Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 05, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-37540 | |
Entity Registrant Name | HOSTESS BRANDS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-4168492 | |
Entity Address, Address Line One | 7905 Quivira Road | |
Entity Address, City or Town | Lenexa, | |
Entity Address, State or Province | KS | |
Entity Address, Postal Zip Code | 66215 | |
City Area Code | 816 | |
Local Phone Number | 701-4600 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001644406 | |
Current Fiscal Year End Date | --12-31 | |
Common Class A | ||
Class of Stock [Line Items] | ||
Title of 12(b) Security | Class A Common Stock, Par Value of $0.0001 per share | |
Trading Symbol | TWNK | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 124,409,339 | |
Warrant | ||
Class of Stock [Line Items] | ||
Title of 12(b) Security | Warrants, each exercisable for a half share of Class A Common Stock | |
Trading Symbol | TWNKW | |
Security Exchange Name | NASDAQ | |
Common Class B | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 6,301,285 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 127,779 | $ 285,087 |
Accounts receivable, net | 141,175 | 104,892 |
Inventories | 51,782 | 47,608 |
Prepaids and other current assets | 16,572 | 15,569 |
Total current assets | 337,308 | 453,156 |
Property and equipment, net | 281,144 | 242,384 |
Intangible assets, net | 1,980,859 | 1,853,315 |
Goodwill | 702,917 | 535,853 |
Other assets, net | 17,395 | 12,993 |
Total assets | 3,319,623 | 3,097,701 |
Current liabilities: | ||
Long-term debt and lease obligations payable within one year | 13,705 | 11,883 |
Tax receivable agreement payments payable within one year | 17,500 | 12,100 |
Accounts payable | 67,169 | 68,566 |
Customer trade allowances | 59,293 | 45,715 |
Accrued expenses and other current liabilities | 45,366 | 21,661 |
Total current liabilities | 203,033 | 159,925 |
Long-term debt and lease obligations | 1,109,286 | 975,405 |
Tax receivable agreement obligations | 126,208 | 126,096 |
Deferred tax liability | 293,329 | 256,051 |
Other long-term liabilities | 1,340 | 0 |
Total liabilities | 1,733,196 | 1,517,477 |
Commitments and Contingencies (Note 13) | ||
Additional paid in capital | 1,176,815 | 1,152,055 |
Accumulated other comprehensive loss | (11,034) | (756) |
Retained earnings | 352,998 | 334,480 |
Stockholders’ equity | 1,518,792 | 1,485,792 |
Non-controlling interest | 67,635 | 94,432 |
Total liabilities and stockholders’ equity | 3,319,623 | 3,097,701 |
Common Class A | ||
Current liabilities: | ||
Common stock | 12 | 12 |
Common Class B | ||
Current liabilities: | ||
Common stock | $ 1 | $ 1 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Common Class A | ||
Common stock, par value (in usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, issued (in shares) | 124,408,614 | 122,108,086 |
Common stock, outstanding (in shares) | 124,408,614 | 122,108,086 |
Common Class B | ||
Common stock, par value (in usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, issued (in shares) | 6,301,285 | 8,409,834 |
Common stock, outstanding (in shares) | 6,301,285 | 8,409,834 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Net revenue | $ 256,226 | $ 241,060 | $ 499,711 | $ 463,798 |
Cost of goods sold | 166,852 | 157,610 | 331,000 | 305,160 |
Gross profit | 89,374 | 83,450 | 168,711 | 158,638 |
Operating costs and expenses: | ||||
Advertising and marketing | 11,158 | 10,696 | 21,221 | 19,559 |
Selling expense | 12,378 | 8,310 | 30,498 | 16,830 |
General and administrative | 24,153 | 19,276 | 49,348 | 36,747 |
Amortization of customer relationships | 7,110 | 6,009 | 13,594 | 11,994 |
Business combination transaction costs | 0 | 0 | 4,282 | 0 |
Other operating expense | 0 | 2,278 | 27 | 517 |
Total operating costs and expenses | 54,799 | 46,569 | 118,970 | 85,647 |
Operating income | 34,575 | 36,881 | 49,741 | 72,991 |
Other expense: | ||||
Interest expense, net | 10,580 | 10,302 | 22,305 | 20,538 |
Other expense | 1,132 | 846 | 1,685 | 1,286 |
Total other expense | 11,712 | 11,148 | 23,990 | 21,824 |
Income before income taxes | 22,863 | 25,733 | 25,751 | 51,167 |
Income tax expense | 5,493 | 9,064 | 5,741 | 7,886 |
Net income | 17,370 | 16,669 | 20,010 | 43,281 |
Less: Net income attributable to the non-controlling interest | 1,200 | 5,186 | 1,492 | 10,672 |
Net income attributable to Class A stockholders | $ 16,170 | $ 11,483 | $ 18,518 | $ 32,609 |
Earnings per Class A share: | ||||
Basic (in usd per share) | $ 0.13 | $ 0.11 | $ 0.15 | $ 0.32 |
Diluted (in usd per share) | $ 0.13 | $ 0.10 | $ 0.15 | $ 0.31 |
Weighted-average shares outstanding: | ||||
Basic (in shares) | 123,638,723 | 105,072,322 | 123,381,190 | 102,618,951 |
Diluted (in shares) | 124,576,409 | 109,509,195 | 125,312,658 | 105,338,010 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 17,370 | $ 16,669 | $ 20,010 | $ 43,281 |
Other comprehensive income (loss): | ||||
Unrealized loss on interest rate swap contracts designated as cash flow hedges | (1,909) | (3,006) | (14,617) | (5,171) |
Tax benefit | 481 | 636 | 3,650 | 1,083 |
Comprehensive income | 15,942 | 14,299 | 9,043 | 39,193 |
Less: Comprehensive income attributed to non-controlling interest | 1,096 | 4,605 | 659 | 9,589 |
Comprehensive income attributed to Class A stockholders | $ 14,846 | $ 9,694 | $ 8,384 | $ 29,604 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Class A | Class B | Total Stockholders’ Equity | Common StockClass A | Common StockClass B | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Non-controlling Interest |
Beginning Balance (in shares) at Dec. 31, 2018 | 100,046,392 | 30,255,184 | ||||||||
Beginning Balance at Dec. 31, 2018 | $ 1,199,803 | $ 10 | $ 3 | $ 925,902 | $ 2,523 | $ 271,365 | $ 350,454 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Comprehensive income (loss) | 19,910 | (1,216) | 21,126 | 4,984 | ||||||
Share-based compensation, net of income taxes | 1,668 | 1,668 | ||||||||
Distributions | (457) | |||||||||
Exercise of public warrants (in shares) | 50 | |||||||||
Ending Balance (in shares) at Mar. 31, 2019 | 100,046,442 | 30,255,184 | ||||||||
Ending Balance at Mar. 31, 2019 | 1,221,381 | $ 10 | $ 3 | 927,570 | 1,307 | 292,491 | 354,981 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Tax effect from share-based compensation | $ 613 | |||||||||
Beginning Balance (in shares) at Dec. 31, 2018 | 100,046,392 | 30,255,184 | ||||||||
Beginning Balance at Dec. 31, 2018 | 1,199,803 | $ 10 | $ 3 | 925,902 | 2,523 | 271,365 | 350,454 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Comprehensive income (loss) | 39,193 | |||||||||
Ending Balance (in shares) at Jun. 30, 2019 | 109,323,871 | 20,999,784 | ||||||||
Ending Balance at Jun. 30, 2019 | 1,326,326 | $ 11 | $ 2 | 1,022,529 | (190) | 303,974 | 244,101 | |||
Beginning Balance (in shares) at Mar. 31, 2019 | 100,046,442 | 30,255,184 | ||||||||
Beginning Balance at Mar. 31, 2019 | 1,221,381 | $ 10 | $ 3 | 927,570 | 1,307 | 292,491 | 354,981 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Comprehensive income (loss) | 14,299 | 9,694 | (1,789) | 11,483 | 4,605 | |||||
Share-based compensation, net of income taxes (in shares) | 20,241 | |||||||||
Share-based compensation, net of income taxes | 1,936 | 1,936 | ||||||||
Exchanges (in shares) | 9,255,400 | (9,255,400) | ||||||||
Exchanges | 111,026 | $ 1 | $ (1) | 110,734 | 292 | (111,026) | ||||
Distributions | (4,459) | |||||||||
Exercise of employee stock options (in shares) | 1,788 | |||||||||
Exercise of employee stock options | 23 | 23 | ||||||||
Payment of taxes for employee stock awards | (124) | (124) | ||||||||
Tax receivable agreement arising from exchanges, net of income taxes | (17,610) | (17,610) | 0 | |||||||
Ending Balance (in shares) at Jun. 30, 2019 | 109,323,871 | 20,999,784 | ||||||||
Ending Balance at Jun. 30, 2019 | 1,326,326 | $ 11 | $ 2 | 1,022,529 | (190) | 303,974 | 244,101 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Tax effect from share-based compensation | 563 | |||||||||
Tax effect from tax receivable agreement | 10,109 | |||||||||
Beginning Balance (in shares) at Dec. 31, 2019 | 122,108,086 | 8,409,834 | 122,108,086 | 8,409,834 | ||||||
Beginning Balance at Dec. 31, 2019 | 1,485,792 | $ 12 | $ 1 | 1,152,055 | (756) | 334,480 | 94,432 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Comprehensive income (loss) | (6,462) | (8,810) | 2,348 | (437) | ||||||
Share-based compensation, net of income taxes (in shares) | 106,770 | |||||||||
Share-based compensation, net of income taxes | 2,180 | 2,180 | ||||||||
Exchanges (in shares) | 969,247 | (969,247) | ||||||||
Exchanges | 11,802 | 11,819 | (17) | (11,802) | ||||||
Distributions | (1,613) | |||||||||
Exercise of employee stock options (in shares) | 2,205 | |||||||||
Exercise of employee stock options | 155 | 155 | ||||||||
Payment of taxes for employee stock awards | (1,004) | (1,004) | ||||||||
Tax receivable agreement arising from exchanges, net of income taxes | (1,942) | (1,942) | ||||||||
Ending Balance (in shares) at Mar. 31, 2020 | 123,186,308 | 7,440,587 | ||||||||
Ending Balance at Mar. 31, 2020 | 1,490,521 | $ 12 | $ 1 | 1,163,263 | (9,583) | 336,828 | 80,580 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Tax effect from share-based compensation | 103 | |||||||||
Tax effect from tax receivable agreement | 1,341 | |||||||||
Beginning Balance (in shares) at Dec. 31, 2019 | 122,108,086 | 8,409,834 | 122,108,086 | 8,409,834 | ||||||
Beginning Balance at Dec. 31, 2019 | 1,485,792 | $ 12 | $ 1 | 1,152,055 | (756) | 334,480 | 94,432 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Comprehensive income (loss) | 9,043 | |||||||||
Ending Balance (in shares) at Jun. 30, 2020 | 124,408,614 | 6,301,285 | 124,408,614 | 6,301,285 | ||||||
Ending Balance at Jun. 30, 2020 | 1,518,792 | $ 12 | $ 1 | 1,176,815 | (11,034) | 352,998 | 67,635 | |||
Beginning Balance (in shares) at Mar. 31, 2020 | 123,186,308 | 7,440,587 | ||||||||
Beginning Balance at Mar. 31, 2020 | 1,490,521 | $ 12 | $ 1 | 1,163,263 | (9,583) | 336,828 | 80,580 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Comprehensive income (loss) | 15,942 | 14,846 | (1,324) | 16,170 | 1,096 | |||||
Share-based compensation, net of income taxes (in shares) | 46,304 | |||||||||
Share-based compensation, net of income taxes | 1,929 | 1,929 | ||||||||
Exchanges (in shares) | 1,139,302 | (1,139,302) | ||||||||
Exchanges | 13,676 | 13,803 | (127) | (13,676) | ||||||
Distributions | (365) | |||||||||
Exercise of employee stock options (in shares) | 36,700 | |||||||||
Exercise of employee stock options | 408 | 408 | ||||||||
Payment of taxes for employee stock awards | (32) | (32) | ||||||||
Tax receivable agreement arising from exchanges, net of income taxes | (2,556) | (2,556) | ||||||||
Ending Balance (in shares) at Jun. 30, 2020 | 124,408,614 | 6,301,285 | 124,408,614 | 6,301,285 | ||||||
Ending Balance at Jun. 30, 2020 | $ 1,518,792 | $ 12 | $ 1 | $ 1,176,815 | $ (11,034) | $ 352,998 | $ 67,635 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Tax effect from share-based compensation | 496 | |||||||||
Tax effect from tax receivable agreement | $ 952 |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||||
Tax effect from share-based compensation | $ 496 | $ 103 | $ 563 | $ 613 |
Tax effect from tax receivable agreement | $ 952 | $ 1,341 | $ 10,109 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Operating activities | ||
Net income | $ 20,010 | $ 43,281 |
Depreciation and amortization | 26,477 | 21,939 |
Impairment of property, goodwill and intangibles | 0 | 1,005 |
Debt discount (premium) amortization | 664 | (536) |
Tax receivable agreement remeasurement | 0 | (483) |
Unrealized foreign exchange losses | 996 | 0 |
Non-cash lease expense | 641 | 0 |
Share-based compensation | 4,503 | 4,780 |
Deferred taxes | 3,973 | 5,637 |
Loss on sale of assets | 128 | 0 |
Change in operating assets and liabilities, net of acquisitions and dispositions: | ||
Accounts receivable | (11,320) | (22,508) |
Inventories | 4,135 | (4,313) |
Prepaids and other current assets | (1,091) | (1,661) |
Accounts payable and accrued expenses | 3,323 | 18,168 |
Customer trade allowances | 8,242 | 8,755 |
Net cash provided by operating activities | 60,681 | 74,064 |
Investing activities | ||
Purchases of property and equipment | (23,376) | (15,398) |
Acquisition of business, net of cash acquired | (318,427) | 0 |
Acquisition and development of software assets | (3,402) | (2,907) |
Net cash used in investing activities | (345,205) | (18,305) |
Financing activities | ||
Repayments of long-term debt and lease obligations | (5,584) | (5,056) |
Proceeds from long-term debt origination, net of fees paid | 136,888 | 0 |
Distributions to non-controlling interest | (1,977) | (4,916) |
Tax payments related to issuance of shares to employees | (1,036) | (124) |
Cash received from exercise of options and warrants | 563 | 23 |
Payments on tax receivable agreement | (1,279) | (2,779) |
Net cash provided by (used in) financing activities | 127,575 | (12,852) |
Effect of exchange rate changes on cash and cash equivalents | (359) | 0 |
Net increase (decrease) in cash and cash equivalents | (157,308) | 42,907 |
Cash and cash equivalents at beginning of period | 285,087 | 146,377 |
Cash and cash equivalents at end of period | 127,779 | 189,284 |
Cash paid during the period for: | ||
Interest | 21,885 | 22,472 |
Net taxes paid (refunded) | (577) | 1,815 |
Supplemental disclosure of non-cash investing: | ||
Accrued capital expenditures | $ 1,542 | $ 1,527 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Descr i ption of Business Hostess Brands, Inc. is a Delaware corporation headquartered in Lenexa, Kansas. The consolidated financial statements include the accounts of Hostess Brands, Inc. and its subsidiaries (collectively, the “Company”). The Company is a leading packaged food company focused on developing, manufacturing, marketing, selling and distributing snack products, including sweet baked goods, cookies and wafers in North America. The Company’s operations are conducted through indirect operating subsidiaries that are wholly-owned by Hostess Holdings, L.P. (“Hostess Holdings”), a direct subsidiary of Hostess Brands, Inc. Hostess Brands, Inc. holds 100% of the general partnership interest in Hostess Holdings and a majority of the limited partnership interests therein and consolidates Hostess Holdings in the Company’s consolidated financial statements. The remaining limited partnership interests in Hostess Holdings are held by the holders of the outstanding shares of Class B common stock of Hostess Brands, Inc. These limited partnership interests in Hostess Holdings are reflected in the consolidated financial statements as a non-controlling interest. In January 2020, the Company acquired Voortman Cookies Limited (“Voortman”), a manufacturer of premium, branded wafers as well as sugar-free and specialty cookies. Basis of Presentation The consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, the unaudited consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented, and all such adjustments were of a normal and recurring nature. The results of operations are not necessarily indicative of the results to be expected for the full fiscal year. The accompanying unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2019. For the periods presented, the Company had two reportable segments: Snacking and In-Store Bakery. The Company sold its In-Store Bakery operations on August 30, 2019. Subsequent to the sale, Snacking remains as the Company’s single reportable segment. Adoption of New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (“Topic 326”). This ASU requires entities to measure the impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted the standard effective January 1, 2020. Adoption of Topic 326 did not have a material impact on the Company’s consolidated financial statements. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its majority-owned or controlled subsidiaries (including those for which the Company is the primary beneficiary of a variable interest entity). All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements and for the reported amounts of revenues and expenses during the reporting period. Management utilizes estimates, including, but not limited to, valuation and useful lives of tangible and intangible assets, valuation of expected future payments under the tax receivable agreement, and reserves for trade and promotional allowances. Actual results could differ from these estimates. Accounts Receivable Accounts receivable represents amounts invoiced to customers for performance obligations which have been satisfied. As of June 30, 2020 and December 31, 2019, the Company’s accounts receivable were $141.2 million and $104.9 million, respectively, which have been reduced by an allowance for damages occurring during shipment, quality claims and doubtful accounts in the amount of $4.9 million and $2.7 million, respectively. Inventories Inventories are stated at the lower of cost or net-realizable value on a first-in first-out basis. Abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) are expensed in the period they are incurred. The components of inventories are as follows : (In thousands) June 30, December 31, Ingredients and packaging $ 25,273 $ 21,439 Finished goods 24,290 22,513 Inventory in transit to customers 2,219 3,656 $ 51,782 $ 47,608 Software Costs Capitalized software is included in “Other assets, net” in the consolidated balance sheets in the amount of $14.6 million and $11.9 million at June 30, 2020 and December 31, 2019, respectively. Capitalized software costs are amortized over their estimated useful life of five years commencing when such assets are ready for their intended use. Software amortization expense included in general and administrative operating expense was $1.3 million and $2.6 million for the three and six months ended June 30, 2020, respectively, compared to $0.7 million and $1.4 million for the three and six months ended June 30, 2019, respectively. Disaggregation of Revenue Net revenue consists of sales of packaged food products in the United States primarily within the Sweet Baked Goods category. Beginning with the acquisition of Voortman on January 3, 2020 (see Note 2. Business Combinations), the Company also sells products in the United States and Canada within the Cookies category. The following tables disaggregate revenues by geographical market and category. Three Months Ended June 30, 2020 (In thousands) Sweet Baked Goods In-Store Bakery Cookies Total United States $ 232,620 $ — $ 20,459 $ 253,079 Canada — — 3,147 3,147 $ 232,620 $ — $ 23,606 $ 256,226 Three Months Ended June 30, 2019 (In thousands) Sweet Baked Goods In-Store Bakery Cookies Total United States $ 229,273 $ 11,787 $ — $ 241,060 Canada — — — — $ 229,273 $ 11,787 $ — $ 241,060 Six Months Ended June 30, 2020 (In thousands) Sweet Baked Goods In-Store Bakery Cookies Total United States $ 458,982 $ — $ 33,766 $ 492,748 Canada — — 6,963 6,963 $ 458,982 $ — $ 40,729 $ 499,711 Six Months Ended June 30, 2019 (In thousands) Sweet Baked Goods In-Store Bakery Cookies Total United States $ 442,151 $ 21,647 $ — $ 463,798 Canada — — — — $ 442,151 $ 21,647 $ — $ 463,798 Concentrations The Company has one customer (together with its affiliates) that accounted for 10% or more of the Company’s total net revenue. The percentage of total net revenues for this customer is presented below by segment: Three Months Ended Six Months Ended (% of Consolidated Net Revenues) June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Snacking 22.3 % 23.3 % 21.7 % 23.5 % In-Store Bakery 0.0 % 0.4 % 0.0 % 0.4 % Total 22.3 % 23.7 % 21.7 % 23.9 % Foreign Currency Remeasurement Certain Voortman sales and production related costs are denominated in the Canadian dollar (“CAD”). CAD transactions have been remeasured into U.S. dollars (“USD”) on the consolidated statement of operations using the average exchange rate for the reporting period. Balances expected to be settled in CAD have been remeasured into USD on the consolidated balances sheet using the exchange rate at the end of the period. During both the three and six months ended June 30, 2020, the Company recognized a loss on remeasurement of $0.7 million reported within other expense on the consolidated statement of operations. |
Business Combinations
Business Combinations | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations On January 3, 2020, the Company completed the acquisition of all of the shares of the parent company of Voortman, a manufacturer of premium, branded wafers as well as sugar-free and specialty cookies for approximately $325.8 million ($423.2 million CAD), pending final working capital and other closing statement adjustments. This purchase price was reduced by a net gain on a related foreign currency contract of $6.9 million, cash acquired of $1.6 million and a receivable for certain purchase price adjustments of $1.1 million, resulting in a net cash outflow of $318.4 million. The acquisition of Voortman diversifies and expands the Company’s product offerings and manufacturing capabilities in the adjacent cookie category. The acquisition also leverages the Company’s customer reach and lean and agile business model. The combined Company expects to realize additional benefits of scale via sharing established, efficient infrastructure and strengthening collaborative retail partnerships in the United States and Canada. An aggregate of $10.8 million CAD was deposited into an escrow account to satisfy amounts in respect of post-closing adjustments and to provide for payment to the Company of indemnity claims, if any. During the six months ended June 30, 2020, working capital and other adjustments of $1.0 million were made to goodwill. The Company continues to work through post-closing working capital and other adjustments in accordance with the terms of the share purchase agreement, as well as other contractual rights it has under the transaction documents. Included in other non-current liabilities in the table below is a $1.3 million liability for pre-acquisition uncertain tax positions. It is offset by a non-current receivable balance of $1.3 million representing expected recovery through seller or insurance policy indemnification. The Company recorded a preliminary allocation of the purchase price to tangible and identified intangible assets acquired and liabilities assumed, based on their fair values as of the closing date. The final allocation of the purchase price is pending the final valuation of certain assets acquired and liabilities assumed and finalization of customary closing adjustments to the final purchase price. The Company expects to finalize the allocation of the purchase consideration as soon as practicable. The preliminary purchase price allocation is as follows: (In thousands) Cash $ 1,639 Accounts receivable 24,848 Inventory 8,309 Income tax receivable 6,079 Other current assets 420 Property and equipment 32,200 Customer relationships 11,100 Trade names 130,000 Goodwill 167,064 Other non-current assets 1,320 Accounts payable and accrued expenses (5,192) Customer trade allowances (5,428) Lease liabilities (6,420) Deferred taxes (38,854) Other non-current liabilities (1,320) Assets acquired and liabilities assumed $ 325,765 During the six months ended June 30, 2020, the Company incurred $4.3 million of expenses related to this acquisition. These expenses are classified as business combination transaction costs on the consolidated statements of operations. The following unaudited pro forma combined financial information presents the Company’s results as though the acquisition of Voortman had occurred at January 1, 2019. The unaudited pro forma consolidated financial information has been prepared using the acquisition method of accounting in accordance with U.S. GAAP: Three Months Ended Six Months Ended (In thousands) June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 (unaudited, pro forma) (unaudited, pro forma) Net revenue $ 256,226 $ 269,082 $ 499,711 $ 512,142 Net income $ 17,370 $ 17,200 $ 20,010 $ 42,059 |
Exit Costs
Exit Costs | 6 Months Ended |
Jun. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Exit Costs | Exit Costs Subsequent to the Company’s acquisition of Voortman, activities were initiated to transition Voortman’s distribution model to the Company’s direct-to-warehouse distribution model. The Company has incurred costs to exit Voortman’s direct-store-delivery model, including severance and contract termination costs related to third-party distributor and leasing relationships. Total costs are expected to be approximately $13.0 million through completion of the transition in 2020. During the three and six months ended June 30, 2020, contract termination costs of $1.8 million and $8.3 million and severance costs of $2.0 million and $4.2 million were recognized within selling expenses and general and administrative expenses, respectively, on the consolidated statement of operations. Reserves for these activities are reported within accrued expenses on the consolidated balance sheet and had the following activity during the six months ended June 30, 2020: (In thousands) Severance Contract Termination Total Charges recorded $ 4,210 $ 8,278 $ 12,488 Payments made (2,526) (6,878) (9,404) Impact of change in exchange rates on CAD denominated liability (112) (387) (499) Reserve balance as of June 30, 2020 $ 1,572 $ 1,013 $ 2,585 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consists of the following: (In thousands) June 30, December 31, 2019 Land and buildings $ 57,668 $ 53,683 Right of use assets, operating 29,537 23,771 Machinery and equipment 234,409 209,382 Construction in progress 21,409 5,878 343,023 292,714 Less accumulated depreciation (61,879) (50,330) $ 281,144 $ 242,384 Depreciation expense was $5.2 million and $10.2 million for the three and six months ended June 30, 2020, compared to $4.3 million and $8.6 million for the three and six months ended June 30, 2019. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting For the periods presented, the Company had two reportable segments: Snacking and In-Store Bakery. The Company’s Snacking segment consists of sweet baked goods, cookies, wafers and bread products that are sold under the Hostess®, Dolly Madison®, Cloverhill® Big Texas®, and Voortman® brands. As of January 3, 2020, the Company added the newly acquired Voortman operations into the reportable segment previously known as Sweet Baked Goods and renamed the segment as “Snacking”. The In-Store Bakery segment consists primarily of Superior on Main® branded and private label products sold through the in-store bakery section of grocery and club stores. The Company divested its In-Store Bakery operations on August 30, 2019. Subsequent to the sale, Snacking is the Company’s single reportable segment. The Company evaluates performance and allocates resources based on net revenue and gross profit. Information regarding the operations of these reportable segments is as follows: Three Months Ended Six Months Ended (In thousands) June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Net revenue: Snacking $ 256,226 $ 229,273 $ 499,711 $ 442,151 In-Store Bakery — 11,787 — 21,647 Net revenue $ 256,226 $ 241,060 $ 499,711 $ 463,798 Depreciation and amortization: Snacking $ 13,656 $ 10,380 $ 26,477 $ 20,562 In-Store Bakery — 680 — 1,377 Depreciation and amortization $ 13,656 $ 11,060 $ 26,477 $ 21,939 Gross profit: Snacking $ 89,374 $ 80,925 $ 168,711 $ 154,069 In-Store Bakery — 2,525 — 4,569 Gross profit $ 89,374 $ 83,450 $ 168,711 $ 158,638 Capital expenditures (1): Snacking $ 13,236 $ 7,516 $ 25,388 $ 11,778 In-Store Bakery — 28 — 180 Capital expenditures $ 13,236 $ 7,544 $ 25,388 $ 11,958 (1) Capital expenditures consists of purchases of property and equipment and acquisition and development of software assets paid in cash or acquired through accounts payable. For the six months ended June 30, 2020 and 2019, capital expenditures in accounts payable decreased by $1.4 million and $6.4 million, respectively. After the August 30, 2019 divestiture of the In-Store Bakery operations, the Company retained no assets related to the In-Store Bakery segment. All assets at June 30, 2020 and December 31, 2019 were attributed to the Snacking segment. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company recognized goodwill in January of 2020 related to its acquisition of Voortman based on a preliminary valuation performed to determine the fair value of the acquired assets. During the three months ended June 30, 2020, the preliminary valuation was adjusted, resulting in a $1.0 million increase to goodwill. The Voortman-related goodwill was incorporated into the Company’s Snacking reporting segment. At June 30, 2020, there is no goodwill associated with the In-Store Bakery reporting segment, which the Company divested in 2019. Goodwill activity is presented below. (In thousands) Snacking Balance as of December 31, 2019 $ 535,853 Acquisition of Voortman 167,064 Balance as of June 30, 2020 $ 702,917 Intangible assets consist of the following: (In thousands) June 30, December 31, Intangible assets with indefinite lives (Trademarks and Trade Names) $ 1,538,631 $ 1,408,630 Intangible assets with definite lives (Customer Relationships) 526,813 515,713 Less accumulated amortization (Customer Relationships) (84,585) (71,028) Intangible assets, net $ 1,980,859 $ 1,853,315 The Company recognized additional trade names and customer relationships intangible assets during the six months ended June 30, 2020 related to the acquisition of Voortman. See Note 2. Business Combinations for additional details. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Included in accrued expenses and other current liabilities are the following: (In thousands) June 30, December 31, Payroll, vacation and other compensation $ 6,589 $ 3,389 Incentive compensation 9,009 6,840 Exit costs 2,585 — Accrued interest 4,768 4,870 Workers compensation reserve 3,179 2,665 Self-insurance reserves 2,012 1,938 Taxes 1,905 1,255 Interest rate swap contract 15,319 704 $ 45,366 $ 21,661 |
Debt and Lease Obligations
Debt and Lease Obligations | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt and Lease Obligations | Debt and Lease Obligations In January 2020, the Company originated a $140.0 million incremental term loan through an amendment to its existing credit agreement. The Company received proceeds of $136.9 million, net of fees incurred of $3.1 million. The proceeds, together with cash on hand, financed the purchase of Voortman (see Note 2. Business Combinations). The terms, conditions and covenants applicable to the incremental term loan are the same as the terms, conditions and covenants applicable to the existing term loans. The term loan requires quarterly payments of interest at a rate of the greater of the applicable LIBOR or 0.75% per annum plus a margin of 2.25% per annum and principal at a rate of 0.25% of the aggregate principal balance with the remaining principal amount due upon maturity on August 3, 2025. A summary of the carrying value of the debt and lease obligations is as follows: (In thousands) June 30, December 31, Term Loan (3.0% as of June 30, 2020) Principal $ 1,108,347 $ 973,930 Unamortized debt premium and issuance costs (5,542) (3,094) 1,102,805 970,836 Lease obligations 20,186 16,452 Total debt and lease obligations 1,122,991 987,288 Less: Current portion of long term debt and lease obligations (13,705) (11,883) Long-term portion $ 1,109,286 $ 975,405 At June 30, 2020, minimum debt repayments under the term loan are due as follows: (In thousands) 2020 $ 5,581 2021 11,164 2022 11,164 2023 11,164 2024 11,164 2025 1,058,110 |
Derivative Contracts
Derivative Contracts | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Contracts | Derivative Contracts To reduce the effect of interest rate fluctuations, in 2017 the Company entered into an interest rate swap contract with a counter party to make a series of payments based on a fixed interest rate of 1.78% and receive a series of payments based on the greater of LIBOR or 0.75%. Both the fixed and floating payment streams are based on a notional amount of $500 million at the inception of the contract and are reduced by $100 million each year of the five-year contract. As of June 30, 2020 and June 30, 2019, the notional amount was $200 million and $300 million, respectively. At June 30, 2020, the effective interest rate on the long-term debt hedged by this contract was 4.03%. In February 2020, the Company entered into additional five-year interest rate swap contracts to further reduce the effect of interest rate fluctuations on its variable-rate Term Loan. The notional value of these contracts was $500 million. Under the terms of the contracts, the Company will make quarterly payments based on fixed interest rates ranging from 1.11% to 1.64% and receive quarterly payments based on the greater of LIBOR or 0.75%. These contracts became effective as of April 30, 2020. At June 30, 2020, the effective interest rate on the long-term debt hedged by these interest rate swap contracts was 3.76%. The Company entered into these transactions to reduce its exposure to changes in cash flows associated with its variable rate debt and has designated these derivatives as cash flow hedges. As of June 30, 2020 and December 31, 2019, the fair values of the interest rate swap contracts of $15.3 million and $0.7 million, respectively, were reported within accrued expenses and other current liabilities on the consolidated balance sheet. The fair value of the interest rate swap contract is measured on a recurring basis by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates (forward curves) derived from observable market interest rate curves (Level 2). In connection with the agreement to purchase Voortman as described in Note 2. Business Combinations, the Company entered into a foreign currency contract to hedge $440 million CAD to be used for the forecasted purchase price and a portion of the subsequent expected conversion costs. At December 31, 2019, the contract had a value of $7.1 million recognized within other current assets on the consolidated balance sheet based on available market information on similar contracts (Level 2) and a corresponding gain of $7.1 million was recognized in gain on foreign currency contract within the consolidated statements of operations. Through settlement of the contracts in January of 2020, a loss of $0.2 million was recognized within other expense on the consolidated statement of operations. |
Earnings per Share
Earnings per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share Basic earnings per share is calculated by dividing net income attributable to the Company’s Class A stockholders for the period by the weighted average number of shares of Class A common stock outstanding for the period excluding non-vested share-based awards. In computing diluted earnings per share, basic earnings per share is adjusted for the assumed issuance of all applicable potentially dilutive share-based awards including public and private placement warrants, RSUs, restricted stock awards and stock options. Below are basic and diluted net income per share: Three Months Ended Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Numerator: Net income attributable to Class A stockholders (in thousands) $ 16,170 $ 11,483 $ 18,518 $ 32,609 Denominator: Weighted-average Class A shares outstanding - basic 123,638,723 105,072,322 123,381,190 102,618,951 Dilutive effect of warrants 758,005 4,002,135 1,744,314 2,363,537 Dilutive effect of RSUs 179,681 434,738 187,154 355,522 Weighted-average shares outstanding - diluted 124,576,409 109,509,195 125,312,658 105,338,010 Net income per Class A share - basic $ 0.13 $ 0.11 $ 0.15 $ 0.32 Net income per Class A share - diluted $ 0.13 $ 0.10 $ 0.15 $ 0.31 For the three and six months ended June 30, 2020 and 2019, the dilutive effect of stock options was excluded from the computation of diluted earnings per share because the assumed proceeds from the awards’ exercise were greater than the average market price of the common shares. Weighted average Class A shares outstanding reflect the weighted impact of exchanges of Class B shares for Class A shares. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company is subject to U.S. federal, state and local taxes on its allocable portion of the income of Hostess Holdings, a partnership for U.S. federal and most applicable state and local taxes. As a partnership, Hostess Holdings is itself not subject to U.S. federal and certain state and local income taxes. The operations of Hostess Holdings include those of its controlled foreign corporation subsidiaries. The Company intends to indefinitely reinvest earnings outside the United States and, thus, is not recording deferred taxes on its investment in foreign subsidiaries. The Company’s estimated annual effective tax rate is 24.1% prior to taking into account any discrete items. The effective tax rate was 24.0% and 35.2% for the three months ended June 30, 2020 and 2019, respectively. Tax expense for the three months ended June 30, 2020 aligned with the Company’s estimated annual effective rate. During the three months ended June 30, 2019, the effective tax rate was impacted by a discrete tax expense of $2.8 million from revaluing deferred tax balances based on changes in estimated state apportionment factors and tax rates. The Company’s effective tax rate for the six months ended June 30, 2020 was 22.3% compared to 15.4% for the six months ended June 30, 2019. The current year effective tax rate was impacted by an adjustment to deferred taxes related to Voortman, which resulted in a discrete tax benefit of $0.5 million. The prior year effective tax rate was impacted by a discrete tax benefit of $3.2 million related to the remeasurement of deferred tax balances arising from changes in estimated state apportionment factors and rates. |
Tax Receivable Agreement Obliga
Tax Receivable Agreement Obligations | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Tax Receivable Agreement Obligations | Tax Receivable Agreement Obligations The following table summarizes activity related to the Tax Receivable Agreement for the six months ended June 30, 2020: (In thousands) Balance December 31, 2019 $ 138,196 Exchange of Class B units for Class A shares 6,791 Payments (1,279) Balance June 30, 2020 $ 143,708 As of June 30, 2020 the future expected payments under the tax receivable agreement are as follows: 2020 $ 10,800 2021 7,900 2022 7,700 2023 7,700 2024 7,800 Thereafter 101,808 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Liabilities related to legal proceedings are recorded when it is probable that a liability has been incurred and the associated amount can be reasonably estimated. Where the estimated amount of loss is within a range of amounts and no amount within the range is a better estimate than any other amount, the minimum amount is accrued. As additional information becomes available, potential liabilities are reassessed and the estimates revised, if necessary. Any accrued liabilities are subject to change in the future based on new developments in each matter, or changes in circumstances, which could have a material effect on the Company’s financial condition and results of operations. Leases The Company entered into operating leases for the buildings in which it operates that expire at various times through 2026, including those entered by Voortman. The Company determines if an arrangement is a lease at inception. At June 30, 2020 and December 31, 2019, right of use assets related to operating leases are included in property and equipment, net on the consolidated balance sheet (see Note 4. Property and Equipment). As of June 30, 2020 and December 31, 2019, the Company has no outstanding financing leases. Lease liabilities for operating leases are included in the current and non-current portions of long-term debt and lease obligations on the consolidated balance sheet (see Note 8. Debt and Lease Obligations). The table below shows the composition of lease expenses: Three Months Ended Six Months Ended (In thousands) June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Amortization of right of use asset, financing lease $ — $ 56 $ — $ 100 Interest, financing lease — 5 — 12 Operating lease expense 1,269 616 3,064 1,257 Short-term lease expense 544 282 1,558 682 Variable lease expense 467 189 1,021 377 $ 2,280 $ 1,148 $ 5,643 $ 2,428 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, the unaudited consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented, and all such adjustments were of a normal and recurring nature. The results of operations are not necessarily indicative of the results to be expected for the full fiscal year. The accompanying unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2019. For the periods presented, the Company had two reportable segments: Snacking and In-Store Bakery. The Company sold its In-Store Bakery operations on August 30, 2019. Subsequent to the sale, Snacking remains as the Company’s single reportable segment. |
Adoption of New Accounting Standards | Adoption of New Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (“Topic 326”). This ASU requires entities to measure the impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted the standard effective January 1, 2020. Adoption of Topic 326 did not have a material impact on the Company’s consolidated financial statements. |
Principles of Consolidation | Principles of ConsolidationThe accompanying consolidated financial statements include the accounts of the Company and its majority-owned or controlled subsidiaries (including those for which the Company is the primary beneficiary of a variable interest entity). All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements and for the reported amounts of revenues and expenses during the reporting period. Management utilizes estimates, including, but not limited to, valuation and useful lives of tangible and intangible assets, valuation of expected future payments under the tax receivable agreement, and reserves for trade and promotional allowances. Actual results could differ from these estimates. |
Accounts Receivable | Accounts ReceivableAccounts receivable represents amounts invoiced to customers for performance obligations which have been satisfied. |
Inventories | Inventories Inventories are stated at the lower of cost or net-realizable value on a first-in first-out basis. Abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) are expensed in the period they are incurred. |
Software Costs | Software CostsCapitalized software is included in “Other assets, net” in the consolidated balance sheets in the amount of $14.6 million and $11.9 million at June 30, 2020 and December 31, 2019, respectively. Capitalized software costs are amortized over their estimated useful life of five years commencing when such assets are ready for their intended use. |
Foreign Currency Remeasurement | Foreign Currency RemeasurementCertain Voortman sales and production related costs are denominated in the Canadian dollar (“CAD”). CAD transactions have been remeasured into U.S. dollars (“USD”) on the consolidated statement of operations using the average exchange rate for the reporting period. Balances expected to be settled in CAD have been remeasured into USD on the consolidated balances sheet using the exchange rate at the end of the period. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Components of Inventories | The components of inventories are as follows : (In thousands) June 30, December 31, Ingredients and packaging $ 25,273 $ 21,439 Finished goods 24,290 22,513 Inventory in transit to customers 2,219 3,656 $ 51,782 $ 47,608 |
Disaggregation of Revenue | The following tables disaggregate revenues by geographical market and category. Three Months Ended June 30, 2020 (In thousands) Sweet Baked Goods In-Store Bakery Cookies Total United States $ 232,620 $ — $ 20,459 $ 253,079 Canada — — 3,147 3,147 $ 232,620 $ — $ 23,606 $ 256,226 Three Months Ended June 30, 2019 (In thousands) Sweet Baked Goods In-Store Bakery Cookies Total United States $ 229,273 $ 11,787 $ — $ 241,060 Canada — — — — $ 229,273 $ 11,787 $ — $ 241,060 Six Months Ended June 30, 2020 (In thousands) Sweet Baked Goods In-Store Bakery Cookies Total United States $ 458,982 $ — $ 33,766 $ 492,748 Canada — — 6,963 6,963 $ 458,982 $ — $ 40,729 $ 499,711 Six Months Ended June 30, 2019 (In thousands) Sweet Baked Goods In-Store Bakery Cookies Total United States $ 442,151 $ 21,647 $ — $ 463,798 Canada — — — — $ 442,151 $ 21,647 $ — $ 463,798 |
Customer Concentration Risk | The Company has one customer (together with its affiliates) that accounted for 10% or more of the Company’s total net revenue. The percentage of total net revenues for this customer is presented below by segment: Three Months Ended Six Months Ended (% of Consolidated Net Revenues) June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Snacking 22.3 % 23.3 % 21.7 % 23.5 % In-Store Bakery 0.0 % 0.4 % 0.0 % 0.4 % Total 22.3 % 23.7 % 21.7 % 23.9 % |
Business Combination (Tables)
Business Combination (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The Company recorded a preliminary allocation of the purchase price to tangible and identified intangible assets acquired and liabilities assumed, based on their fair values as of the closing date. The final allocation of the purchase price is pending the final valuation of certain assets acquired and liabilities assumed and finalization of customary closing adjustments to the final purchase price. The Company expects to finalize the allocation of the purchase consideration as soon as practicable. The preliminary purchase price allocation is as follows: (In thousands) Cash $ 1,639 Accounts receivable 24,848 Inventory 8,309 Income tax receivable 6,079 Other current assets 420 Property and equipment 32,200 Customer relationships 11,100 Trade names 130,000 Goodwill 167,064 Other non-current assets 1,320 Accounts payable and accrued expenses (5,192) Customer trade allowances (5,428) Lease liabilities (6,420) Deferred taxes (38,854) Other non-current liabilities (1,320) Assets acquired and liabilities assumed $ 325,765 |
Business Acquisition, Pro Forma Information | The unaudited pro forma consolidated financial information has been prepared using the acquisition method of accounting in accordance with U.S. GAAP: Three Months Ended Six Months Ended (In thousands) June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 (unaudited, pro forma) (unaudited, pro forma) Net revenue $ 256,226 $ 269,082 $ 499,711 $ 512,142 Net income $ 17,370 $ 17,200 $ 20,010 $ 42,059 |
Exit Costs (Tables)
Exit Costs (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Costs | Reserves for these activities are reported within accrued expenses on the consolidated balance sheet and had the following activity during the six months ended June 30, 2020: (In thousands) Severance Contract Termination Total Charges recorded $ 4,210 $ 8,278 $ 12,488 Payments made (2,526) (6,878) (9,404) Impact of change in exchange rates on CAD denominated liability (112) (387) (499) Reserve balance as of June 30, 2020 $ 1,572 $ 1,013 $ 2,585 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consists of the following: (In thousands) June 30, December 31, 2019 Land and buildings $ 57,668 $ 53,683 Right of use assets, operating 29,537 23,771 Machinery and equipment 234,409 209,382 Construction in progress 21,409 5,878 343,023 292,714 Less accumulated depreciation (61,879) (50,330) $ 281,144 $ 242,384 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Operations | Information regarding the operations of these reportable segments is as follows: Three Months Ended Six Months Ended (In thousands) June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Net revenue: Snacking $ 256,226 $ 229,273 $ 499,711 $ 442,151 In-Store Bakery — 11,787 — 21,647 Net revenue $ 256,226 $ 241,060 $ 499,711 $ 463,798 Depreciation and amortization: Snacking $ 13,656 $ 10,380 $ 26,477 $ 20,562 In-Store Bakery — 680 — 1,377 Depreciation and amortization $ 13,656 $ 11,060 $ 26,477 $ 21,939 Gross profit: Snacking $ 89,374 $ 80,925 $ 168,711 $ 154,069 In-Store Bakery — 2,525 — 4,569 Gross profit $ 89,374 $ 83,450 $ 168,711 $ 158,638 Capital expenditures (1): Snacking $ 13,236 $ 7,516 $ 25,388 $ 11,778 In-Store Bakery — 28 — 180 Capital expenditures $ 13,236 $ 7,544 $ 25,388 $ 11,958 (1) Capital expenditures consists of purchases of property and equipment and acquisition and development of software assets paid in cash or acquired through accounts payable. For the six months ended June 30, 2020 and 2019, capital expenditures in accounts payable decreased by $1.4 million and $6.4 million, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill Activity | Goodwill activity is presented below. (In thousands) Snacking Balance as of December 31, 2019 $ 535,853 Acquisition of Voortman 167,064 Balance as of June 30, 2020 $ 702,917 |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets consist of the following: (In thousands) June 30, December 31, Intangible assets with indefinite lives (Trademarks and Trade Names) $ 1,538,631 $ 1,408,630 Intangible assets with definite lives (Customer Relationships) 526,813 515,713 Less accumulated amortization (Customer Relationships) (84,585) (71,028) Intangible assets, net $ 1,980,859 $ 1,853,315 |
Schedule of Finite-Lived Intangible Assets | Intangible assets consist of the following: (In thousands) June 30, December 31, Intangible assets with indefinite lives (Trademarks and Trade Names) $ 1,538,631 $ 1,408,630 Intangible assets with definite lives (Customer Relationships) 526,813 515,713 Less accumulated amortization (Customer Relationships) (84,585) (71,028) Intangible assets, net $ 1,980,859 $ 1,853,315 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | Included in accrued expenses and other current liabilities are the following: (In thousands) June 30, December 31, Payroll, vacation and other compensation $ 6,589 $ 3,389 Incentive compensation 9,009 6,840 Exit costs 2,585 — Accrued interest 4,768 4,870 Workers compensation reserve 3,179 2,665 Self-insurance reserves 2,012 1,938 Taxes 1,905 1,255 Interest rate swap contract 15,319 704 $ 45,366 $ 21,661 |
Debt and Lease Obligations (Tab
Debt and Lease Obligations (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Debt and Lease Obligation | A summary of the carrying value of the debt and lease obligations is as follows: (In thousands) June 30, December 31, Term Loan (3.0% as of June 30, 2020) Principal $ 1,108,347 $ 973,930 Unamortized debt premium and issuance costs (5,542) (3,094) 1,102,805 970,836 Lease obligations 20,186 16,452 Total debt and lease obligations 1,122,991 987,288 Less: Current portion of long term debt and lease obligations (13,705) (11,883) Long-term portion $ 1,109,286 $ 975,405 |
Schedule of Maturities of Long-term Debt | At June 30, 2020, minimum debt repayments under the term loan are due as follows: (In thousands) 2020 $ 5,581 2021 11,164 2022 11,164 2023 11,164 2024 11,164 2025 1,058,110 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Net Income Per Share | Below are basic and diluted net income per share: Three Months Ended Six Months Ended June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Numerator: Net income attributable to Class A stockholders (in thousands) $ 16,170 $ 11,483 $ 18,518 $ 32,609 Denominator: Weighted-average Class A shares outstanding - basic 123,638,723 105,072,322 123,381,190 102,618,951 Dilutive effect of warrants 758,005 4,002,135 1,744,314 2,363,537 Dilutive effect of RSUs 179,681 434,738 187,154 355,522 Weighted-average shares outstanding - diluted 124,576,409 109,509,195 125,312,658 105,338,010 Net income per Class A share - basic $ 0.13 $ 0.11 $ 0.15 $ 0.32 Net income per Class A share - diluted $ 0.13 $ 0.10 $ 0.15 $ 0.31 |
Tax Receivable Agreement Obli_2
Tax Receivable Agreement Obligations (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Summary of Tax Receivable Agreement | The following table summarizes activity related to the Tax Receivable Agreement for the six months ended June 30, 2020: (In thousands) Balance December 31, 2019 $ 138,196 Exchange of Class B units for Class A shares 6,791 Payments (1,279) Balance June 30, 2020 $ 143,708 |
Future Expected Payments Under Tax Receivable Arrangement | As of June 30, 2020 the future expected payments under the tax receivable agreement are as follows: 2020 $ 10,800 2021 7,900 2022 7,700 2023 7,700 2024 7,800 Thereafter 101,808 |
Commitment and Contingencies (T
Commitment and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lease Cost | The table below shows the composition of lease expenses: Three Months Ended Six Months Ended (In thousands) June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Amortization of right of use asset, financing lease $ — $ 56 $ — $ 100 Interest, financing lease — 5 — 12 Operating lease expense 1,269 616 3,064 1,257 Short-term lease expense 544 282 1,558 682 Variable lease expense 467 189 1,021 377 $ 2,280 $ 1,148 $ 5,643 $ 2,428 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Description of Business (Details) | 6 Months Ended |
Jun. 30, 2020segment | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Number of reportable segments | 2 |
Hostess Brands, Inc. | |
Subsidiary of Limited Liability Company or Limited Partnership [Line Items] | |
Ownership percentage in Hostess Holdings | 100.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Accounts receivable | $ 141,175 | $ 104,892 |
Reserve to cover allowances for damages occurring during shipment, quality claims and doubtful accounts | $ 4,900 | $ 2,700 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Ingredients and packaging | $ 25,273 | $ 21,439 |
Finished goods | 24,290 | 22,513 |
Inventory in transit to customers | 2,219 | 3,656 |
Inventories | $ 51,782 | $ 47,608 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Software Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||||
Capitalized software | $ 14.6 | $ 14.6 | $ 11.9 | ||
Capitalized software, estimated useful life | 5 years | ||||
Software amortization expense | $ 1.3 | $ 0.7 | $ 2.6 | $ 1.4 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 256,226 | $ 241,060 | $ 499,711 | $ 463,798 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 253,079 | 241,060 | 492,748 | 463,798 |
Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 3,147 | 0 | 6,963 | 0 |
Sweet Baked Goods | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 232,620 | 229,273 | 458,982 | 442,151 |
Sweet Baked Goods | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 232,620 | 229,273 | 458,982 | 442,151 |
Sweet Baked Goods | Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 0 | 0 | 0 | 0 |
In-Store Bakery | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 0 | 11,787 | 0 | 21,647 |
In-Store Bakery | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 0 | 11,787 | 0 | 21,647 |
In-Store Bakery | Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 0 | 0 | 0 | 0 |
Cookies | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 23,606 | 0 | 40,729 | 0 |
Cookies | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 20,459 | 0 | 33,766 | 0 |
Cookies | Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 3,147 | $ 0 | $ 6,963 | $ 0 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Concentrations (Details) - Customer concentration risk - Consolidated net revenues | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Concentration Risk [Line Items] | ||||
Percentage of total net revenues for customer | 22.30% | 23.70% | 21.70% | 23.90% |
Snacking | ||||
Concentration Risk [Line Items] | ||||
Percentage of total net revenues for customer | 22.30% | 23.30% | 21.70% | 23.50% |
In-Store Bakery | ||||
Concentration Risk [Line Items] | ||||
Percentage of total net revenues for customer | 0.00% | 0.40% | 0.00% | 0.40% |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Foreign Currency Remeasurement (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Accounting Policies [Abstract] | ||
Loss on foreign currency remeasurement (less than) | $ 0.7 | $ 0.7 |
Business Combination - Narrativ
Business Combination - Narrative (Details) $ in Thousands, $ in Millions | Jan. 03, 2020USD ($) | Jan. 03, 2020CAD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jan. 03, 2020CAD ($) |
Business Acquisition [Line Items] | |||||||
Cash outflow | $ 318,427 | $ 0 | |||||
Working capital and other adjustments to goodwill | $ 1,000 | ||||||
Expenses incurred related to acquisition | $ 0 | $ 0 | 4,282 | $ 0 | |||
Voortman | |||||||
Business Acquisition [Line Items] | |||||||
Consideration transferred during acquisition | $ 325,800 | $ 423.2 | |||||
Net gain on related foreign currency contract | 6,900 | ||||||
Cash acquired | 1,639 | ||||||
Purchase price adjustments receivable | 1,100 | ||||||
Cash outflow | 318,400 | ||||||
Portion of purchase cost deposited into escrow account | $ 10.8 | ||||||
Working capital and other adjustments to goodwill | 1,000 | ||||||
Other non-current liabilities | 1,320 | ||||||
Non-current receivable balance | $ 1,300 | ||||||
Expenses incurred related to acquisition | $ 4,300 |
Business Combination - Purchase
Business Combination - Purchase Price Allocation (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jan. 03, 2020 | Dec. 31, 2019 |
Provisional amounts for assets acquired and liabilities assumed | |||
Goodwill | $ 702,917 | $ 535,853 | |
Voortman | |||
Provisional amounts for assets acquired and liabilities assumed | |||
Cash | $ 1,639 | ||
Accounts receivable | 24,848 | ||
Inventory | 8,309 | ||
Income tax receivable | 6,079 | ||
Other current assets | 420 | ||
Property and equipment | 32,200 | ||
Goodwill | 167,064 | ||
Other non-current assets | 1,320 | ||
Accounts payable and accrued expenses | (5,192) | ||
Customer trade allowances | (5,428) | ||
Lease liabilities | (6,420) | ||
Deferred taxes | (38,854) | ||
Other non-current liabilities | (1,320) | ||
Assets acquired and liabilities assumed | 325,765 | ||
Voortman | Customer relationships | |||
Provisional amounts for assets acquired and liabilities assumed | |||
Customer relationships | 11,100 | ||
Voortman | Trade names | |||
Provisional amounts for assets acquired and liabilities assumed | |||
Trade names | $ 130,000 |
Business Combination - Pro Form
Business Combination - Pro Forma Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Business Acquisition [Line Items] | ||||
Net revenue | $ 256,226 | $ 241,060 | $ 499,711 | $ 463,798 |
Net income | 17,370 | 16,669 | 20,010 | 43,281 |
Voortman | ||||
Business Acquisition [Line Items] | ||||
Net revenue | 256,226 | 269,082 | 499,711 | 512,142 |
Net income | $ 17,370 | $ 17,200 | $ 20,010 | $ 42,059 |
Exit Costs - Narrative (Details
Exit Costs - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | |
Restructuring and Related Activities [Abstract] | ||
Expected restructuring cost | $ 13 | $ 13 |
Contract termination costs | 1.8 | 8.3 |
Severance costs | $ 2 | $ 4.2 |
Exit Costs - Reserves (Details)
Exit Costs - Reserves (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Restructuring Cost and Reserve [Line Items] | ||
Charges recorded | $ 12,488 | |
Payments made | (9,404) | |
Impact of change in exchange rates on CAD denominated liability | (499) | |
Reserve balance | 2,585 | $ 0 |
Severance | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges recorded | 4,210 | |
Payments made | (2,526) | |
Impact of change in exchange rates on CAD denominated liability | (112) | |
Reserve balance | 1,572 | |
Contract Termination | ||
Restructuring Cost and Reserve [Line Items] | ||
Charges recorded | 8,278 | |
Payments made | (6,878) | |
Impact of change in exchange rates on CAD denominated liability | (387) | |
Reserve balance | $ 1,013 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 343,023 | $ 343,023 | $ 292,714 | ||
Less accumulated depreciation | (61,879) | (61,879) | (50,330) | ||
Property and equipment, net | 281,144 | 281,144 | 242,384 | ||
Depreciation expense | 5,200 | $ 4,300 | 10,200 | $ 8,600 | |
Land and buildings | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 57,668 | 57,668 | 53,683 | ||
Right of use assets, operating | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 29,537 | 29,537 | 23,771 | ||
Machinery and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | 234,409 | 234,409 | 209,382 | ||
Construction in progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Property and equipment, gross | $ 21,409 | $ 21,409 | $ 5,878 |
Segment Reporting (Details)
Segment Reporting (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)segment | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting [Abstract] | |||||
Number of reportable segments | segment | 2 | ||||
Segment Reporting Information [Line Items] | |||||
Net revenue | $ 256,226,000 | $ 241,060,000 | $ 499,711,000 | $ 463,798,000 | |
Depreciation and amortization | 13,656,000 | 11,060,000 | 26,477,000 | 21,939,000 | |
Gross profit | 89,374,000 | 83,450,000 | 168,711,000 | 158,638,000 | |
Capital expenditures | 13,236,000 | 7,544,000 | 25,388,000 | 11,958,000 | |
Decrease of capital expenditures in accounts payable | 1,400,000 | 6,400,000 | |||
Assets | 3,319,623,000 | 3,319,623,000 | $ 3,097,701,000 | ||
Snacking | |||||
Segment Reporting Information [Line Items] | |||||
Net revenue | 256,226,000 | 229,273,000 | 499,711,000 | 442,151,000 | |
Depreciation and amortization | 13,656,000 | 10,380,000 | 26,477,000 | 20,562,000 | |
Gross profit | 89,374,000 | 80,925,000 | 168,711,000 | 154,069,000 | |
Capital expenditures | 13,236,000 | 7,516,000 | 25,388,000 | 11,778,000 | |
In-Store Bakery | |||||
Segment Reporting Information [Line Items] | |||||
Net revenue | 0 | 11,787,000 | 0 | 21,647,000 | |
Depreciation and amortization | 0 | 680,000 | 0 | 1,377,000 | |
Gross profit | 0 | 2,525,000 | 0 | 4,569,000 | |
Capital expenditures | 0 | $ 28,000 | 0 | $ 180,000 | |
Assets | $ 0 | $ 0 | $ 0 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill, adjustment | $ 1,000,000 | ||||
Goodwill | 702,917,000 | $ 702,917,000 | $ 535,853,000 | ||
Amortization expense | 7,110,000 | $ 6,009,000 | 13,594,000 | $ 11,994,000 | |
In-Store Bakery | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | $ 0 | $ 0 | |||
Customer relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Weighted-average amortization period | 19 years 2 months 12 days | ||||
Customer relationships | Minimum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Remaining amortization period | 1 year | ||||
Customer relationships | Maximum | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Remaining amortization period | 23 years |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Goodwill Activity (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | $ 535,853 |
Goodwill, Ending Balance | 702,917 |
Snacking | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 535,853 |
Acquisition of Voortman | 167,064 |
Goodwill, Ending Balance | $ 702,917 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, net | $ 1,980,859 | $ 1,853,315 |
Trademarks and Trade Names | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets with indefinite lives (Trademarks and Trade Names) | 1,538,631 | 1,408,630 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets with definite lives (Customer Relationships) | 526,813 | 515,713 |
Less accumulated amortization (Customer Relationships) | $ (84,585) | $ (71,028) |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Payroll, vacation and other compensation | $ 6,589 | $ 3,389 |
Incentive compensation | 9,009 | 6,840 |
Exit costs | 2,585 | 0 |
Accrued interest | 4,768 | 4,870 |
Workers compensation reserve | 3,179 | 2,665 |
Self-insurance reserves | 2,012 | 1,938 |
Taxes | 1,905 | 1,255 |
Interest rate swap contract | 15,319 | 704 |
Accrued expenses and other current liabilities | $ 45,366 | $ 21,661 |
Debt and Lease Obligations - Na
Debt and Lease Obligations - Narrative (Details) - USD ($) | 1 Months Ended | 6 Months Ended | |
Jan. 31, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
Debt Instrument [Line Items] | |||
Proceeds from long-term debt origination, net of fees paid | $ 136,888,000 | $ 0 | |
Term Loan | |||
Debt Instrument [Line Items] | |||
Face amount | $ 140,000,000 | ||
Proceeds from long-term debt origination, net of fees paid | 136,900,000 | ||
Fees incurred | $ 3,100,000 | ||
Stated interest rate | 0.25% | ||
Term Loan | New LIBOR Floor | |||
Debt Instrument [Line Items] | |||
Effective fixed interest rate on long-term debt | 0.75% | ||
Term Loan | LIBOR Floor | |||
Debt Instrument [Line Items] | |||
Effective fixed interest rate on long-term debt | 2.25% |
Debt and Lease Obligations - Sc
Debt and Lease Obligations - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Lease obligations | $ 20,186 | $ 16,452 |
Total debt and lease obligations | 1,122,991 | 987,288 |
Less: Current portion of long term debt and lease obligations | (13,705) | (11,883) |
Long-term portion | $ 1,109,286 | 975,405 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Effective rate | 3.00% | |
Principal | $ 1,108,347 | 973,930 |
Unamortized debt premium and issuance costs | (5,542) | (3,094) |
Long-term debt | $ 1,102,805 | $ 970,836 |
Debt and Lease Obligations - _2
Debt and Lease Obligations - Schedule of Maturities of Long-term Debt (Details) - Term Loan $ in Thousands | Jun. 30, 2020USD ($) |
Debt Instrument [Line Items] | |
2020 | $ 5,581 |
2021 | 11,164 |
2022 | 11,164 |
2023 | 11,164 |
2024 | 11,164 |
2025 | $ 1,058,110 |
Derivative Contracts (Details)
Derivative Contracts (Details) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Feb. 29, 2020USD ($) | Jan. 31, 2020USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2019CAD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2017USD ($) | |
Derivative [Line Items] | |||||||
Gain (loss) on foreign currency contract | $ (200,000) | $ 7,100,000 | |||||
Term Loan | |||||||
Derivative [Line Items] | |||||||
Effective fixed interest rate on long-term debt | 3.00% | ||||||
Interest Rate Swap | Term Loan | |||||||
Derivative [Line Items] | |||||||
Notional amount of derivative contracts | $ 500,000,000 | ||||||
Term of contract | 5 years | ||||||
Interest Rate Swap | Term Loan | Minimum | |||||||
Derivative [Line Items] | |||||||
Fixed interest rate | 1.11% | ||||||
Interest Rate Swap | Term Loan | Maximum | |||||||
Derivative [Line Items] | |||||||
Fixed interest rate | 1.64% | ||||||
Interest Rate Swap | LIBOR | Term Loan | |||||||
Derivative [Line Items] | |||||||
Basis spread on variable rate | 0.75% | ||||||
Designated as Hedging Instrument | Interest Rate Swap | Cash Flow Hedge | |||||||
Derivative [Line Items] | |||||||
Fixed interest rate | 1.78% | ||||||
Notional amount of derivative contracts | $ 200,000,000 | $ 300,000,000 | $ 500,000,000 | ||||
Reduction in notional amount per year | $ 100,000,000 | ||||||
Term of contract | 5 years | ||||||
Effective fixed interest rate on long-term debt | 4.03% | ||||||
Designated as Hedging Instrument | Interest Rate Swap | Cash Flow Hedge | Accrued Expenses and Other Current Liabilities | |||||||
Derivative [Line Items] | |||||||
Fair value of derivative asset (liability) | $ (15,300,000) | (700,000) | |||||
Designated as Hedging Instrument | Interest Rate Swap | Cash Flow Hedge | Term Loan | |||||||
Derivative [Line Items] | |||||||
Effective fixed interest rate on long-term debt | 3.76% | ||||||
Designated as Hedging Instrument | Interest Rate Swap | Cash Flow Hedge | LIBOR | |||||||
Derivative [Line Items] | |||||||
Basis spread on variable rate | 0.75% | ||||||
Designated as Hedging Instrument | Foreign Currency Contract | |||||||
Derivative [Line Items] | |||||||
Notional amount of derivative contracts | $ 440,000,000 | ||||||
Designated as Hedging Instrument | Foreign Currency Contract | Other Current Assets | |||||||
Derivative [Line Items] | |||||||
Fair value of derivative asset (liability) | $ 7,100,000 |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator: | ||||
Net income attributable to Class A stockholders (in thousands) | $ 16,170 | $ 11,483 | $ 18,518 | $ 32,609 |
Denominator: | ||||
Weighted-average Class A shares outstanding - basic (in shares) | 123,638,723 | 105,072,322 | 123,381,190 | 102,618,951 |
Dilutive effect of warrants (in shares) | 758,005 | 4,002,135 | 1,744,314 | 2,363,537 |
Dilutive effect of RSUs (in shares) | 179,681 | 434,738 | 187,154 | 355,522 |
Weighted-average shares outstanding - diluted (in shares) | 124,576,409 | 109,509,195 | 125,312,658 | 105,338,010 |
Net income per Class A share - basic (in usd per share) | $ 0.13 | $ 0.11 | $ 0.15 | $ 0.32 |
Net income per Class A share - dilutive (in usd per share) | $ 0.13 | $ 0.10 | $ 0.15 | $ 0.31 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2020 | |
Income Tax Disclosure [Line Items] | |||||
Effective income tax rate | 24.00% | 35.20% | 22.30% | 15.40% | |
Discrete tax benefit | $ 2.8 | $ 3.2 | |||
Voortman | |||||
Income Tax Disclosure [Line Items] | |||||
Discrete tax benefit | $ 0.5 | ||||
Forecast | |||||
Income Tax Disclosure [Line Items] | |||||
Effective income tax rate | 24.10% |
Tax Receivable Agreement Obli_3
Tax Receivable Agreement Obligations - Summary of Activity (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Reconciliation Of Tax Receivable Agreement Liability [Roll Forward] | |
Balance December 31, 2019 | $ 138,196 |
Exchange of Class B units for Class A shares | 6,791 |
Payments | (1,279) |
Balance June 30, 2020 | $ 143,708 |
Tax Receivable Agreement Obli_4
Tax Receivable Agreement Obligations - Future Expected Payments (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Income Tax Disclosure [Abstract] | |
2020 | $ 10,800 |
2021 | 7,900 |
2022 | 7,700 |
2023 | 7,700 |
2024 | 7,800 |
Thereafter | $ 101,808 |
Commitments and Contingencies -
Commitments and Contingencies - (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Amortization of right of use asset, financing lease | $ 0 | $ 56 | $ 0 | $ 100 |
Interest, financing lease | 0 | 5 | 0 | 12 |
Operating lease expense | 1,269 | 616 | 3,064 | 1,257 |
Short-term lease expense | 544 | 282 | 1,558 | 682 |
Variable lease expense | 467 | 189 | 1,021 | 377 |
Total lease cost | $ 2,280 | $ 1,148 | $ 5,643 | $ 2,428 |