-term and long-term advance purchase contracts, to lock in prices for certain high-volume raw materials, packaging components and fuel inputs. These strategies, however, may not protect us from increases in specific raw materials costs.

~~We are also actively monitoring~~Damage or disruption to our supply chain, including third-party manufacturing or transportation and distribution capabilities, due to weather, including any potential effects of climate change, natural disaster, fire or explosion, terrorism, pandemics or other infectious diseases, strikes, government action, or other reasons beyond our control or the control of our suppliers and business partners, could impair our ability to manufacture or sell our products. Failure to take adequate steps to mitigate the likelihood or potential impact of ~~the COVID-19 pandemic on~~such events, or to effectively manage such events if they occur, particularly when a product is sourced from a single supplier or location, could adversely affect our business, financial condition and operating results.

In addition, disputes with significant suppliers, including disputes regarding pricing or performance, could adversely affect our ability to supply ~~chain.~~ products to our customers and could materially and adversely affect our product sales, financial condition, and results of operations.

We source the significant majority of our ingredients, raw materials and packaging within North America. However, global supply may become constrained, which may cause the price of certain ingredients, raw materials and packaging used in our products to increase, such ingredients may become unavailable and/or we may experience disruptions to our operations. We are unable to accurately predict the impact that the coronavirus will have due to various uncertainties, including the severity of the disease, the duration of the outbreak, the timing, effectiveness and public acceptance of vaccines and actions that may be taken by governmental authorities. We also cannot predict the effects of another wave of COVID-19 or any future outbreak of other highly infectious or contagious diseases.

Continued volatility or sustained increases in the prices of commodities, transportation and other supplies we purchase could increase the costs of our products, and our profitability could suffer. Moreover, increases in the prices of our products to cover these increased costs may result in lower sales volumes. If we are not successful in

our buying strategies and production efficiencies, or if we are unable to price our products to cover increased costs, then commodity and other input price volatility or increases could materially and adversely affect our financial condition and operating results.

The loss of one or more of our current co-manufacturing arrangements could adversely affect our business.

We use independent contract manufacturers, or co-manufacturers, to manufacture a portion of our products. In some cases, an individual co-manufacturer may produce all of our requirements for a particular product. There are a limited number of qualified co-manufacturers in the industry. Therefore, if we lose or need to change one or more co-manufacturers or fail to retain co-manufacturers for newly acquired or developed products or brands, production of our products may be delayed or postponed and/or the availability of some of our products may be reduced or eliminated, which could have a material adverse effect on our business, financial condition and operating results.

The ability to distribute our products is subject to significant changes in the availability and pricing of transportation.

We utilize third-party carriers to ship our products to our distribution centers and to customers. The availability of timely and reliable transportation and the associated costs are subject to market demand, carrier capacity, fuel prices and regulatory oversight. Our procurement of transportation services from a diversified group of carriers and continuous monitoring of carrier usage and pricing could be insufficient to protect us from changes in market demand or carrier capacity. The inability to distribute our products in a cost-effective manner could have a material adverse effect on our business, financial condition and operating results.

Climate change may negatively affect our business and operations.

There is concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters. In the event that such climate change has a negative effect on agricultural productivity, we may be subject to decreased availability or less favorable pricing for certain commodities that are necessary for our products, such as sugar and wheat. Adverse weather conditions and natural disasters can reduce crop size and crop quality, which in turn could reduce our supplies of raw materials, lower recoveries of usable raw materials, increase the prices of our raw materials, increase our cost of transporting and storing raw materials, or disrupt our production schedules. As a result of climate change, we may also be subjected to decreased availability of water, deteriorated quality of water or less favorable pricing for water, which could adversely affect our financial condition and operating results.

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.

We have several large customers that account for a significant portion of our sales. Wal-Mart together with its affiliates is our largest customer and represented approximately ~~20.2%~~19.6% of our net revenue for the year ended December 31, ~~2020.~~2022. Cumulatively, ~~including Wal-Mart,~~ our top ten customers, including Wal-Mart, accounted for 59.4% of total net revenue for the year ended December 31, ~~2020.~~2022.

We do not have long-term supply contracts with any of our major customers. The loss of one or more major customers, or a material reduction in sales to these customers for any reason, including, but not limited to, a significant business interruption of our customers’ operations or our inability to forecast demand and plan production to fulfill customer orders, would result in a decrease in our product sales, financial condition and operating results.

Our results could be adversely impacted as a result of increased labor and employee-related expenses.

Inflationary pressures and ~~any~~ shortages in the labor market ~~could~~have increased and may continue to increase labor costs or constrain production capacity, which could have a material adverse effect on our consolidated operating results or financial condition. While we have historically experienced some level of ordinary course turnover of employees, the COVID-19 pandemic and resulting actions and impacts have exacerbated labor shortages and increased turnover. A number of factors have had and may continue to have adverse effects on the labor force available to us, including reduced employment pools, federal unemployment subsidies and other government regulations, which include laws and regulations related to workers’ health and safety, wage and hour practices and immigration. A sustained labor shortage or increased turnover rates within our employee base (or within the employee base of key suppliers or

third-party manufacturers), could negatively affect our supply chain or our ability to efficiently operate our manufacturing and distribution facilities and overall business.

Our labor costs include the cost of providing employee benefits, including health and welfare, and severance benefits. The annual costs of benefits vary with increased costs of health care and the outcome of collectively-bargained wage and benefit agreements. Labor shortages and increased turnover rates within our team members have led to and could in the future lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees, and could negatively affect our ability to efficiently operate our bakeries or otherwise operate at full capacity. An overall or prolonged labor shortage, lack of skilled labor, increased turnover or labor inflation could have a material adverse impact on our financial condition and operating results.

Various federal and state labor laws govern our relationships with our employees and affect operating costs. These laws include employee classifications as exempt or non-exempt, minimum wage requirements, unemployment tax rates, workers’ compensation rates, overtime, family leave, safety standards, payroll taxes, citizenship requirements and other wage and benefit requirements for employees classified as non-exempt. As our employees are paid at rates set above, but related to, the applicable minimum wage, further increases in the minimum wage could increase our labor costs. Significant additional government regulations could materially and adversely affect our business, financial condition and operating results.

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.

Approximately ~~41%~~44% of our employees, as of December 31, ~~2020,~~2022, are covered by collective bargaining agreements and other employees may seek to be covered by collective bargaining agreements. Strikes or work stoppages or other business interruptions could occur if we are unable to renew these agreements on satisfactory terms or enter into new agreements on satisfactory terms, which could impair manufacturing and distribution of our products or result in a loss of sales, which could adversely impact our business, financial condition or operating results. The terms and conditions of existing, renegotiated or new collective bargaining agreements could also increase our costs or otherwise affect our ability to fully implement future operational changes to enhance our efficiency or to adapt to changing business needs or ~~strategy.~~strategy, which could have an adverse effect to our financial condition and operating results.

We may be subject to product liability claims should the consumption of any of our products cause injury, illness or death.

We sell food products for human consumption, which involves risks such as product contamination or spoilage, ~~mislabeling,~~misbranding, product tampering and other adulteration of food products. Consumption of a ~~mislabeled,~~misbranded, adulterated, contaminated or spoiled product may result in personal illness or injury. We could be subject to claims or lawsuits relating to an actual or alleged illness or injury, and we could incur liabilities that are not insured or exceed our insurance coverage. Even if product liability claims against us are not successful or fully pursued, these claims could be costly and time consuming and may require our management to spend time defending the claims rather than operating the business. In addition, publicity regarding these claims could adversely affect our reputation and brands.

Our success will depend on our continued ability to produce and successfully market products with extended shelf life.

We have invested to extend our product shelf life, while maintaining our products’ taste, texture and quality. Extended shelf life, or ESL, is an important component of our DTW model. Our ability to produce and successfully market existing and new products with ESL, while maintaining taste, texture and quality, is essential to our success. If we are unable to continue to produce products with ESL or if the products are not accepted by consumers, we could be forced to make changes to our distribution model or products that could have an adverse effect on our product sales, financial condition and operating results.

Product recalls may increase our costs, negatively impact our brands’ reputation, and adversely affect our business.

A product that ~~has been~~is actually or allegedly misbranded or ~~becomes~~ adulterated could result in product withdrawals or recalls, destruction of product inventory, negative publicity, temporary plant closings, substantial cost of compliance or

remediation, and potentially significant product liability judgments against us. Any of these events could result in a loss of demand for our products, which would have a material adverse effect on our financial condition and operating ~~results or cash flows.~~results. While we carry insurance to cover the direct costs of such events, we cannot guarantee that these costs will be ~~covered.~~recovered. We could also be adversely affected if consumers lose confidence in our ~~product~~products’ quality, safety and integrity generally.

We rely on third parties for services related to sales, marketing and distribution.

We utilize third-party ~~sales~~brokerage and ~~marketing~~merchandising services and common carriers to execute order fulfillment for the majority of our products. While these services have increased our market penetration and expanded our distribution reach, we are dependent upon these third parties to effectively market ~~sell~~ and distribute our products. We do not have long-term contracts with any of these third-party service providers. Accordingly, any termination by a third-party provider of their services to us, or any failure by these third parties to perform their obligations to us, would have a material adverse impact on our ~~business~~financial condition and operating results.

~~RISKS RELATED TO OUR INDUSTRY AND ECONOMIC CONDITIONS~~

~~The~~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.

~~In response to~~Public health crises, including the COVID-19 pandemic, ~~certain governmental authorities~~and measures that have ~~issued stay-at-home orders, proclamations and/or directives aimed at minimizing~~been and may in the ~~spread~~future be taken by governments, businesses, including us, and individuals in response to such crises have had, are having and could continue to have impacts on our financial and operational performance.

The impact of the ~~pandemic. Additional, more restrictive proclamations and/or directives~~COVID-19 pandemic on our operations and the operations of third parties in our supply chain has included, and may ~~be issued~~ in the ~~future. We cannot predict~~future include, employee absenteeism and labor shortages, failure of third parties on which we rely to meet their obligations to us or disruptions in their ability to do so, increases in the ~~economic impact~~costs, or reductions in the availability and timely delivery, of ~~additional waves~~ingredients, packaging and other materials used to manufacture our products, operational delays, increases in the cost of ~~COVID-19 infections or governmental measures~~freight, lack of adequate manufacturing capacity and ~~directives~~delays in ~~response thereto. Although U.S. and foreign regulatory agencies have approved several vaccines for treatment~~repairs at our facilities.

The impacts of the ~~virus, the effectiveness,~~COVID-19 pandemic or other public ~~acceptance and widespread availability of the vaccines remain uncertain. While we do not expect that the virus will have a material adverse effect on~~health crises could exacerbate conditions in our ~~business or financial results at~~other risk factors noted in this ~~time,~~Item 1A, “Risk Factors.” If we are unable to ~~accurately predict~~successfully manage our business through the ~~impact that~~challenges and uncertainties created by the ~~coronavirus will~~COVID-19 pandemic, many of which are not within our control, our business, financial condition and operating results could be materially adversely affected.

RISKS RELATED TO OUR INDUSTRY AND ECONOMIC CONDITIONS

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 global economy has been negatively impacted by the military conflict between Russia and Ukraine. Furthermore, governments in the U.S., United Kingdom, and European Union have ~~due~~each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia. Although we have no operations in Russia, Belarus or Ukraine, our supply chain has been, and may continue to ~~various uncertainties,~~be, adversely impacted by the Russia-Ukraine conflict. Further escalation of geopolitical tensions related to the military conflict, including ~~the severity~~increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, lower consumer demand, and changes to foreign exchange rates and financial markets, any of ~~the disease, the duration of the outbreak, the economic impact on~~which may adversely affect our ~~customers,~~business and ~~actions that may be taken by governmental authorities.~~

~~We also cannot predict~~supply chain. In addition, the effects of ~~another wave~~the ongoing conflict could heighten many of ~~COVID-19 or any future outbreak of other highly infectious or contagious diseases.~~our known risks described in this Item 1A, Risk Factors.

Our geographic focus makes us particularly vulnerable to economic and other events and trends in North America.

We operate in North America and are particularly susceptible to adverse United States regulations, trade policies, economic climate, consumer trends, market fluctuations, including commodity price fluctuations or supply shortages of our ingredients and other production inputs, and other adverse events. The concentration of our businesses in North America could present challenges and may increase the likelihood that an adverse event in the United States would materially and adversely affect our product sales, financial condition and operating results.

The consolidation of retail customers could adversely affect us.

Retail customers may continue to consolidate, resulting in fewer customers for our business. Consolidation also produces larger retail customers that may seek to leverage their position to improve their profitability by demanding improved efficiency, lower pricing, increased promotional programs, or specifically tailored products. In addition, larger retailers have the scale to develop supply chains that permit them to operate with reduced inventories or to develop and market their own retailer brands. Retail consolidation and increased retailer power could materially and adversely affect our product sales, financial condition, and operating results.

Retail consolidation also increases the risk that adverse changes in our customers’ business operations or financial performance will have a corresponding material and adverse effect on us. For example, if our customers cannot access sufficient funds or financing, then they may delay, decrease, or cancel purchases of our products, or delay or fail to pay us for previous purchases, which could materially and adversely affect our product sales, financial condition, and operating results.

OTHER GENERAL RISKS RELATED TO OUR BUSINESS

Unsuccessful implementation of business strategies to reduce costs may adversely affect our business, financial condition, results of operations and cash flows.

Many of our costs, such as freight, raw materials and energy, are subject to factors outside of our control. Therefore, we must seek to reduce costs in other areas, such as through operating efficiency. If we are not able to complete projects designed to reduce costs and increase operating efficiency on time or within budget, our business, financial condition, results of operations and cash flows may be adversely impacted. In addition, if the cost-saving initiatives we have implemented, or any future cost-saving initiatives, do not generate the expected cost savings and synergies, our business, financial condition ~~results of operations~~ and ~~cash flows~~operating results may be adversely affected.

Legal claims or other regulatory enforcement actions could subject us to civil and criminal penalties.

As a large food company, we operate in a highly regulated environment with constantly evolving legal and regulatory frameworks. Various laws and regulations govern food production, storage, distribution, sales, labeling, advertising and marketing, as well as licensing, trade, labor, tax and environmental matters, and health and safety practices. Government authorities regularly ~~change~~pass new and amend existing laws and regulations and may change their ~~interpretations.~~interpretations of existing laws and regulations. Consequently, we are subject to heightened risk of legal claims or other regulatory enforcement actions. Although we have implemented policies and procedures designed to ensure compliance with existing laws and regulations, there can be no assurance that our employees, contractors, or agents will not violate our policies and procedures. Moreover, a failure to maintain effective control processes could lead to violations, unintentional or otherwise, of laws and regulations. Legal claims or regulatory enforcement actions arising out of our failure or alleged failure to comply with applicable laws and regulations could subject us to civil and criminal penalties that could materially and adversely affect our product sales, reputation, financial condition and operating results.

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 various federal, state or provincial, and local laws and regulations relating to the protection of the environment, including those governing the discharge of pollutants into the air and water, the management and disposal of solid and hazardous materials and wastes, employee exposure to hazards in the workplace and the cleanup of contaminated sites. We are required to obtain and comply with environmental permits for many of our operations, and sometimes we are required to install pollution control equipment or to implement operational changes to limit air emissions or wastewater discharges and/or decrease the likelihood of accidental releases of hazardous materials.

We could incur substantial costs, including cleanup costs, civil or criminal fines or penalties, and third-party claims for property damage or personal injury as a result of any violations of environmental laws and regulations, noncompliance with environmental permit conditions or contamination for which we may be responsible that is identified or that may occur in the future. ~~Such~~The increasing concern over climate change also may result in more regional, federal, and/or global legal and regulatory requirements to reduce or mitigate the effects of greenhouse gases and replenish water. If such laws are enacted, we may experience significant increases in our costs ~~may be material.~~of operation and delivery. In particular, increasing regulation of fuel emissions could substantially increase the distribution and supply chain costs associated with our products.

Under federal and state (or provincial) environmental laws, we may be liable for the costs of investigation, removal or remediation of certain hazardous or toxic substances, as well as related costs of investigation and damage to natural resources, at various properties, including our current and former properties and the former properties of our predecessors, as well as off-site waste handling or disposal sites that we or our predecessors have used. Liability may be imposed upon us without regard to whether we knew of or caused the presence of such hazardous or toxic substances. Any such locations we currently own or occupy, or locations that we may acquire in the future, may result in liability to us under such laws or expose us to third-party actions such as tort suits based on alleged conduct or environmental conditions. In addition, we may be liable if hazardous or toxic substances migrate from properties for which we may be responsible to other properties.

In addition to regulations applicable to our operations, failure by any of our suppliers to comply with regulations, or allegations of compliance failure, may disrupt their operations and could result in potential liability. Even if we were able to obtain insurance coverage or compensation for any losses or damages resulting from the noncompliance of a supplier with applicable regulations, our brands and reputation may be adversely affected by negative perceptions of our brands stemming from such compliance failures.

We cannot predict what environmental or health and safety legislation or regulations will be enacted in the future or how existing or future laws or regulations will be enforced, administered or interpreted. We also cannot predict the amount of future expenditures that may be required in order to comply with such environmental or health and safety laws or regulations or to respond to environmental claims. These potential expenses could have a material adverse effect on our financial condition and operating results.

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.

Our and our contract manufacturers’ operations are subject to extensive regulation by the FDA, the FTC and other national, state, and local authorities in the ~~US,~~U.S., as well as the CFIA and provincial and local authorities in Canada. For example, we are subject to the Food, Drug and ~~Cosmetics~~Cosmetic Act (“FDCA”) and regulations promulgated thereunder by the FDA. This comprehensive regulatory program governs, among other things, the registration of all ~~points~~food facilities in the food supply chain, manufacturing, processing, composition and ingredients, labeling, packaging, holding, distribution and safety of food. Under this program, the FDA regulates manufacturing practices for foods through, among other things, its current ~~“good manufacturing practices”~~CGMP regulations, ~~or cGMPs,~~ and specifies the ingredients for certain foods. Our ~~processing facilities~~bakeries and products are subject to periodic inspection by federal, state, and local authorities. The Food Safety Modernization Act (“FSMA”) increased the number of inspections at food facilities in the United States in an effort to ~~enhance~~monitor compliance with preventive control standards to reduce the ~~detection~~risk of food-borne illness outbreaks and ~~order~~provided the FDA with the authority to issue mandatory recalls of tainted food ~~products. It also imposes~~products in certain situations. FSMA, therefore, imposed greater responsibility upon parties throughout the food chain to design and implement effective ~~hazard analysis and critical~~preventive control ~~point program using preventive controls in food safety~~ programs, ~~throughout the~~including risk-based end-to-end supply ~~chain.~~chain programs. Failure to follow ~~cGMPs and~~CGMPs or to have an adequate food safety program ~~results~~could result in the adulteration of food ~~being adulterated~~ and could require product recalls. ~~cGMPs require certain~~The FDCA requires reports of ~~hazardous~~certain unsafe food products to be submitted to the FDA and provides ~~authority for~~ the FDA with the authority to take corrective action, ~~including~~which may include, for certain unsafe foods, mandating the recall of adulterated or misbranded food products.

Similarly, the ~~facility~~bakery in Burlington, Ontario is subject to the Canadian Food and Drugs Act (“CFDA”) and the Safe Food for Canadian’s Act (“SFCA”) and regulations promulgated thereunder by Health Canada and the CFIA. The CFDA and SFCA govern the import, export, manufacture, distribution, composition, packaging, ~~labelling,~~labeling, advertising, and sale of food products in Canada. Under the SFCA, the CFIA, among other things, issues licenses for the importation, manufacturing, processing, packaging and ~~labelling~~labeling of foods, and enforces requirements for food

safety, preventive controls, traceability, and product complaints, investigations and recalls. Failure to implement appropriate preventive controls and have an adequate food safety program may result in food being unsafe and could require product recalls. Under the SFCA, companies are required to report to the CFIA if a food presents a risk of injury to human health, whether due to adulteration or misbranding, and CFIA has authority to take corrective action, ~~including~~which may include, for certain unsafe foods, ordering the recall of the affected food products.

The FDA also has extensive and specific regulations concerning food labeling, including use of certain terms such as sugar free, healthy, low sodium and low fat. Improper labeling of a food causes it to be misbranded and could result in a recall. Under the FDCA, the FDA can issue a Warning Letter or Untitled Letter, or take other regulatory action such as a product seizure and detention, product recall, refuse to allow the export of the product, or with the Department of Justice, criminal or civil penalties, injunction against or restriction of product manufacture or distribution, consent decrees, disgorgement, restitution, against misbranded or adulterated food products. The FTC and state authorities regulate how we market and advertise our products, and we could be the target of claims relating to alleged false or deceptive advertising under federal, state, and foreign laws and regulations. In Canada, the CFIA enforces the detailed labelling and advertising requirements and restrictions promulgated under the CFDA and the SFCA, and has broad authority to take regulatory action such as product seizure and detention, stop sale, product recall, license suspension, impose administrative monetary penalties or pursue criminal prosecution for ~~non-compliant~~noncompliant food product or food advertising that is allegedly false or deceptive. Changes in these laws or regulations or the introduction of new laws or regulations could increase the costs of doing business for us or our customers or suppliers or restrict our actions, causing our financial condition and operating results to be adversely affected.

We seek to comply with applicable laws and regulations through a combination of employing internal personnel to ensure quality-assurance and food safety programs compliance and contracting with third-party ~~laboratories that conduct analysis of products for the nutritional-labeling requirements.~~laboratories. Compliance with regulations is costly and time-consuming. From time to time, we have been subject to civil claims alleging that we failed to comply with applicable laws and regulations. Any failure to comply or maintain permits and licenses relating to our operations could subject us to fines, injunctions, recalls or seizures, as well as potential criminal sanctions or suspensions or revocations of our registration, permits or licenses, which could result in increased operating costs ~~resulting in~~that have a material adverse effect on our business, financial condition and operating results. Requirements to comply with applicable laws and regulations or maintain permits and licenses relating to our operations have resulted in civil litigation against us alleging non-compliance and could subject us to fines, injunctions, recalls or seizures, as well as potential criminal sanctions or suspensions or revocations of our registration, permits or licenses, which could result in increased operating costs resulting in a material adverse effect on our business, financial condition, and operating results.

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.

Certain jurisdictions in which our products are made, manufactured, distributed or sold have either imposed, or are considering imposing, product labeling or warning requirements or limitations on the marketing or sale of certain of our products as a result of ingredients or substances contained in such products. These types of provisions have required that we provide a label that highlights perceived concerns about a product or warns consumers to avoid consumption of certain ingredients or substances present in our products and have also prohibited or limited the use of certain words or phrases in connection with describing a ~~products’ qualities,.~~product’s qualities. For example, in California, Proposition 65 requires a specific warning on any product that contains a substance listed by the State of California as having been found to cause cancer or birth defects, unless the level of such substance in the product is below a safe harbor level. We have been subject to civil claims alleging non-compliance with these requirements and may be subject to such claims in the future.

In addition, the United States ~~has~~ imposed ~~new~~ nutrition labeling regulations that ~~require~~required large food manufacturers to declare the quantity of added sugar by January 1, 2020, as well as a national bio-engineered food disclosure standard that ~~requires~~required food manufacturers to disclose bio-engineered food ~~ingredients.~~ingredients by January 1, 2022. Our new product labeling may impact the consumption and public perception of our products.

Additionally, Health Canada has imposed a new requirement for food manufacturers to add front-of-pack nutrition labeling by December 31, 2025 to pre-packaged foods that contain sugars, saturated fats, and/or sodium at or above certain thresholds. The new product labeling may impact the consumption and public perception of our products.

The imposition or proposed imposition of additional product labeling or warning requirements could reduce overall consumption of our products, lead to negative publicity (whether based in scientific fact or not) or leave consumers with the perception (whether or not valid) that our products do not meet their health and wellness needs. Such factors could adversely affect our business, financial conditions and 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.

A significant portion of our assets are goodwill and other intangible assets, the majority of which are not amortized but are reviewed for impairment at least annually and more often if indicators of impairment exist. If the carrying value of these assets exceeds the current estimated fair value, the asset is considered impaired, and this would result in a ~~noncash~~non-cash charge to earnings, which could be material. Events and conditions that could result in impairment include a sustained drop in the market price of our Class A common stock, increased competition or loss of market share, obsolescence, product claims that result in a significant loss of sales or profitability over the product life, deterioration in macroeconomic conditions, or declining financial performance in comparison to projected results.

Our business operations could be disrupted if our information technology systems fail to perform adequately.

The efficient operation of our business depends on our information technology systems, most of which are managed by third-party service providers. We rely on our information technology systems to effectively manage our business data, communications, supply chain, order entry and fulfillment, and other business processes. The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in transaction errors, processing inefficiencies, and the loss of sales and customers, causing our business and operating results to suffer. In addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, the potential effects of climate change, power outages, systems failures, security breaches, cyber-attacks and viruses. Any such damage or interruption could have a material adverse effect on our ~~business.~~business, financial condition and operating results.

We continuously monitor and update our information technology networks and infrastructure to prevent, detect, address and mitigate the risk of unauthorized access, misuse, and other events that could have a security impact. We invest to protect our data and business processes against risk of data security breach and cyber-attacks. We believe our security processes provide adequate measures of protection against security breaches. Nevertheless, despite continued vigilance in these areas, disruptions in information technology systems, including unauthorized use of data, are possible and could have a negative impact on our operations or business reputation. Failure of our systems, including failures due to cyber-attacks that would prevent the ability of systems to function as intended, could cause transaction errors, loss of customers and sales, and could have negative consequences to our operations, our employees and those with whom we do business. This in turn could have a negative impact on our financial condition and operating results.

We occasionally implement new and upgrade our existing information technology systems. We may not be able to implement or upgrade the systems successfully without experiencing delays, increased costs and other difficulties, including potential design defects, miscalculations, testing requirements, and the diversion of management’s attention from day-to-day business operations. If we are unable to implement or upgrade the systems as planned, the effectiveness of our internal control over financial reporting could be adversely affected, our ability to assess those controls adequately could be delayed, and our financial condition, results ~~or operations.~~of operations and cash flows could be negatively impacted.

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.

We must hire, retain and develop a highly skilled and diverse workforce. We compete to hire new personnel in the many regions in which we manufacture and market our products and then to develop and retain their skills and competencies. Unplanned turnover or failure to develop adequate succession plans for leadership positions or hire and retain a diverse workforce with the skills and in the locations we need to operate and grow our business could deplete our institutional knowledge base and erode our competitiveness.

We also face increased personnel-related risks. These risks could lead to operational challenges, including increased competition for employees with the skills we require to achieve our business goals, and higher employee turnover, including employees with key capabilities. Furthermore, we might be unable to manage changes in, or that affect, our workforce appropriately or satisfy the legal requirements associated with how we manage and compensate our employees. These risks could materially and adversely affect our reputation, ability to meet the needs of our customers, product sales, financial condition and operating results.

~~Risks Related to Our Capital Structure~~

RISKS RELATED TO OUR CAPITAL STRUCTURE

Our ~~substantial leverage could~~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.

As of December 31, ~~2020,~~2022, our total balance on long term debt, excluding deferred financing charges, discount, premium, and lease obligations, was ~~$1,102.8~~$983.2 million. Our ~~degree of leverage~~current or future debt could have important consequences, including:

•requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures, and future business opportunities or to pay dividends;

•exposing us to the risk of increased interest rates because the portion of our borrowings not hedged by swap agreements are subject to variable rates;

•making it more difficult for us to make payments on our indebtedness;

•increasing our vulnerability to general economic and industry conditions;

•restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

•subjecting us to restrictive covenants that may limit our flexibility in operating our business;

•limiting our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, and general corporate or other purposes; and

•~~placing us at a competitive disadvantage compared to our competitors who are less highly leveraged.~~

Despite our ~~significant leverage,~~existing debt, we may be able to incur significant additional amounts of debt, which could further exacerbate the ~~risks associated with our significant leverage.~~

risk.

Changes in interest rates may adversely affect our earnings and/or cash flows.

Our term loan and revolving line of credit bear interest at variable interest rates that use the London Inter-Bank Offered Rate (“LIBOR”) as a benchmark rate. ~~On July 27, 2017, the~~The United Kingdom’s Financial Conduct Authority ~~(“FCA”), which regulates~~and the administrator of LIBOR have announced that ~~it intends~~the publication of the most commonly used U.S. dollar LIBOR setting will cease to ~~stop persuading~~be published or ~~compelling banks~~cease to ~~submit LIBOR quotations~~be representative after ~~2021 (the “FCA Announcement”). The FCA Announcement, as updated by more recent pronouncements, indicates that the continuation of LIBOR on the current basis cannot and will not be assured after~~June 30, 2023 and the publication of all other LIBOR settings ceased to be published as of December 31, 2021. While we have sought to reduce future interest rate volatility by entering into floating interest rate to fixed interest rate swap agreements with respect to a portion of our outstanding indebtedness, the transition away from LIBOR may ~~cease~~nonetheless cause us to ~~exist or otherwise be unsuitable for use~~incur increased costs and additional risk.

Starting January 1, 2022, banks in the United States have ceased entering into new credit and other contractual agreements using U.S. dollar LIBOR as a ~~benchmark. Recent proposals for LIBOR reforms may result in~~reference rate, and instead began incorporating alternative reference rates such as the ~~establishment of new methods of calculating LIBOR or~~Secured Overnight Financing Rate (“SOFR”), within such agreements. Given that SOFR is a secured rate backed by government securities, it will be a rate that does not take into account bank credit risk (as is the ~~establishment of one or more alternative benchmark rates.~~case with LIBOR). Although our credit agreement provides for the transition to successor base rates ~~the successor base rates may be related to LIBOR, and~~ the consequences of any potential cessation, modification or other reform of LIBOR cannot be predicted at this time. We work to reduce our exposure to LIBOR through swap contracts which effectively fix a portion of our variable-rate interest payments. If LIBOR ceases to exist, we may need to amend our credit agreement and swap contracts. As a result, ourOur interest expense may increase, and our ~~available cash flow~~financial condition and operating results may be adversely affected.

We may be unable to obtain additional financing to fund our operations and growth.

We may require additional financing to fund our operations or growth. The failure to secure additional financing could have a material adverse effect on our continued development or growth. None of our officers, directors or stockholders are required to provide any financing to us.

2225

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.~~tax receivable agreement.

We have no direct operations and no significant assets other than our ownership interest in our operating subsidiaries. We depend on our operating subsidiaries for distributions, loans and other payments to generate the funds necessary to meet our financial obligations, including our expenses as a publicly traded company, to pay any dividends with respect to our common stock, and to satisfy our obligations under the tax receivable agreement. See Note 8. Tax Receivable ~~Agreement. See Note 9. Tax receivable agreement~~Agreement to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K, for information on the ~~Tax Receivable Agreement.~~tax receivable agreement. The financial condition and operating requirements of our operating subsidiaries may limit our ability to obtain cash from our operating subsidiaries. The earnings from, or other available assets of, our operating subsidiaries 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.~~tax receivable agreement.

The ability of our operating subsidiaries (other than subsidiaries which have been designated as unrestricted pursuant to our ability to do so in certain limited circumstances) to make distributions, loans and other payments to us for the purposes described above and for any other purpose are governed by the terms of our credit facilities and will be subject to the negative covenants set forth therein. Any loans or other extensions of credit will be subject to the investment covenants contained therein, which provide for several exceptions including, among others (i) a general investment basket equal to the greater of a fixed dollar amount and a percentage of EBITDA and (ii) an unlimited investment basket based on satisfying a total net leverage ratio on a pro forma basis. Similarly, any dividends, distributions or similar payments will be subject to the dividends and distributions covenant under such credit facilities, which also provide for several exceptions including, among others (i) for payment of overhead and certain fees and expenses of parent companies, (ii) for tax distributions, subject to certain limitations, (iii) a general dividend and distribution basket equal to the greater of a fixed dollar amount and a percentage of EBITDA and (iv) an unlimited dividend and distribution basket based on satisfying a total net leverage ratio on a pro forma basis.

RISKS RELATED TO OUR CLASS A COMMON STOCK

Our stock price may be ~~volatile~~volatile.

The market price of our Class A common stock could be subject to wide fluctuations in response to various factors, many of which are beyond our control. Purchases or sales of large quantities of our stock, or significant short positions in our stock could have an unusual or adverse effect on our market price. These fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results in the future. Abnormal trading activity, including activity that is considered market manipulation, can lead to irrational and/or temporary movements in the price of our Class A common stock, which, in turn, may increase its risk and volatility. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our Class A common stock will be stable or appreciate over time.

Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

Our certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together, these provisions may make ~~more difficult~~ the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities. These provisions include:

•no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

•the right of our board to elect a director to fill a vacancy created by the expansion of our board or the resignation, death or removal of a director in certain circumstances, which prevents stockholders from being able to fill vacancies on our board;

•a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

•a prohibition on stockholders calling a special meeting and the requirement that a meeting of stockholders may only be called by members of our board, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and

•advance notice procedures that stockholders must comply with in order to nominate candidates to our board or to propose matters to be acted upon at a meeting of stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.

RISKS RELATED TO THE AMENDMENT OF PREVIOUSLY ISSUED REPORTS

The restatement of certain of our financial statements may subject us to risks and uncertainties, including the increased possibility of legal proceedings.

On April 30, 2021, management and the audit committee of our Board of Directors determined that our previously issued quarterly and year-to-date unaudited consolidated financial statements for March 31, 2020, June 30, 2020, September 30, 2020, December 31, 2020 and our audited consolidated financial statements for the years ending December 31, 2020, 2019 and 2018 should no longer be relied upon. In addition, we determined that the related press releases, earnings releases, and investor communications describing our financial statements for these periods should no longer be relied upon. The errors identified were non-cash and related to our classification of certain outstanding warrants. Accordingly, we restated the annual, quarterly and year-to-date audited and unaudited consolidated financial statements for the foregoing periods on May 17, 2021.

As a result of our restatement, we may become subject to additional risks and uncertainties, including, among others, the increased possibility of legal proceedings or a review by the SEC and other regulatory bodies. The costs of defending against such legal proceedings or administrative actions could be significant. In addition, we could face monetary judgments, penalties or other sanctions that could have a material adverse effect on our business, financial condition and operating results.

Item 1B. Unresolved Staff Comments

None.

2427

Item 2. Properties

As of December 31, ~~2020,~~2022, we operated the following facilities, supporting our Snacking ~~reporting segment's~~reportable segment’s operations, as shown in the chart below.


Type	Location	Owned/Leased	Size (Sq. Ft.)
Bakery	Emporia, Kansas	Owned	278,500
Bakery	Columbus, Georgia	Leased(1)	313,700
Bakery	Indianapolis, Indiana	Owned	195,000
Bakery	Chicago, Illinois	Owned	137,000
Bakery, under construction	Arkadelphia, Arkansas	Leased(1)	330,000
Bakery and Distribution Center	Burlington, Ontario	Leased	250,000
Distribution Center	Chicago, Illinois	Leased	~~64,816~~65,416
Distribution Center	Edgerton, Kansas	Leased	765,000
Distribution Center	Emporia, Kansas	Leased	24,112
~~Commercial~~ Office Space	Chicago, Illinois	Leased	9,325
Office Space	~~Burlington, Ontario~~Nashville, Tennessee	Leased	~~12,647~~1,860
Corporate Headquarters	Lenexa, Kansas	Owned	50,200
Third-Party Warehouse	Kansas City, ~~Kansas~~	~~Other(2)~~	—
~~Third-Party Warehouse~~	~~Brantford, Ontario~~Missouri	Other(2)	—
Third-Party Warehouse	Carthage, Missouri	Other(2)	—
Third-Party Warehouse	Hobart, Indiana	Other(2)	—
Third-Party Warehouse	~~Belvidere, Illinois~~Edgerton, Kansas	Other(2)	—
Third-Party Warehouse	~~Atlanta, Georgia~~	~~Other(2)~~	—
~~Third-Party Warehouse~~	~~Fogelsville, Pennsylvania~~Bolingbrook, IL	Other(2)	—

(1) The Columbus, Georgia ~~facility is~~and Arkadelphia, Arkansas bakery are subject to bond and lease agreements in which we have elected the right of setoff, and therefore are treated as if the properties were owned. Additionally, the facilities are available to purchase by the Company for ~~the purchase amount of $100.~~a nominal amount.

(2)Variable usage fees are charged on a per-pallet basis.

Item 3. Legal Proceedings

We are involved in lawsuits, claims and proceedings arising in the ordinary course of business. These matters may involve personnel and employment issues, personal injury, ~~contract~~contracts and other proceedings arising in the ordinary course of business. Although we do not expect the outcome of these proceedings to have a material adverse effect on our financial condition or results of operations, litigation is inherently unpredictable. Therefore, we could incur judgments or enter into settlements or claims that could materially impact our results.

The information required to be furnished by us under this Part I, Item 3 (Legal Proceedings) is incorporated by reference to the information contained in Note ~~15.~~14. Commitments and Contingencies to the consolidated financial statements included in Part II, Item 8 on this Annual Report on Form 10-K.

Item 4. Mine Safety Disclosures

Not applicable.

2528

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our Class A common stock ~~and warrants are~~is currently quoted on Nasdaq under the ~~symbols~~symbol “TWNK” ~~and “TWNKW,” respectively.~~.

As of February ~~22, 2021,~~17, 2023, there were ~~approximately~~ 5 stockholders of record of our Class A common stock and no stockholders of record of our Class B common stock. Our Board of Directors periodically reviews our capital return policy to determine whether the payment of cash dividends or repurchases of securities are in the best interests of the Company and our stockholders.

We currently do not pay dividends and have not paid any cash dividends on our common stock to date.

Securities Authorized for Issuance Under Equity Compensation Plans

Plan Category
(A)
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
(B)
Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights
(C)
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plan (excluding securities reflected in column (A))
Equity Compensation Plans approved by stockholders 3,219,648 (1) $ 13.43 (2) 2,770,885 (3)
Equity Compensation Plans not approved by stockholders — — —
Total 3,219,648 $ 13.43 2,770,885


Plan Category	(A) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		(B) Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights			(C) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (A))
Equity Compensation Plans approved by stockholders	2,647,741	(1)	$	13.25	(2)	8,180,342	(3)
Equity Compensation Plans not approved by stockholders	—		—			—
Total	2,647,741		$	13.25		8,180,342

(1)Consists of shares subject to outstanding stock options, restricted stock units and performance restricted stock units under the Amended and Restated Hostess Brands, Inc. 2016 Equity Incentive Plan (the “2016 Plan”), some of which are vested and some of which remain subject to the vesting and/or performance criteria relating to the respective equity award.

(2)Represents the weighted average exercise price of ~~2,071,115~~1,202,867 stock options and excludes the impact of ~~1,148,533~~1,444,874 shares of restricted stock units for which no exercise price is ~~payable.~~payable under the 2016 Plan.

(3)~~Consists of~~Of these shares, 5,180,342 remain available for future issuance under the 2016 ~~Plan.~~Plan and 3,000,000 remain available for future issuance under the 2022 Employee Stock Purchase Plan (“ESPP”).

For additional information, refer to Item 11 of Part III of this Annual Report on Form 10-K.

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

During the year ended December 31, 2020, the Metropoulos Entities exchanged their remaining Class B units in Hostess Holdings, together with shares of Class B common stock for shares of our Class A common stock on a one-for-one basis. At December 31, 2020, there were no remaining Class B units or shares of Class B common stock outstanding. Other than any shares of Class A common stock issued in such exchanges, we did not issue any equity securities without registration during the period covered by this Annual Report on Form 10-K.

2629

Issuer Purchase of Equity Securities

Period Total number of securities repurchased Average price paid per share Total number of securities purchased as part of publicly announced plans or programs
Approximate dollar value of securities that may yet be purchased under the program (in millions) (1)
October 1 - 31, 2020 — — — $ 100.0
November 1 - 30, 2020 (2) 444,444 $ 13.50 444,444 94.0
November 1 - 30, 2020 (3) 2,000,000 1.00 2,000,000 92.0
December 1 - 31, 2020 — — — 92.0
2,444,444 2,444,444


Period	Total number of securities repurchased	Average price paid per share		Total number of securities purchased as part of publicly announced plans or programs	Approximate dollar value of securities that may yet be purchased under the program (in millions) (1)
October 1 - 31, 2022 (2)	688,304	$	23.77	688,304	$	41.3
November 1 - 30, 2022	—	—		—	41.3
December 1 - 31, 2022 (2)	847,126	23.20		847,126	21.7
	1,535,430			1,535,430

(1)In ~~November 2020, the Company's~~February 2022, our Board of Directors approved a securities repurchase program of up to ~~$100~~$150 million of ~~its~~our outstanding securities. As of December 31, 2022, there was $21.7 million remaining under this program. The program has no expiration date. The program may be amended, suspended or discontinued at any time at ~~the Company's~~our discretion and does not commit ~~the Company~~us to repurchase ~~its~~our securities.

(2)Repurchase of shares of Class A common ~~stock~~stock.

~~(3)Repurchase of Private Placement warrants, each exercisable for one half share of Class A common stock~~

~~Warrants~~

~~As of~~ ~~December 31, 2020, there wer~~e 53,936,776 public warrants and 541,658 private placement warrants outstanding. Each warrant entitles its holder to purchase one half of one share of our Class A common stock at an exercise price of $5.75 per half share, to be exercised only for a whole number of shares of our Class A common stock. The warrants became exercisable on December 4, 2016 and expire on November 4, 2021 or earlier upon redemption or liquidation. The Company may redeem the outstanding public warrants at a price $0.01 per warrant, if the last sale price of the Company’s common stock equals or exceeds $24.00 per share for any 20 trading days within a 30 trading day period ending on the third business day before the Company sends the notice of redemption to the warrant holders. The private placement warrants, however, are nonredeemable so long as they are held by Gores Sponsor, LLC or its permitted transferees. The private warrants were registered with the SEC for future potential sales to the public. When sold to the public, the private placement warrants will become public warrants. During the year ended December 31, 2020, we repurchased 2,000,000 private placement warrants for cash.

2730

Performance Graph

The following graph and related information shall not be deemed “soliciting material” or be deemed to be “filed” with the Commission, nor shall such information be incorporated by reference into any future filing, except to the extent that we specifically incorporate it by reference into such filing. The following stock performance graph compares, for the period ~~November 30, 2015 (the first day our common stock was traded following our initial public offering)~~December 29, 2017 through December 31, ~~2020~~2022 (the last trading day of our fiscal year), the cumulative total stockholder return for (1) the Company’s common stock, (2) the ~~Standard & Poor’s 500~~S&P SmallCap 600 and (3) the ~~Standard & Poor’s~~S&P composite 1500 Packaged Foods and Meats Sub-Index. The graph assumes the value of the investment in our common stock and each index was $100.00 on ~~November 30, 2015~~December 29, 2017 and assumes reinvestment of any dividends. The stock price performance below is not necessarily indicative of future stock price performance.

2831

Item 6. ~~Selected Financial Data~~

~~Not applicable.~~[RESERVED]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our 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 on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in Item 1A “Risk Factors” of this Annual Report on Form 10-K.

For a comparison of our results of operations for the fiscal years ended December 31, 2021 and December 31, 2020, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on March 1, 2022.

Overview

We are a leading ~~packaged food~~sweet snacks company focused on developing, manufacturing, marketing, selling and distributing ~~snack products~~snacks in North America, providing a wide range of snack cakes, donuts, sweet rolls, breakfast pastries, cookies, snack pies and related products. As of December 31, ~~2020,~~2022, we operate five baking facilities and utilize distribution centers and third-party warehouses to distribute our products. Our ~~DTW~~Direct-to-Warehouse product distribution system allows us to deliver to our customers’ warehouses. Our customers in turn distribute to their retail stores and/or distributors. In 2022, we purchased a facility in Arkadelphia, Arkansas. The facility will become our sixth bakery upon completion of capital investments to install production lines and other necessary improvements needed to make the facility operational. The facility is expected to open in the fourth quarter of 2023.

The Company has one reportable segment: ~~Snacking (formerly referred to as Sweet Baked Goods, or “SBG”).~~Snacking. The Snacking segment consists of sweet baked goods, cookies, bread and buns ~~and frozen retail products~~ that are sold under the Hostess®, Voortman®, Dolly Madison®, Cloverhill®, and Big Texas®~~, and Voortman®~~ brands. Through August 30, 2019, we operated in two reportable segments: SBG and In-Store Bakery (“ISB”). The In-Store Bakery segment consisted of Superior on Main® and private label products sold through the in-store bakery section of grocery and club stores. The Company divested its In-Store Bakery segment's operations on August 30, 2019.

Hostess® is the second leading brand by market share within the Sweet Baked Goods ~~("SBG"~~(“SBG”) category, according to Nielsen U.S. total universe. For the 52-week period ended December ~~26, 2020~~31, 2022 our branded SBG ~~products~~products’ (which include Hostess®, Dolly Madison®, Cloverhill®, and Big Texas®) market share was ~~19.5%~~21.2% per Nielsen’s U.S. SBG category data. OurHostess® branded products include the #1 cupcake and mini donut products within the SBG category and our Voortman® branded products include the #1 creme wafer and ~~sugar-free~~sugar free cookie products within the ~~larger cookie~~Cookie category.

Principal Components of Operating Results

Net Revenue

We generate revenue through selling packaged snacks, ~~under the Hostess® group of brands,~~ which ~~includes~~include iconic products such as ~~CupCakes,~~Donettes®, Twinkies®, ~~Donettes®,~~CupCakes, Ding Dongs®, Zingers®, Danishes, Honey Buns and Coffee Cakes under the Hostess® brand, as well as cookies, wafers and ~~sugar-free~~sugar free products under the Voortman® brand. We also sell products under the Dolly Madison®, Cloverhill® and Big Texas® brands along with private label products. Our product assortment is ~~sold~~delivered to customers’ warehouses and distribution centers by the case or in display-ready corrugate units. Retailers display and sell our products to the end consumer in single-serve, multi-pack or club-pack formats. We sell our products primarily to supermarket chains, national mass ~~merchandisers~~retailers and convenience ~~and dollar~~ stores, along with a smaller portion of our product sales going to club, dollar and drug stores, the vending ~~drug,~~channel, and other retail outlets.

Our revenues are driven by average net price and total volume of products sold. Factors that impact unit pricing and sales volume include product mix, the cost of ~~ingredients,~~inputs, promotional activities, industry capacity, new product initiatives and quality and consumer preferences. We do not keep a significant backlog of finished goods inventory, as our baked products are promptly shipped to our distribution centers after being produced and then distributed to customers.

Cost of Goods Sold

Cost of goods sold consists of ingredients, packaging, labor, energy, and other production costs, as well as warehousing and transportation costs including in-bound freight, inter-plant transportation and distribution of our products to customers. The cost of ingredients and packaging represent the majority of our total costs of goods sold. All costs that are incurred at the bakeries, including the depreciation of bakery facilities and equipment, are included in cost of goods sold. We do not allocate any corporate functions into cost of goods sold.

Our cost of ingredients consists principally of cooking oil, sugar, coatings, flour ~~sweeteners, edible oils~~ and ~~compound coating,~~eggs, which are subject to substantial price fluctuations, as is the cost of paper, corrugate, films and plastics used to package our products. The prices for raw materials are influenced by a number of factors, including the weather, crop production, transportation and processing costs, inflation,

government regulation and policies and worldwide market supply and demand. We also rely on fuel products, such as natural gas, diesel, propane and electricity, to operate our bakeries and produce our products. Fluctuations in the prices of the

raw materials or fuel products used in the production, packaging or transportation of our products affect the cost of products sold and our product pricing strategy. We utilize forward buying strategies through short-term and long-term advance purchase contracts to lock in prices for certain high-volume raw materials, ~~packaged~~packaging components and certain fuel inputs. Through these initiatives, we believe we are able to obtain competitive pricing.

Advertising and Marketing

Our advertising and marketing expenses ~~relate to~~include wire racks and corrugate displays delivered to customers to display our products off shelf, field marketing and merchandising services to reset and check our store inventory on a regular basis. We also invest in advertising campaigns, which include social media, print, online advertising, local promotional events, monthly agency fees and payroll costs.

Selling ~~Expense~~

Selling expenses primarily include sales management, ~~employment,~~sales employee-related expenses, travel, and related expenses, as well as broker fees. We utilize brokers for sales support, including managing promotional activities and order processing.

General and Administrative

General and administrative expenses primarily include employee and related expenses for the accounting, ~~planning,~~finance, customer service, legal, human resources, corporate operations, research and development, purchasing, logistics and executive functions. Also included are professional service fees related to audit and tax, legal, outsourced information technology functions, transportation planning, headquarters and other office sites and insurance costs, as well as the depreciation and amortization of corporate assets.

~~Non-Controlling Interest~~Other Expense

~~During~~Other expense primarily includes interest paid on our term loan offset by interest income earned on investments as well as a gain in 2022 from receipt of insurance proceeds under the ~~years ended December 31, 2020~~representation and ~~2019, Mr. Metropoulos~~warranty insurance policy purchased in connection with the Voortman acquisition and the ~~Metropoulos Entities held equity investment~~change in us primarily through Class B limited partnership units in the Company’s subsidiary, Hostess Holdings (“Class B Units”), and an equal number of shares of the Company’s Class B common stock (“Class B Stock”). Our Class B Stock had voting, but no economic rights, while Hostess Holdings’ Class B Units had economic, but no voting rights. Each Class B Unit, together with a share of Class B Stock held by the Metropoulos Entities, was exchangeable for a share of the Company’s Class A common stock (or at the option of the Company, the cash equivalent thereof). The Company holds 100% of the general partnership interest in Hostess Holdings and, since the final exchange described below, all of the limited partnership interests and consolidates Hostess Holdings in the Company’s consolidated financial statements. The interest of the Metropoulos Entities in Hostess Holdings’ Class B Units prior to the final exchange is reflected in our consolidated financial statements as a non-controlling interest. The Metropoulos Entities have eliminated their ownership through a series of exchanges of shares of Class B Stock and Class B Units for an equal number of Class A shares. As part of the final exchange, we repurchased 0.4 million shares of Class A common stock from the Metropoulos Entities. The remaining shares were purchased by third parties. At December 31, 2020, there were no outstanding shares of Class B common stock.

~~Factors Impacting Recent Results~~

~~COVID-19~~

The acute and far-reaching impact of the COVID-19 pandemic and actions taken by governments to contain the spread of the virus have impacted our operations during the year ended December 31, 2020. As consumers prepared for extended stays at home, we experienced an increase in consumption during the first and second quarters, particularly in our multi-pack products sold through grocery and mass retailer channels. Conversely, we experienced lower consumption of single-serve products, often consumed away from home. This trend has moderated during the remainder of the year; however, we cannot predict if these trends will sustain or reverse in future periods.

We have established a COVID-19 task force to monitor the rapidly evolving situation and recommend risk mitigation actions as deemed necessary. To date, we have experienced minimal disruption to our supply chain or distribution network, including the supplyfair value of our ~~ingredients,~~liability-classified public and packaging or other sourced materials, though it is possible that more significant disruptions could occur if the COVID-19 pandemic continues to impact markets around the world. We are also working closely with all of our contract manufacturers, distributors and other external business partners. As a food producer, we are an essential service and our production and distribution facilities continue to operate. To protect our employees and ensure continuity of operations, we have implemented additional safety and sanitation measures in all of our facilities. We are monitoring our employees’ health and providing additional resources and protocols to enable effective social distancing and adherence to our stringent internal food safety guidelines, industry best practices and evolving CDC and other governmental guidelines. Although our corporate headquarters and other offices have remained open with additional safety and sanitation protocols, many non-production and warehouse team members, including sales, marketing and corporate employees, are adhering to social distancing guidelines by working from home and reducing person-to-person contact while supporting our ability to bring products to consumers.

We have adequate liquidity to pay for the costs associated with these additional measures while servicing our on-going operating and capital needs. However, we continue to actively monitor and will take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate in this dynamic environment.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law. The CARES Act provided a substantial stimulus and assistance package intended to address the impact of the COVID-19 pandemic, including tax relief and government loans, grants and investments. Under the provisions of this act, we were able to defer the payment of $5.6 million of 2020 employer payroll taxes until 2021. Apart from this deferral and their impact on the general economy, including the labor market and consumer demand, neither the CARES Act nor any other government program intended to address COVID-19 had any material impact on our consolidated financial statementsprivate placement warrants for the year ended December 31, ~~2020.~~ 2021.

Factors Impacting Recent Results

Supply Chain

We believe volatility in certain aspects of the global supply chain have had a continued impact on our operations, including the cost and availability of labor, transportation and raw materials. Various macro factors, including, but not limited to, the COVID-19 pandemic, labor market trends, rising fuel and transportation costs, currency exchange rate, the conflict in Ukraine, the Avian Influenza and overall elevated demand for goods, have led to fragility in the supply chain.

We continue to ~~monitor any effects that~~experience increased labor costs, raw materials costs and transportation costs in the current economic climate. Given the fragility of the global supply-chain environment, our ability to source raw materials for our production facilities or produce and ship products to meet the needs of our customers may ~~result from the CARES Act~~be materially impacted. We continue to work closely with all of our vendors, distributors, contract manufacturers, and other ~~stimulus programs.~~external business partners to ensure availability of our products for our customers and consumers.

In response to the inflationary costs described above, we have implemented price increases and may implement additional price increases in the future. Customers may not accept price increases or we may face competitive pressure that leads to price reductions for certain products.

Acquisition

On January 3, 2020, we completed the acquisition of all of the shares of the parent company of Voortman Cookies Limited (“Voortman”), a manufacturer of premium, branded wafers and cookies, ~~as well as sugar-free~~including sugar free products. By adding the Voortman® brand, we believe we have greater growth opportunities provided by a more diverse portfolio of brands and products. ~~Our consolidated statement of operations includes the operation of these assets from January 3, 2020 through December 31, 2020.~~

In December 2020, wethe Company asserted claims for indemnification against the sellers under the terms of the Share Purchase Agreement pursuant to which wethe Company acquired Voortman ~~for an aggregate of approximately $90 million Canadian Dollar (“CAD”~~(the “Agreement”) ~~in damages arising~~. The claims arose out of alleged breaches by the sellers of certain representations, warranties and covenants contained in ~~such agreement~~the Agreement relating to periods prior to the closing of the acquisition. ~~We have~~The Company also submitted claims relating to these alleged breaches under the representation and warranty insurance policy we(“RWI”) it purchased in connection with the acquisition. ~~Such insurance policy has~~In June 2022, the RWI insurers agreed to pay the Company $42.5 million CAD (the RWI coverage limit) (the “Proceeds”) related to these breaches. During the year ended December 31, 2022, the Company received the Proceeds and recognized a ~~coverage limit~~gain of $42.5 million ~~CAD.~~CAD ($33.0 million) in other expense (income) on our consolidated statement of operations. Per agreement with the RWI insurers, under no circumstances will the Company be required to return the Proceeds.

On November 3, 2022, pursuant to the agreement with the RWI insurer, Voortman brought claims in the Ontario (Canada) Superior Court of Justice (the “Claim”), related to the breaches against certain of the sellers from whom Voortman was acquired. The Claim alleges the seller defendants made certain non-disclosures and misrepresentations to induce the Company to overpay for Voortman. The Company is seeking damages of $109 million CAD representing the amount of the aggregate liability of the sellers for indemnification under the Agreement, $5.0 million CAD in punitive or aggravated damages, interest, proceedings fees and any other relief the presiding court deems appropriate. A portion of any recovery will be shared with the RWI insurers. Although wethe Company strongly ~~believe~~believes that ~~our claims are~~its Claim against the sellers is meritorious, no assurance can be given as to whether wethe Company will recover all, or any part, of the amounts ~~for which we have made such claims. No gains or receivables have been recognized related to these claims as~~it is pursuing.

Change in Fair Value of Warrant Liabilities

During the years ended December 31, ~~2020.~~

~~Disposition~~

~~On August 30, 2019, we sold the In-Store Bakery operations, including relevant trademarks~~2021 and ~~licensing agreements, to an unrelated party. The In-Store Bakery operations provided products that~~2020, there were ~~primarily sold~~fluctuations in the ~~in-store bakery section of the U.S. retail channels under the Superior on Main® brand or store-branded. We divested the operations to focus more on future investment in areas~~market price of our ~~business that better leverage~~publicly traded warrants. These fluctuations created significant gains and losses on the remeasurement of certain warrants which are recognized as “change in fair value of warrant liabilities” within other expense on our ~~core competencies.~~consolidated statement of operations. The warrants expired on November 4, 2021 and are no longer outstanding.

3134

Results of Operations

(In thousands, except per share data)
Year Ended
December 31,
2020 Year Ended
December 31,
2019
Net revenue $ 1,016,609 $ 907,675
Gross profit 355,639 299,834
As a % of net revenue 35.0 % 33.0 %
Operating costs and expenses $ 220,329 $ 163,738
Operating income 135,310 136,096
Other expense 46,549 41,639
Income tax expense 20,405 16,892
Net income 68,356 77,565
Net income attributable to Class A shareholders 64,735 63,115
Earnings per Class A share:
Basic 0.52 0.57
Diluted 0.51 0.55



(In thousands, except per share data)	Year Ended December 31, 2022			Year Ended December 31, 2021
Net revenue	$	1,358,207		$	1,142,036


Gross profit	465,679			409,983
As a % of net revenue	34.3		%	35.9		%












Total operating costs and expenses	$	245,401		$	209,245
Operating income	220,278			200,738





Total other expense	8,994			40,926

Income tax expense	47,089			40,513
Net income	$	164,195		$	119,299



Earnings per Class A share:
Basic	$	1.20		$	0.91
Diluted	1.19			0.86

Results for the Year Ended December 31, ~~2020~~2022 Compared to Results for the Year Ended December 31, ~~2019~~2021

Net Revenue

Net revenue for the year ended December 31, ~~2020~~2022 increased ~~$108.9~~$216.2 million, or ~~12.0%~~18.9%, compared to the year ended December 31, ~~2019. Excluding In-Store Bakery,~~2021. Contribution from pricing actions and favorable product mix provided 16.3% of the growth, while higher volumes accounted for 2.6% of the growth. Sweet baked goods revenue increased $185.0 million or 18.0%, while cookies net revenue increased ~~$137.6~~$31.2 million or ~~15.7%~~26.8%. The acquisition of Voortman contributed $96.2 million of net revenue. The remaining increase was attributed to higher volume of Hostess® branded multi-pack and bagged-donut products due to strong demand partially offset by lower sales of private label and non-Hostess® branded products. From a sales channel perspective, strong growth in the grocery, convenience and dollar channels was offset by lower sales in the mass channel.

Gross Profit

Gross profit increased 13.6% and was ~~35.0%~~34.3% of net revenue for the year ended December 31, ~~2020, an increase~~2022, a decrease of ~~195~~161 basis points from a gross margin of ~~33.0%~~35.9% for the year ended December 31, ~~2019.~~2021. The ~~increase resulted primarily from the accretion from Voortman~~decrease in gross margin was due to inflation and ~~efficiencies from higher sales volume as well as lower promotional activity. These benefits were~~supply-chain inefficiencies, partially offset by ~~higher operating costs due to COVID-19.~~favorable price/mix, including revenue growth management initiatives, and productivity initiatives.

Operating Costs and Expenses

Operating costs and expenses for the year ended December 31, ~~2020~~2022 increased by ~~34.6%~~17.3% from the year ended December 31, ~~2019. These costs increased~~2021. The increase was primarily ~~due~~attributed to transition costs incurred to shift Voortman from a direct-to-store delivery operating model to a direct-to-warehouse model including contract termination costs for the independent distributors and severance costs,higher investments in our workforce, as well as ~~normal costs of Voortman's continuing operations. 2020 operating costs also increased due to~~ higher ~~employee incentive compensation~~advertising and an impairment charge related to the planned disposition of production equipment. 2019 operating costs reflect a $7.1 million gain on the valuation of a foreign currency contract originated to hedge the January 2020 purchase of Voortman in Canadian dollars.depreciation expense.

Operating Income

Operating income for the year ended December 31, ~~2020~~2022 was ~~$135.3~~$220.3 million compared to ~~$136.1~~$200.7 million for the year ended December 31, ~~2019.~~2021. The ~~additional profits from Voortman's operations and~~increase in gross profit contributed to the higher ~~Hostess® branded sales volume were~~operating income in the current year partially offset by ~~transition costs to shift Voortman to a warehouse model and lapping the prior year gain on remeasurement of the foreign currency contract.~~higher operating costs.

3235

Other Expense

~~For~~Other expense for the ~~years~~year ended December 31, ~~2020~~2022 was $9.0 million compared to $40.9 million for the year ended December 31, 2021. The decrease in other expense was primarily due to a gain from receipt of insurance proceeds of $33.0 million under the representation and ~~2019, interest~~warranty insurance policy (purchased in connection with the Voortman acquisition). Interest expense related to our term loan was ~~$41.8~~$42.4 million and ~~$43.3~~$38.6 million ~~respectively. During~~for the ~~year~~years ended December 31, ~~2020 we also recognized unrealized losses related to the remeasurement of certain CAD denominated liabilities.~~2022 and December 31, 2021, respectively.

Income Taxes

Our effective tax rate was ~~23.0%~~22.3% for the year ended December 31, ~~2020~~2022 compared to ~~17.9%~~25.4% for the year ended December 31, ~~2019.~~2021. The ~~increase in~~effective tax rate for the year ended December 31, 2022 was impacted favorably by the $33.0 million non-taxable gain related to receipt of proceeds under the representation and warranty insurance policy. Additionally, the effective tax rate ~~was primarily~~for both periods reflect a tax benefit related to revaluing our deferred tax liabilities due to a change in the Class B for Class A share exchanges during 2019 and 2020. Subsequent to these exchanges, more income from Hostess Holdings, L.P was allocated to Hostess Brands, Inc. This increase was partially offset byestimated state tax ~~credits generated in 2020.~~rate.

Net Income

For the year ended December 31, ~~2020~~,2022, net income was ~~$68.4~~$164.2 million compared to ~~$77.6~~$119.3 million for the year ended December 31, ~~2019. Higher gross margin~~2021. Net income increased due to ~~the accretion of Voortman~~higher gross profits and the ~~benefit~~$33.0 million gain from receipt of ~~higher Hostess~~® ~~branded sales volume was~~insurance proceeds under the representation and warranty insurance policy purchased in connection with the Voortman acquisition for the year ended December 31, 2022, partially offset by higher operating costs ~~incurred to transition Voortman DSD to warehouse distribution. In 2020, we also lapped the $7.1 million foreign currency contract remeasurement gain in 2019.~~and higher interest expense.

Earnings Per Share

Our earnings per Class A share was ~~$0.52~~$1.20 (basic) and ~~$0.51~~$1.19 (dilutive) for the year ended December 31, ~~2020~~,2022, compared to ~~$0.57~~$0.91 (basic) and ~~$0.55~~$0.86 (dilutive) for the year ended December 31, ~~2019~~.2021. The ~~decrease~~increase in basic and diluted earnings per share was due to the net income impacts noted above.

~~For a discussion of our results for the year ended~~ ~~December 31, 2019 compared to our results for the year ended December 31, 2018,~~ ~~please see Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 26, 2020.~~

~~Segments~~

We have one reportable segment: Snacking (formerly referred to as Sweet Baked Goods, or “SBG”). The Snacking segment consists of sweet baked goods, cookies, bread and buns retail products that are sold under the Hostess®, Dolly Madison®, Cloverhill®, Big Texas®, and Voortman® brands. Through August 30, 2019, we operated in two reportable segments: SBG and In-Store Bakery. The In-Store Bakery segment consisted of Superior on Main® and private label products sold through the in-store bakery section of grocery and club stores. The Company divested its In-Store Bakery segment's operations on August 30, 2019.

~~We evaluate performance and allocate resources based on net revenue and gross profit. Information regarding the operations of these reportable segments is as follows:~~

(In thousands) Year Ended
December 31,
2020 Year Ended
December 31,
2019
Net revenue:
Snacking $ 1,016,609 $ 878,973
In-Store Bakery — 28,702
Net revenue $ 1,016,609 $ 907,675
Gross profit:
Snacking $ 355,639 $ 293,648
In-Store Bakery — 6,186
Gross profit $ 355,639 $ 299,834
Capital expenditures (1):
Snacking $ 58,953 $ 35,354
In-Store Bakery — 182
Capital expenditures $ 58,953 $ 35,536

~~(1)For all periods presented, capital expenditures consists of purchases of property and equipment and acquisition and development of software assets paid in cash or acquired through accounts payable.~~

3336

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Adjusted ~~net revenue,~~gross profit, adjusted gross ~~profit,~~margin, adjusted operating income, adjusted net income, adjusted ~~Class A~~ net income margin, adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS collectively referred to as “Non-GAAP Financial Measures,” are commonly used in our industry and should not be construed as an alternative to ~~net revenue,~~ gross profit, gross margin, operating income, net income, net income ~~attributed to Class A stockholders~~margin, 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. We included these Non-GAAP Financial Measures because we believe the measures provide management and investors with additional information to measure the ~~Company's~~Company’s performance, estimate the ~~Company's~~Company’s value and evaluate the ~~Company's~~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 we consider 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.

For example, we define 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~~Company’s results as reported under GAAP. For example, adjusted EBITDA:

•does not reflect the ~~Company's~~Company’s capital expenditures, future requirements for capital expenditures or contractual commitments;

•does not reflect changes in, or cash requirements for, the ~~Company's~~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~~Company’s debt; and

•does not reflect payments related to income taxes or the ~~Tax Receivable Agreement or distributions to the non-controlling interest to reimburse its~~ tax ~~liability.~~

receivable agreement.

3437


		Year Ended December 31, 2020													Year Ended December 31, 2022
		Net Revenue		Gross Profit		Operating Income		Net Income		Class A Net Income		Diluted EPS
GAAP Results		$	1,016,609	$	355,639	$	135,310	$	68,356	$	64,735	$	0.51
($ and shares in thousands)														($ and shares in thousands)	Gross Profit		Gross Margin		Operating Income		Net Income		Net Income Margin		Diluted EPS
GAAP results														GAAP results	$	465,679	34.3	%	$	220,278	$	164,195	12.1	%	$	1.19
Non-GAAP adjustments:	Non-GAAP adjustments:													Non-GAAP adjustments:
Foreign currency impacts		—		—		—		2,065		1,966		0.02
Acquisition, disposal and integration related costs (1)		6,821		7,963		29,166		29,166		27,569		0.22
Facility transition costs (2)		—		3,681		5,710		5,710		5,396		0.04
Impairment of property and equipment		—		—		3,009		3,009		2,909		0.02
Tax Receivable Agreement remeasurement		—		—		760		760		760		—
COVID-19 costs (3)		—		2,082		2,388		2,388		2,257		0.02
Other		—		—		100		1,766		1,681		0.01
Foreign currency remeasurement														Foreign currency remeasurement	—		—		—		630		—		0.01
Project consulting costs (1)														Project consulting costs (1)	—		—		3,887		3,887		0.3		0.03
Tax receivable agreement remeasurement														Tax receivable agreement remeasurement	—		—		(860)		(860)		(0.1)		(0.01)
Gain on Voortman insurance proceeds (2)														Gain on Voortman insurance proceeds (2)	—		—		—		(32,970)		(2.3)		(0.24)
Accelerated depreciation related to network optimization														Accelerated depreciation related to network optimization	1,908		0.1		1,908		1,908		0.1		0.02
Other (3)														Other (3)	161		—		265		650		—		—
Remeasurement of tax liabilities	Remeasurement of tax liabilities	—		—		—		(455)		(455)		—		Remeasurement of tax liabilities	—		—		—		(2,161)		(0.2)		(0.02)
Discrete income tax expense														Discrete income tax expense	—		—		—		1,188		0.1		0.01
Tax impact of adjustments	Tax impact of adjustments	—		—		—		(10,961)		(10,961)		(0.09)		Tax impact of adjustments	—		—		—		(1,910)		(0.1)		(0.01)

Adjusted Non-GAAP results	Adjusted Non-GAAP results	$	1,023,430	$	369,365	$	176,443	$	101,804	$	95,857	$	0.75	Adjusted Non-GAAP results	$	467,748	34.4	%	$	225,478	134,557		9.9		$	0.98

Income tax	Income tax							31,821						Income tax							49,972		3.7
Interest expense	Interest expense							42,826						Interest expense							40,950		3.0
Depreciation and amortization	Depreciation and amortization							54,940						Depreciation and amortization							58,178		4.3
Share-based compensation	Share-based compensation							8,671						Share-based compensation							10,450		0.8
Adjusted EBITDA	Adjusted EBITDA							$	240,062					Adjusted EBITDA							$	294,107	21.7	%


☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended	December 31, ~~2020~~2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to


Title of Each Class	Ticker Symbol	Name of Each Exchange on Which Registered
Class A Common Stock, par value of $0.0001 per share	TWNK	~~The Nasdaq Stock Market LLC~~
~~Warrants, each exercisable for half share of Class A Common Stock~~	~~TWNKW~~	The Nasdaq Stock Market LLC


		Page
Part I
Item 1.	Business	4
Item 1A.	Risk Factors	1113
Item 1B.	Unresolved Staff Comments	2427
Item 2.	Properties	2528
Item 3.	Legal Proceedings	2528
Item 4.	Mine Safety Disclosures	2528
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	2629
Item 6.	Selected Financial Data	2932
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2932
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	3942
Item 8.	Financial Statements and Supplementary Data	4144
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	7476
Item 9A.	Controls and Procedures	7576
Item 9B.	Other Information	7576
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	76
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	7577
Item 11.	Executive Compensation	7577
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	7577
Item 13.	Certain Relationships and Related Transactions, and Director Independence	7677
Item 14.	Principal Accounting Fees and Services	7677
Part IV
Item 15.	Exhibits, Financial Statement Schedules	7677


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm			4245
Consolidated Balance Sheets as of December 31, ~~2020~~2022 and ~~2019~~2021			4447
Consolidated Statements of Operations for the years ended December 31, ~~2020, 2019~~2022, 2021 and ~~2018~~2020			4548
Consolidated Statements of Comprehensive Income for the years ended December 31, ~~2020, 2019~~2022, 2021 and ~~2018~~2020			4649
Consolidated Statements of Stockholders’ Equity for the years ended December 31, ~~2020, 2019~~2022, 2021 and ~~2018~~2020			4750
Consolidated Statements of Cash Flows for the years ended December 31, ~~2020, 2019~~2022, 2021 and ~~2018~~2020			4851
Notes to Consolidated Financial Statements			4952


	December 31,		December 31,
ASSETS	2020		2019
Current assets:
Cash and cash equivalents	$	173,034	$	285,087
Accounts receivable, net	125,550		104,892
Inventories	49,348		47,608
Prepaids and other current assets	21,614		15,569
Total current assets	369,546		453,156
Property and equipment, net	303,959		242,384
Intangible assets, net	1,967,903		1,853,315
Goodwill	706,615		535,853
Other assets, net	17,446		12,993
Total assets	$	3,365,469	$	3,097,701

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Long-term debt and lease obligations payable within one year	$	13,811	$	11,883
Tax receivable agreement obligations payable within one year	11,800		12,100
Accounts payable	61,428		68,566
Customer trade allowances	46,779		45,715
Accrued expenses and other current liabilities	55,715		21,661
Total current liabilities	189,533		159,925
Long-term debt and lease obligations	1,113,037		975,405
Tax receivable agreement obligations	144,744		126,096
Deferred tax liability	295,009		256,051
Other long-term liabilities	1,560		0
Total liabilities	1,743,883		1,517,477
Commitments and Contingencies (Note 15)	0		0
Class A common stock, $0.0001 par value, 200,000,000 shares authorized, 130,347,464 and 122,108,086 issued and outstanding at December 31, 2020 and 2019, respectively	13		12
Class B common stock, $0.0001 par value, 50,000,000 shares authorized, NaN issued or outstanding at December 31, 2020, 8,409,834 issued and outstanding at December 31, 2019	0		1
Additional paid in capital	1,238,765		1,152,055
Accumulated other comprehensive loss	(10,407)		(756)
Retained earnings	399,215		334,480
Treasury stock	(6,000)		0
Stockholders’ equity	1,621,586		1,485,792
Non-controlling interest	0		94,432
Total liabilities, stockholders’ equity and non-controlling interest	$	3,365,469	$	3,097,701


(In thousands, except per share data)	Year Ended December 31, 2020			Year Ended December 31, 2019
Net revenue	$	1,016,609		$	907,675


Gross profit	355,639			299,834
As a % of net revenue	35.0		%	33.0		%












Operating costs and expenses	$	220,329		$	163,738
Operating income	135,310			136,096




Other expense	46,549			41,639

Income tax expense	20,405			16,892
Net income	68,356			77,565

Net income attributable to Class A shareholders	64,735			63,115

Earnings per Class A share:
Basic	0.52			0.57
Diluted	0.51			0.55


(In thousands)	Year Ended December 31, 2020		Year Ended December 31, 2019

Net revenue:
Snacking	$	1,016,609	$	878,973
In-Store Bakery	—		28,702
Net revenue	$	1,016,609	$	907,675

Gross profit:
Snacking	$	355,639	$	293,648
In-Store Bakery	—		6,186
Gross profit	$	355,639	$	299,834

Capital expenditures (1):
Snacking	$	58,953	$	35,354
In-Store Bakery	—		182
Capital expenditures	$	58,953	$	35,536


	Year Ended December 31, 2021
($ and shares in thousands)	Gross Profit		Gross Margin		Operating Income		Net Income		Net Income Margin		Diluted EPS
GAAP results	$	409,983	35.9	%	$200,738		$119,299		10.4%		$0.86
Non-GAAP adjustments:
Foreign currency remeasurement	—		—		—		(505)		—		—

Project consulting costs (1)	—		—		6,081		6,081		0.5		0.04
Change in fair value of warrant liabilities	—		—		—		(566)		—		—
Tax receivable agreement remeasurement	—		—		(1,409)		(1,409)		(0.1)		(0.01)


Other (2)	704		0.1		2,107		4,338		0.4		0.03
Remeasurement of tax liabilities	—		—		—		(3,357)		(0.3)		(0.03)
Tax impact of adjustments	—		—		—		(1,871)		(0.2)		(0.01)

Adjusted Non-GAAP results	$	410,687	36.0	%	$	207,517	122,010		10.7		$	0.88

Income tax							45,741		4.0
Interest expense							39,762		3.5
Depreciation and amortization							51,681		4.5
Share-based compensation							9,585		0.8
Adjusted EBITDA							$	268,779	23.5	%


	Year Ended December 31, 2019
	Net Revenue		Gross Profit		Operating Income		Net Income		Class A Net Income		Diluted EPS
GAAP Results	$	907,675	$	299,834	$	136,096	$	77,565	$	63,115	$	0.55
Non-GAAP adjustments:
Foreign currency impacts	—		—		(7,127)		(7,127)		(6,721)		(0.07)
Acquisition, disposal and integration related costs	—		1,563		5,484		5,484		5,172		0.05
Special employee incentive compensation (1)	—		33		1,910		1,910		1,801		0.02
Facility transition costs (2)	—		9,381		12,080		12,080		11,392		0.10
Tax Receivable Agreement remeasurement	—		—		186		186		186		—
Impairment of property and equipment, intangible assets and goodwill	—		—		1,976		1,976		1,863		0.02
Loss on debt refinancing	—		—		1,487		2,023		1,908		0.02
Remeasurement of tax liabilities	—		—		—		(4,564)		(4,564)		(0.05)
Other	—		—		—		1,233		1,163		0.01
Tax impact of adjustments	—		—		—		(3,918)		(3,918)		(0.04)

Adjusted Non-GAAP results	$	907,675	$	310,811	$	152,092	$	86,848	$	71,397	$	0.61

Income tax							25,374
Interest expense							39,870
Depreciation and amortization							43,334
Share-based compensation							9,231
Adjusted EBITDA							$	204,657


	Year Ended December 31, 2020		Year Ended December 31, 2019		Year Ended December 31, 2018

Net revenue	$	1,016,609	$	907,675	$	850,389
Cost of goods sold	660,970		607,841		583,112

Gross profit	355,639		299,834		267,277

Operating costs and expenses:
Advertising and marketing	45,724		39,775		35,069
Selling expense	46,729		30,719		30,071
General and administrative	92,860		69,423		52,760

Amortization of customer relationships	26,510		23,377		24,057

Business combination transaction costs	4,282		1,914		297
Tax receivable agreement liability remeasurement	760		186		(1,866)
Gain on foreign currency contract	0		(7,128)		0
Other operating expense	3,464		5,472		5,331
Total operating costs and expenses	220,329		163,738		145,719
Operating income	135,310		136,096		121,558
Other (income) expense:
Interest expense, net	42,826		39,870		39,404
Gain on buyout of tax receivable agreement	0		0		(12,372)
Other expense	3,723		1,769		146
Total other expense	46,549		41,639		27,178
Income before income taxes	88,761		94,457		94,380
Income tax expense	20,405		16,892		12,954
Net income	68,356		77,565		81,426
Less: Net income attributable to the non-controlling interest	3,621		14,450		18,531
Net income attributable to Class A stockholders	$	64,735	$	63,115	$	62,895

Earnings per Class A share:
Basic	0.52		0.57		0.63
Diluted	0.51		0.55		0.61
Weighted-average shares outstanding:
Basic	124,927,535		110,540,264		99,957,049
Diluted	127,723,488		114,699,447		103,098,394


	Class A Voting Common Stock			Class B Voting Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Losses)		Retained Earnings		Treasury Stock			Total Stockholders’ Equity		Non-controlling Interest
	Shares	Amount		Shares	Amount								Shares	Amount
Balance–December 31, 2017	99,791	$	10	30,320	$	3	$	920,723	$	1,318	$	208,279	0	$	0	$	1,130,333	$	342,240
Adoption of new accounting standards net of income taxes of $83	—	—		—	—		—		7		191		—	—		198		85
Comprehensive income	—	—		—	—				1,198		62,895		—	—		64,093		19,050
Share-based compensation, net of income taxes of $505	191	—		—	—		5,095		—		—		—	—		5,095		—
Exchanges	64	—		(64)	—		1,370		—				—	—		1,370		(1,370)
Distributions	—	—		—	—				—		—		—	—		—		(9,551)
Payment of taxes for employee stock awards	—	—		—	—		(1,025)		—		—		—	—		(1,025)		—
Tax receivable agreement arising from exchanges, net of income taxes of $33	—	—		—	—		(261)		—		—		—	—		(261)		—
Balance–December 31, 2018	100,046	10		30,256	3		925,902		2,523		271,365		0	0		1,199,803		350,454
Comprehensive income	—	—		—	—		—		(3,388)		63,115		—	—		59,727		13,292
Share-based compensation, net of income taxes of $1,354	209	—		—	—		7,877		—		—		—	—		7,877		—
Exchanges	21,845	2		(21,845)	(2)		262,547		109		—		—	—		262,656		(262,656)
Distributions	—	—		—	—		—		—		—		—	—		—		(6,658)
Exercise of employee stock options	7	—		—	—		23		—		—		—	—		23		—
Payment of taxes for employee stock awards	—	—		—	—		(1,431)		—		—		—	—		(1,431)		—

Tax receivable agreement arising from exchanges, net of income taxes of $28,817	—	—		—	—		(42,863)		—		—		—	—		(42,863)		—
Balance–December 31, 2019	122,107	12		8,411	1		1,152,055		(756)		334,480		0	0		1,485,792		94,432
Comprehensive income	—	—		—	—		—		(8,691)		64,735		—	—		56,044		2,749
Share-based compensation, including income taxes of $2,167	223	—		—	—		10,838		—		—		—	—		10,838		—
Exchanges	8,411	1		(8,411)	(1)		94,719		(960)		—		—	—		93,759		(93,759)
Distributions	—	—		—	—		—		—		—		—	—		—		(3,422)
Exercise of employee stock options and warrants	50	—		—	—		690		—		—		—	—		690		—
Payment of taxes for employee stock awards	—	—		—	—		(1,440)		—		—		—	—		(1,440)		—

Repurchase of private placement warrants	—	—		—	—		(2,000)		—		—		—	—		(2,000)		—
Repurchase of common stock	(444)	—		—	—		—		—		—		444	(6,000)		(6,000)		—
Tax receivable agreement arising from exchanges, net of income taxes of $11,818	—	—		—	—		(16,097)		—		—		—	—		(16,097)		—
Balance-December 31, 2020	130,347	$	13	0	$	—	$	1,238,765	$	(10,407)	$	399,215	444	$	(6,000)	$	1,621,586	$	0



	Year Ended December 31, 2022		Year Ended December 31, 2021		Year Ended December 31, 2020
Net income	$	164,195	$	119,299	$	108,297
Other comprehensive income:
Unrealized gain (loss) on interest rate swaps and foreign currency contracts designated as cash flow hedges	51,566		8,973		(16,870)
Reclassification into net income	(3,309)		4,503		3,886
Income tax benefit (expense)	(12,673)		(3,575)		3,421
Comprehensive income	199,779		129,200		98,734
Less: Comprehensive income attributed to non-controlling interest	—		—		2,749
Comprehensive income attributed to Class A stockholders	$	199,779	$	129,200	$	95,985


(In thousands)	(In thousands)	December 31, 2020		December 31, 2019		(In thousands)	December 31, 2022		December 31, 2021
Ingredients and packaging	Ingredients and packaging	$	22,965	$	21,439	Ingredients and packaging	$	35,410	$	22,607
Finished goods	Finished goods	23,583		22,513		Finished goods	26,133		26,988
Inventory in transit to customers	Inventory in transit to customers	2,800		3,656		Inventory in transit to customers	3,863		3,218
		$	49,348	$	47,608		$	65,406	$	52,813


	Year Ended December 31, 2021
(In thousands)	Sweet Baked Goods		Cookies		Total
United States	$	1,025,541	$	98,797	$	1,124,338
Canada	—		17,698		17,698
	$	1,025,541	$	116,495	$	1,142,036


~~(In thousands)~~
~~Cash~~	$	~~1,639~~
~~Accounts receivable~~	~~24,848~~
~~Inventory~~	~~7,564~~
~~Income tax receivable~~	~~7,522~~
~~Other current assets~~	~~420~~
~~Property and equipment~~	~~32,028~~
~~Customer relationships (1)~~	~~11,100~~
~~Trade names (2)~~	~~130,000~~
~~Goodwill (3)~~	~~170,762~~
~~Other non-current assets~~	~~1,320~~
~~Accounts payable and accrued expenses~~	~~(6,172)~~
~~Customer trade allowances~~	~~(5,428)~~
~~Lease liabilities~~	~~(6,420)~~
~~Deferred taxes~~	~~(39,149)~~
~~Other non-current liabilities~~	~~(1,320)~~
~~Assets acquired and liabilities assumed~~	$	~~328,714~~


	Twelve Months Ended
(In thousands)	December 31, 2020		December 31, 2019
	(unaudited, pro forma)
Net revenue	$	1,016,609	$	1,007,140
Net income	68,356		70,428


(In thousands)	Severance		Contract Termination		Total
Charges recorded	$	4,632	$	8,278	$	12,910
Payments made	(4,063)		(7,913)		(11,976)
Impact of change in exchange rates on CAD denominated liability	(33)		(365)		(398)
Reserve balance as of December 31, 2020	$	536	$	0	$	536


	Restricted Stock Units	Weighted Average Grant Date Fair Value
Unvested as of December 31, 2018	895,784	$	14.46
Total Granted	721,985	12.76
Forfeited	(298,601)	14.96
Vested(1)	(415,033)	14.26
Unvested as of December 31, 2019	904,135	12.99
Total Granted	628,801	12.99
Forfeited	(285,991)	14.54
Vested(2)	(198,677)	12.17
Unvested as of December 31, 2020	1,048,268	$	13.95


	Restricted Stock Units	Weighted Average Grant Date Fair Value




Unvested as of December 31, 2021	1,139,527	$	14.62
Total Granted	714,118	20.55
Forfeited	(91,573)	16.73
Vested (1)	(508,906)	14.47
Unvested as of December 31, 2022	1,253,166	$	17.90


	Year Ended December 31, 2020	Year Ended December 31, 2019
Expected volatility (1)	26.34%	26.66%
Expected dividend yield (2)	0%	0%
Expected option term (3)	6.00 years	6.00 years
Risk-free rate (4)	1.6%	1.8%


						Year Ended December 31, 2020
Expected volatility (1)						26.3%
Expected dividend yield (2)						—%
Expected option term (3)						6.0 years
Risk-free rate (4)						1.6%


	Number of Options	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price
Outstanding as of December 31, 2018	943,939	5.54	$	13.54
Granted	905,421	—	11.59
Exercised	(7,463)	—	13.11
Forfeited	(124,226)	—	12.42
Outstanding as of December 31, 2019	1,717,671	8.35	$	13.35
Exercisable as of December 31, 2019	486,663	7.35	$	15.43
Granted	703,329	—	13.69
Exercised	(44,257)	—	11.35
Forfeited	(305,628)	—	13.93
Outstanding as of December 31, 2020	2,071,115	7.95	$	13.43
Exercisable as of December 31, 2020	787,671	7.01	$	14.20


(In thousands)





Balance December 31, ~~2018~~2020	$	~~69,063~~
~~Exchange of Class B units for Class A shares~~	~~71,679~~
~~Remeasurement due to disposal of In-Store Bakery operations~~	~~1,779~~156,544
Remeasurement due to change in estimated state tax rate	~~(1,593)~~(1,409)
Payments	~~(2,732)~~(9,270)


Balance December 31, ~~2019~~2021	~~138,196~~ $
~~Exchange of Class B units for Class A shares~~	~~27,915~~
~~Remeasurement due to tax law change~~	~~610~~145,865
Remeasurement due to change in estimated state tax rate	~~150~~ (860)
Payments	~~(10,327)~~(9,313)
Balance December 31, ~~2020~~2022	$	~~156,544~~135,692


(In thousands)
2021	$	11,167
2022	11,167
2023	11,167
2024	11,167
2025	1,058,095


(In thousands)	(In thousands)	As of December 31, 2020		As of December 31, 2019		(In thousands)	As of December 31, 2022		As of December 31, 2021
Deferred tax assets	Deferred tax assets					Deferred tax assets
Imputed interest	Imputed interest	$	6,744	$	6,198	Imputed interest	$	6,248	$	6,478
Tax credits	Tax credits	4,582		2,599		Tax credits	1,140		3,011
Derivative instruments		3,495		0

Net operating loss carryforwards	Net operating loss carryforwards	2,601		249		Net operating loss carryforwards	122		—
Accrued liabilities	Accrued liabilities	4,870		0		Accrued liabilities	8,992		7,080
Stock-based compensation		3,449		0
Share-based compensation						Share-based compensation	2,804		3,588
Other	Other	4,443		1,343		Other	5,236		5,367
Total deferred tax assets	Total deferred tax assets	30,184		10,389		Total deferred tax assets	24,542		25,524

Deferred tax liabilities	Deferred tax liabilities					Deferred tax liabilities
Investment in partnership		0		(266,440)

Goodwill and intangible assets	Goodwill and intangible assets	(277,563)		0		Goodwill and intangible assets	(304,121)		(291,024)
Property and equipment	Property and equipment	(46,732)		0		Property and equipment	(53,456)		(51,272)
Other	Other	(898)		0		Other	(13,995)		(1,075)
Total deferred tax liabilities	Total deferred tax liabilities	(325,193)		(266,440)		Total deferred tax liabilities	(371,572)		(343,371)

Total Deferred tax assets and liabilities		$	(295,009)	$	(256,051)
Total deferred tax assets and liabilities						Total deferred tax assets and liabilities	$	(347,030)	$	(317,847)


(In thousands)	Total Committed		Commitments within 1 year		Commitments beyond 1 year
Ingredients	$	127,775	$	115,628	$	12,147
Packaging	71,715		71,715		0


HOSTESS BRANDS, INC.

By			/s/ ~~Brian T. Purcell~~Travis E. Leonard
			~~Brian T. Purcell~~ Travis E. Leonard Executive Vice President, Chief Financial Officer