Hostess Brands (TWNK) 21 Feb 232022 Q4 Earnings call transcript

Company Profile

Participants

Andrew Callahan	President and CEO
Travis Leonard	CFO
James Salera	Stephens Inc.
Ken Goldman	JPMorgan
Rob Dickerson	Jefferies
Bill Chappell	Truist Securities
David Palmer	Evercore ISI
Pamela Kaufman	Morgan Stanley
Robert Moskow	Credit Suisse
Steve Powers	Deutsche Bank

Call transcript

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Operator

Greetings. Welcome to the Hostess Brands, Inc. Year-End 2022 Earnings Q&A. [Operator Instructions]

I will now turn the conference over to your host, Andy Callahan.

begin. may You

Andrew Callahan

and good portion and conference welcome, to and everybody, I'm our Travis Terrific. Financial Chief Hostess afternoon, Brands' Q&A Officer. CEO, President Brands' of Callahan, earnings joined fourth the by Andy Leonard, Thanks, Hostess and I'm quarter call. XXXX

be will release replay and today Time. along Relations all investor is with had earnings the presentation, to and at Hostess subsequent A ending Eastern still available our period also which Investor www.hostessbrands.com. at review chance on on you've the December published of X:XX our the That p.m. website. website Hopefully, the was a for XX, section of the webcast the be Q&A will available XXXX,

update we detailed statements, found of risks a these no the call, undertake revise may forward-looking differ or we earnings assumptions today's in uncertainties A results regarding statements, statements. During make our including future and from and and the release forward-looking obligation performance. Actual materially SEC and company's may in of filings. number expectations these forward-looking course these of can to list be the

A non-GAAP believe GAAP a Management measures reconciliation we to to included of in provide is measures measures these full investors. useful release. non-GAAP number that of to the information comparable financial references will make most earnings the

we're with with for the available So way, Q&A. out that, of that the

Operator

Stephens Bienvenu Instructions] Please from [Operator Ben line with with Inc. comes your Our first question proceed of question. the

James Salera

then composition a that? flat there? that kind you color for as us of little price into look on just to idea wanted Hi, give was innovation I Ben. built some from we think of primarily there on Any for be kind we I would helpful. volume of questions. could Should the of through that think XXXX, sales? get bouncers Or guys. Thanks the as and detail Jim Salera taking of on my into an maybe

Andrew Callahan

there. on like Yes,

full the about as feel So year as 'XX, it. good far we actually,

to the is gets see, price As for year. full Volume you the us gets and can -- algorithm back to then a if to see for can focused customer flattish you the to we it, prepared and had algorithm on But you've total it mix drives also, sustainable mentioned above profit in chance remarks, the we're our year growth. the guide. profitable consumer as

a at composition last year. FY the look historical, line 'XX, revenue the of the with in in history. The more back you disruptions year especially like you are and if the As in at QX, of distorted the comparison at full gating of is comparisons, coming marketplace because to volume perspective, in look in some

little our So we to year feel of and a and good you distortion. look you gating bit really take models if out full when disruption you the about the at historicals, compare

good and matter us year at a 'XX, year further XX%. reported, us but peers. makes was at two in just FY of stack As as We'll the our very two -- QX, top albeit stacked level food a fact, good encourages have of same we not QX, QX of what the growth growth

to So pacing of normal more we're really back FY 'XX. getting the of in quarters a

Bouncers. really with Now Bouncers, encouraged we're

really we but and consumers feel phase, which as hear what we I us Our both from about customers encouraged, good with the 'XX. our we look week, makes customers through in have mentioned the have visibility hearing excited we're we initial this And really remarks innovation, we prepared we're FY and were next plans the year. this what the from nothing at consumers feel about trial in later and our

James Salera

targeted that Can about snacking out in of laid you up the kind brought you -- Great. you And in? or five with there attack feel past since your of and you have with that it Bouncers Bouncers. of kind coming consumers helps pipeline any expand that guys these you reach have maybe talk innovation in maybe occasions. Is Andy, occasion you the kind any

Andrew Callahan

Yes.

get once So feedback. again, Bouncers great we is --

have attract For the product need. a We're those us what tried way. parents they've fits it, millennial also able their that they disproportionate told who in to

So we cranking lunchbox that way skew the for occasion. towards have we expect. it's a all And designed the

resonating achieving It's to our Ding and and Poppable some consumers. with Stone brand reimagining what be our and in strategy, goods them It's our lot -- That's universe. a Nets Hostess with a -- Dong, could our form putting of that So and for form the that is which our new seems $XX really relevant part generation, icons, version. our of they be a taking of strategy a and putting snacking -- Twinkies, of billion working. more can all X-bite these in a these baked reimagination whole it to do core iconic

it So but excited to does over at we it said, we're skew do one over-indexes in But consumed our being its that that With the see indications gets the the really household, to occasions, about multiple lunchbox. do that. to once products ability early our of lunchbox.

James Salera

the Great. I'll pass guys. on. it color Thanks for

Andrew Callahan

Thank you.

Operator

question line question. of with from Goldman proceed Ken the comes with your Please next Our JPMorgan.

Ken Goldman

indications the some pedal environment on there competitors larger Hi, Clearly, I one to thank toward what are of the year. the your wanted in bit right you're ask about little you. that of end step the promotional a maybe seeing now.

you're importantly, intensity year Just goes modeling the from quarter? more your I seeing Thank as the what on? consent in in you. guess, curious what promotional you're first and you And

Andrew Callahan

both and consumer of customer sight So we have engagement. our our our ability about feel really plans the good the response to and -- with line we

our don't headline. It's all a think been in of guide our a as As relationships stronger. contemplated fact, customer have I matter never

year in two stack to our category perform to things Certainly, well continue we've the of seen related of in some continues the compete, during numbers. these coming our well. back, category extremely to marketplace in total really even which times grow we with we

I what And like doing. we're really

we through a manage consistently continue about in distortion supply you're You're a seeing we're chain positive the rate. talking to -- very talking because

So in we the our execution included customers, ability growth, the with driving good and over as which consumers benefit on playbook about consistent our is feel I from we're time. partnership our plan our algorithm focus to really the running, our drive

Ken Goldman

Quick And for then that. -- thank follow-up. you

less about in, of for assuming to overall bit talk You what's more little right, year the this accustomed elasticity? that, you your have past, expectations how is pricing Are terms taking grow Can than coming know assuming as you sense one more talked just kind to that has to is a more of I a consumers ultimately baked forward. in about tough will there in still elasticity? they model that as higher higher and prices. just trying -- sensitive a going if But you're consumers put that of been much level historically at sensitive of prices? given for, get it's somewhat it to you're higher not be or least

Andrew Callahan

Yes.

you just the marketplace, reminder, deliver growth we an established. have Ken, but -- mentioned just all we that pricing in, a we response deliver established always believe As that that is now, to changes in of to the the we we'll and need all believe pricing that we guide we the agile to the

as out and get that's long-term. to therefore half the we sustainable see benefit So that, into is feel the of algorithm volume and lapping on, That's the today. pricing we the driving the of good we year more more what the of about really our goes what and we'll back see

partnership our we Relative what we all on out. impact customers, a not half. see elasticity elasticity we'll think our seeing have offsetting come type and any well, that through of short-term our enhanced which the that execution, impacts the is driving have to a see We on the with to beat consumer investment work on that's response merchandise we -- and innovation, we'll back the our elasticity, displays even our it, what we our in marketing, break in timing displays, and of start do -- investment includes that good just

which good we gives We me forward. have seen necessarily for not we've from feel assumptions those QX, actually in a as move changed what

said with You banks. absorb economists lot reports, in economies. undergoing We've we've published Certainly that's a still new consumer different of that of in our of conditions availability points well the channels across category seen price our they changes as performs marketplace the peers in help accessibility the of of very resiliency as is also the and some multiple I've that. our the kind support remarks have done research some and proprietary my our and in the breadth

continue my drive to over those all to So, sustainable guide confidence and our factor growth profitable time. around of ability up our to

Ken Goldman

Thanks, Andy.

Andrew Callahan

Yes, thanks. Ken.

Travis Leonard

Ken. Thanks,

Operator

with Our line the next of Jefferies. Please with comes question Rob question. from your Dickerson proceed

Andrew Callahan

Rob. Hi,

Rob Dickerson

couple Andy. How of Thanks. are guess I you questions. a Hi, going?

have didn't growth prepared to than of if question if algo time implies First all a just guide of through the 'XX. go kind is could little relative what I higher remarks. expectations? is, long-term explain, Apologies that driving longer-term I the think bit kind to Maybe you kind of the EBITDA

Andrew Callahan

Rob. Hi,

to sure Just we it. make heard

You the and for explain why guide? were second, a long-term the algo think I you bit slightly garbled said a profitability than little higher is the there

Rob Dickerson

it. that's Yes,

Andrew Callahan

Yes.

that. Sorry about

You let that are little bit one. take garbled. I'll Travis, you

Travis Leonard

for Yes. thanks Hi, the question.

we about mentioned, in as that proud we going growth results And, to of So XXXX. really guide. delivered the first good forward. we you feel off, expect our strong deliver really We're

Day from we talk. growth we've as you've that perspective, flywheel Investor talked an it's about since our the me So, by think EBITDA driven about -- heard

to and mentioned, X% -- I'm It's Andy and X% continued growth So, it's we're -- focus lot guiding to price top-line our top-line growth that good mix rather. a as and we're of expecting is volume. and targeting sorry,

misspoke. It's productivity. on I our Sorry, continued focus

management heard good me our across our operating growth that across So is We've productivity business this you've well. system. is expenses. talk and leverage This revenue about entire got as

as flat net going costs a of in XXXX. is to be operating our revenue relatively percent So

and from common is kicking flywheel top-line. starting our of all So it's the

where getting on our that. Our focus operating costs leverage, margins see and we in particularly key

Rob Dickerson

Okay, just And follow ups. great. two maybe then quick

implied bit albeit the sure which year in kind just what ability, margin volume back of the back cadence gross half. on of Thanks should of anything terms Andy, the sounds then terms the that thinking much. not in as be we so not cadence accelerated for more margin, the get year. driven, there volume it on and I'm you gross volume like that's through for also is yet. year of suggest we top-line would message year-over-year, in the In a half, the then little maybe sort the maybe and positive is about if

Andrew Callahan

Let me come is Travis your gross top-line on the on reiterate correct. margin, so. the Rob, takeaway then top and

the look of we through year. executed lap that as that as at driver pricing actions early XXXX out more a flows the you As we price-mix multiple in

seeing more year. the see start drivers becoming above around growth innovation our and at move and other things that then through we you'll algo marketing You'll and as

if And you'll historical. 'XX, at want to it. see our look that's that of So you follows it cadence the more

the away get of disruptions where take of and benchmarks a good a pricing lot supply that'll historical and last see of you'll of year see that. average things, to distortion some way timing an take you If you be chain distorting

our all adds that up and aligns with model. So

that's the to So at way look it.

turn Travis discussion. I'll margin to it the for gross over

Travis Leonard

great Hi, question.

gross Let me talk this up little a frame bit. about margins bit a and

margin flat. flat 'XX. are margins essentially gross Adjusted our So, FY gross is essentially versus

keep Arkadelphia $X start-up costs, mind, are margins, growth. strong deliver onetime we expect flat single-digit essentially to Now absorbing of EBITDA got which is gross and but we high million in in nature. We've inflation

margin our than gross still peers. remain Now, better

to committed time. over those are We margins recovering gross

good which this So But tool timing. management our recover around recovery profitable we'll not about long-term margins those we of leverage feel fuel and around our investments growth. is choices growth. continue to revenue We're 'XX, as the to margin for productivity and we gross really capabilities FY around prioritizing growth think margin about our --

that QX. As tough things did cadence, the of about probably you we have you'll the on think cadence, a a see one

So talked actually first It I that. about earnings call. my was

was were was there So obviously, fragility. inflation around a high. -- supply chain lot There

lap So better that. result QX, to in we do we begin a as expect of some

Andrew Callahan

to related I over consumer paid for continued it. what's going -- sustainable focus growth and just our that we've is do that time on well feel us off Hostess -- gross over customer really to And Yes. and that's consistent our profitable well Brands time we'll growth. serve committed do and as Rob. to within sustainable we're continuing until deliver Travis the we'll margins of context mentioned, Thanks, to and profitable recovering first

Rob Dickerson

Super. Thank you.

Operator

line of Truist the Our proceed Please question your from comes question. with Securities. with Chappell Bill next

Bill Chappell

Thanks, afternoon. good

Andrew Callahan

Hi, Bill.

Travis Leonard

Hi, Bill.

Bill Chappell

landscape. for it's about a you three the goods. the Can know little competitive I bit big just say

move know innovation the single-serve are for the I an some half? come I years we different promotions? ease expectations couple a And kind start standpoint, year? to of wouldn't be it the it category You grocery expect but what your I second of for kind you guess And to share, as two, the side little as do of but growth year bit kind level know this then on gaining held a of after through it the costs gets share. back it's of one, from

Andrew Callahan

really our that's guide. bit Yes, run harder models, a our be highly couple in our because our of share, really and things. ability play good great I expandable about to feel able about It's category predict about to one. feel a little mostly a for to we're

a which it, can billion right now. and lot we're occasion So and in in set. Sweet of of $XX category access complete We're it's $X meets Baked Goods across not growth baked in snacking a there's interest that a goods map that billion

course, and category. that better as in and -- real over that will that term time. to that a kind time, our in of of really up go I and down disruptions that a good playbook the of take And execute share short complement believe So I a share we're lot

way us believe a doesn't undermine our confidence that don't in model doesn't our long ability is number we that really and guide. the our So saying, But of share. that to we -- drive give

have We confidence in that. of lot a

supply was pricing All the good stack of the and that be talked flowed our different contributed we on model everything in now, marketplace. category, through good. to timing bit helped of have or chain, continues including our in of confidence said, our to all need. in little two-year distortions The it have we all timing our they to growth my about was The execution I've continues be being

the I'll the promotions, -- top-line, I our we that with about patterns. with And all It's satisfaction reiterate partnership growth. is it's guide, And there. in overall to probably have gating our drive better. to to contemplated good of have similar customers, the the do of fully been pacing to 'XX this. the promotions I historical similar really never partnerships and we feel think consumer Related a in

listen already, store, about multi-tiered displays, the in chance feel to and tools is When access prepared we're remarks I merchandising haven't -- good the our you if about on focus you consumers customers which the really performing. partnerships have our across to get a enhanced really Travis merchandising, to talked visibility related good about our activating through availability we

Bill Chappell

Got it.

I'm so And you missed, this category expect sorry, -- I growth for year.

Andrew Callahan

I did not model that.

share. number that you forecasting will me ours. Sweet not It's number. wouldn't difficult believe I great a in term. how for time continue to category to over the the drive over predicting give a I I -- In communicated forecasting to that performing I'm has do given the term, been the it in we have that reliable talked drive fact the So that but Goods share in short short time, distortion and that Baked about to

Bill Chappell

Great. Thanks so much.

Andrew Callahan

Bill. it, got You

Operator

your of next Evercore the line our ISI. Palmer comes And question proceed from David with Please with question.

David Palmer

things effect, you Thanks. think costs much margin Question those what of do even net and and two the year and about in terms perhaps for how into gross the year overtime have would these improvement? next with chain you productivity supply this

Travis Leonard

Thanks Travis. for is the this Hi, question.

these let maybe separate bit. me things So a

allow pipeline and to part investments and and our our productivity and continue growth feel obviously accelerating think our invest develop it fiscal a good heard growth call. build We I investments to and We've us the I to margins. talk our full we feel then again in and about to year keep We've really this our about earlier bit productivity, really keep pipeline that's about repeatable ability to flywheel 'XX. of alluded good of our you've So to this and scalable recover the this processes little capability, to of initiatives accelerated of that, me full. very in productivity in the

we the As alone This today, improving lot we we were are us. think here it's as about to the chain, FY and sit in it supply way challenges. chain see in supply we not unique a is that, is There of this. 'XX,

the talk we that context us came suppliers. with heard But was, supply have relationships fragility. in our strengthened our of chain out might You about what of key

strengthen our system good if ability there the in -- if during those really are feel to going that XXXX and relationships, tough we in strategic as move we to -- feel we partnership, shocks have the it forward. So good, with forward some situations

Andrew Callahan

that, committed margins So gross on our time. recovering to we've building over

flat So this we're communicating year.

you couple million Obviously, of some double-digits. to our probably that, cost, if we we Now a balance focus related is have of that know this we inflation from going more certainly all on $X so skew our balance ladder our up Travis a We've talked onetime mentioned of with on have to things. we right. tags, earlier sustainable remarks little a as section and in obviously, prepared that be we growth, bit Q&A

eventually With of growth. in So it. profit that, we get we're all high will really still

time. We we've on year will of as real over building it that's have this we in invest settle and under going driver we've as But invest to -- recover really out believe to been continue a of and we in them productivity great leadership, there, -- Travis's we I be growth. our pipeline fuel doing

David Palmer

mentioned belief chain including bringing is some your promotion, there net be other, of that, productivity about But any will of that commodities supply and to you're it price neutral, that and your bigger this will be is So gross back a year costs. easing those margin? what benefit you

Andrew Callahan

is, and consumer the all some that's manage of absorb because conclusion what the to the Arkadelphia to that model balance have you costs we gross make. growth the -- That's of of Certainly onetime neutral a recovery. margin we're matters of as doing of the timing

David Palmer

merchandising how of it, will the you. versus then and about the new the pace, Thank the product question my final year. innovation this quarter rest cadence and news first one, benefit then And the will

Andrew Callahan

we in will now do to back some of announce Bouncers chance lot this covering So, fall. I like innovation and which as sample. another a -- you David, the will have will industry later attendees know, you launched week, -- we we companies, a really know We're here have

So I look that forward to feedback.

at total XX% innovation. revenue we XXXX, the As of we from drove looked

index So and the that's months. The well phase, what and category of takes innovation XX it was. the above trial about pacing the the

expect be So to contribution year. really another we strong innovation our

the get to to innovations, we've the continue Buns launched we grow. As continues of previously, benefit

and -- have innovation new coming also out with packaging We Sugar. Voortman is Zero

as trial the still We one and announcing Bouncers on have well another we're Hostess new in as phase ones. is the

I've related pipeline and ever as good drive So to innovation ability better felt to -- feel as our as I've actually growth.

to We'll to at of continue be a category, about. optimistic the I'm the our XX% index high delivering continue XX%. -- us vitality of of to to moving -- expect maybe two high at our the end of times up very to end

consumers good, So half be XXXX, phase of from initial it our but to our our trial really really the still launching, related be excited really the encouraging it. feedback will in Bouncers, products that is to the we're about continue customers and new we're first

about And it excited more selling They the for it's how under are here since they're excited the a peek have they March. one in in about innovation even obviously, Bouncers, they launching. sneak are we later launching and were next

David Palmer

Thank you.

Operator

Our next Morgan with of Kaufman Pamela from proceed question. Please with line your the question comes Stanley.

Pamela Kaufman

behavior what multi-packs? are terms just are across to Hi, of seeing you're you mass seeing And serve differences good what and grocery ask for in across stores? evening. single I versus I channels? convenience wanted any versus habits you demand then in guess, shopping about, in consumer observing

Andrew Callahan

take last let part then and the to, cross related channel. that I'll talk me about first So,

serve, only have well, And very does very channel of our and it's it to channels, of fact, do across know we the well. spent index our have really business is model consumption over the convenience also single-serve not you continue business where very as initiative expanding broader to leveraging matter single-serve we strong and business continues do Our well an and more single strength convenience. we we a

going with numbers that and at regularly retailers availability that those much. front I see well ends really grocery of large and expansion the And some expanding is planogram like

well our it to we now growth and customers single So I the on future. the drive really expect continue well in with have to is that build doing serves partnership do and program

channels, our investment strength operating by adding just breadth one -- Related a our model as to the the powered the and throughout availability. of as by has which the in really our life, headline, business enabled entire quality is availability, of products to shelf of the our

same that. and have the to So of the life our it neutralizes our enact to as shelf one, day which we quality at strive able be end exact ability really really empowers to

you happen. But but shift minor seen We've like that obviously positioned but channels, shifts, channels. the we're not if major across a asked does our some about

seen have which they originally were high, trips, We moderated slightly have but really recently.

high We're continue resilience channel. trends season, strong We to see moving into normal. to and that related those the convenience a within are

we access continued consumer trends, of haven't major So as shopping consumer related the within and really our with a the moves. business minor They've seen to to behavior and convenience availability our in move strength been anyway, and breadth business consumer across. our booing

which way to times By to is over greater a two loyalty in almost rate times franchise, that's time Pam, already we times than related increase at to continue two category. two of see the the strong the our really total buyer addition

testament our track that's I continue So that in a to product quality. our investment really to because

Pamela Kaufman

very quarter. an expansion is update How Can on what now distribution so the then what's targeting to -- the over are next for growth just Voortman, continue and much fourth Great. And give just you you strong distribution the growth? have in on year? where driving

Andrew Callahan

Yes.

it, about passed is, of three bought anniversary has when One us. and we accretive, -- new accretive. great things added a category the margin It's three-year we been to originally it the growth Voortman just

immediately We sugar profile leading margin warehouse growing it a a twice the within the to segment, cookie reduced We category unlock more of it. position within $X the billion to moved at than that's rate. have

driving really not growth -- distributor distribution. And really focused The on then growth. the the is we what's driving now the

from has to been and able compelling to to our It going continues growth to a be is not provide our by Although a innovation be velocity velocity. more our related execution velocity of competition, sugar, merchandising category we distribution cookie high our down. Hostess, positive. our What's reduced ability and is the macro versus Voortman mostly trends quality learned really of And that within position driving by preferred velocity launches. model behind driven driven product now

our price shows protect that's that this our growth When aggressive on with the I margins to that driving been mix dissect over model, us look the that despite and fact what's time. we've

once velocity So very expect trends as continue of similar again, Voortman to to these into Hostess, piece macro of this of on a category the continue I cookie larger build we sub-segment it.

And we lap business. the due but to completely elasticity impacts of stuff the velocity pricing. of of -- There's ahead almost the mostly drivers nothing but Voortman, good it's the

Pamela Kaufman

Thanks.

Andrew Callahan

Yes.

Operator

Our the next Suisse. of question. with with proceed from line comes Moskow question Robert Credit your Please

Robert Moskow

am CAGNY next display Hi, conference right Daniel's. Jack thanks. big the I a of to at

So know. become in me of just incoherent question, if middle the this I let

Andrew Callahan

our for call it we'll able see to O'clock, tomorrow you take what That's get you'll X conference innovation. and having of at be our Rob. but some next

Robert Moskow

comp about first shaping if the like have of you reversing. to distribution know Daniel's, a you it's up want But really year, me Jack picked tough the from competitor and now Well, of know. Okay. I quarter let because this it's that

how and think quarter, volume growth? about we first should So top-line

Andrew Callahan

to Yes, concept can. way explain I the I'm trying this best

'XX. you pacing take the patterns. in those if historical It with, in mostly that So if pacing of QX follows the QX, year of ago, is throughout volumes -- our the was look QX, QX QX, quarters, pacing QX line you out 'XX of at the which and revenue and of revenue

is cetera. through cross And And aligned rising with our then that when so We feel tab we internal that we why supported approach. that innovation, that's et good. models,

be really outlier was Now was growth. what's that the which year the distorting like ago, the -- it down up or comparison looking may as to is really the

good really [technical normalize high that. races following QX going about stat you will not as will the year a it be it's two we're be to difficulty] in stacked -- Rob. of it's and in year in two are as declining still strong and high, that, when QX, a here's but you, not stack to off QX, be QX Now because like also feel we that, for In

year. So that's way fit the think the through kind best to of in

Robert Moskow

Okay.

So...

Andrew Callahan

benchmark That versus gating. historicals

Robert Moskow

that look mean forecasting that should to at Is things it? stack XQ? on way three we're when a So, year we at does best look the

Andrew Callahan

look absolute historical QX at then for the yes, history. can the a the 'XX based to growth -- gating You three and number of the that compare gated on pace -- for year the

Okay. Both. take out distortions. the it And will

Robert Moskow

is the you XQ Okay. share you thought can surprise when which the We of the Like, a was wanted knew the tell degree going just in to surprise. how anything whether for about regain to about And, this competitor out retail? looked actually know surprise market declines all degree capacity, more to a back it you was I us to to is it was there came at you? me. numbers it came a but

Andrew Callahan

Yes.

than So number the share is different our total.

Now came our -- guide. our within where we in in QX was

very category ways it we can and I of Goods impacted news it we're interest in and lot of of total category, got competitors, Baked you expandable priory look does two specifically of a a ways the categories. well. it baking we baking, frankly, the is do one which Sweet is interested number at in by share lot the and way clearly So think look We a from at

our we not share do number, we forecast So, precisely as the own as do number.

own Our be is fit driving models anticipated, guide access. and in number the better performed would our have within our we still ability our share, to but able than the category which to

and feel buyers, New is millennial intact going about the times growth rate growth forward. two to continue all our penetration we increase households, in good our of consumers continue to drive

Robert Moskow

sense. you. Okay, makes Thank

Andrew Callahan

Yes. Thank you.

Travis Leonard

Rob. Thanks,

Operator

with comes question. your Our from next Please with the question Bank. line of Steve Deutsche Powers proceed

Steve Powers

evening. good Yes. Hi,

bit just in frame are you follow-up help in needs the foreseeable future? for what if a capacity growth go really you you this based investments Maybe us the 'XX big the then you could see increases? for expected a beyond? build of 'XX. and on capacity parts on Just then, as capacity exactly Or those getting is just forward, do we more step-up 'XX out color capacity a more around called And provide little business and

Travis Leonard

Travis. that. start is question. answers. this for Great I'll this Thank -- Hi, you the

will So what will incremental QX is XX% Donettes of This bakery lines were and Arkadelphia. online and in referring to come XXXX. new capacity we our and it our to provide cake

good good to bakery. feel It's to and we Donettes really got about it, the of first cake feel we platform. So lands it's concept really help us about. definitely, with this going feel a a really kind which And sustainability

that as this here, little a one. we let is our say, think in bakery. we $XXX the million. down. CapEx capital, ramp talk guide The investments $XXX I and in in that bit about beyond, you the about talked about big this So will would reflects about way million will in this Day XXXX of our and into way about Investor the context investment -- see is as capacity, And think to XXXX think the to we to That me

in a had our revenue we in our So Day, be elevated just will And guide. of percent you Day. think at little what then of of with $XXX.X color consistent as of of the we bit we it revenue. as context about CapEx Investor you XXXX, about will to give CapEx in and at about low-double XX% That XXXX million, the given remain Investor digits a of spending kind about talked which more is here, how that's we talked

Andrew Callahan

Steve, me on build let Yes, that.

add financials, at going our we and about it. footprint it's -- So capacity Travis I they're where important and industry way We're good new which XX% strategically feels said cake exactly growing. bakery really adding and the the to us business are to and a talking Donettes to about was first

what need And -- two efficiencies going to it. when these We have do decisions to make years drive able in it, unlock this and obviously, within to we're we we've you we're capacity advance.

we producing time, either stacked our talked or or growth, into maintenance. a driven our here our as lines, product, now that we there's when about and there's a sit we up online get the equipment volume cake today, total back growth algorithm, upgrading the preventive with our either we're we've As sanitizing over not growth, growth we not time human need them

it's XX/X pretty say, if these over and time anything. or much we're So lines on whenever

the optimizing nice efficiencies to network we When real did COVID complex hit, run and we drive of a a network throughout. job

do reset able bakery. we our network. will that We'll We be to this when unlock new

optimize the We will able line runs. to be

the then be to employees, of burdensome be our that. includes on planful, ability more will manage do less We to way a able pipeline, that's to part able our productivity, to our

first going is a so capacity. it in And about way So in confident driven. talk algorithm time. sustainable to which growth need that we're we we're long-term mostly growth drive volume optimize And really profitable the successful second, the first we those in that

of get As period hyperinflation, us. will drive great of out success it for really we this

year made feel So to really the get we'll feel back of need the we that. half decision in that really really team online when good the about it fortunate the I it. because did,

Steve Powers

modernity you've as get the that running Yes, them, sort on or going lines as you're of plan And a new flex investments older lines you been forward? just more in to but now that freedom in you to -- to footprint, in gets you've it full that's automate of carry and is them, footprint follow-up, bit online, is my -- the anticipated optimize there you new that overall part great. out upgrade the made for those of little kind us had production while, all a is more

Andrew Callahan

it's, Well, yes. yes, think I

maybe not lot be the things answer. would the trying I be We think our do that line. flippant to not but answer honest of -- a it in

that lines is in that. do for automation, high forward. we ROI unlocks in need -- invest lines. which our go to We productivity, then part be part of savings our example, to of We to take we able really And have as down

forward -- away. able supervisors and at our to then different We're also with we're and able IT those we our implement some learnings launching investments back IT We've bring train right to technology that facilities back. Arkadelphia, when have digital team we're

we yes, only, for be be other without plan gives a not it's to It bring also and then to capacity So able test of it us to as lines. impact really digitization the a throughout to provides bed update foot-forward us IT freedom technologies that some network. the the the to to able

in don't the quality about productivity. that forget, They're investment. pipeline some And all we to contemplated related of our talked

but our only already focus which technologies, not allow innovation. that, and They do quality us on So our digital really those to we implement. support

Steve Powers

much. you Thank Okay. very

Operator

line with with Goldman from comes next Please your proceed JPMorgan. Our the of Ken question. question

Ken Goldman

of Hi, thanks. can, follow-ups, Two quick clarification. name the I in if

a soft first there's for what bit think little guide top about line. I to would confusion the us quarter's sort exactly of number of you

not $XXX if modeling people number. in are reasonable make I the I that think closer that. the to curious I'm want people a some to for that's sure getting context, off just Again, with bit actually way little million that number. to model. giving we're you're not

guiding for the line question organic X% around growth second the year. at you're top And then to -- midpoint this is

but seeing You're also for percentage expense above be guiding your to you're EBITDA, points and few will percentage operating be a percent margin gross flat. of will flat sales as a that

but plant mathematically, wanted D&A. assume guess, that's make I'm Arkadelphia I difference online, sure I the about that I correctly. So is thinking just coming to the

So thanks your there. for help

Andrew Callahan

QX across can X%, you than once it we the out with year does you're up the at The full follow QX So quarter. on imply growth higher number, but get X% the benchmark versus the that of a that.

Ken. follow -- that, can was high. But what I that -- your say? offline up we did think Was think QX math you I on So slightly on

Ken Goldman

Thinking slightly roughly high.

Okay. that. thanks for

Andrew Callahan

I don't know.

Travis Leonard

Ken, follow-up call. let's about this in the talk

Andrew Callahan

Yes.

do specific talked first guide the the top fuel some to about, mostly And margin get go in don't to we of So related our about through and the to throughout half EBITDA that that then you line we growth our related bridge, initiatives, price/mix the some to from Related and - year. profitability the our the the some that. the talked flowing pricing the of throughout throughout to on clearly you to we EPS. leverage if P&L quarters

about that. we where that's So feel

Ken Goldman

We'll guys. on follow one, up Thanks that too.

Operator

I'll question-and-answer reached management any back And we of session. remarks. have over the turn closing end to call the for the

Andrew Callahan

like team growth after this I deliver for profitable that a sustainably to to can to to thank drive growth We position Brands' sustainable long-term we have that it. That's year. the day confident industry-leading continue. to year continue I'd we Hostess do after shown deliver forward the feel to take year that look our results what they every business, I'm will and

your for quarter. and So we thanks see will next you interest,

Operator

Thank This you time. participation. disconnect for and today's your this your conference, may lines at concludes you

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