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spk03: Greetings and welcome to the Hostess Brands, Inc. 3rd Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Chris Mandeville, Managing Director of Investor Relations at ICR. Thank you, sir. You may begin.
spk01: Good afternoon, and welcome to Hostess Brand's third quarter 2020 earnings conference call. Joining me on today's call are Andy Callahan, Hostess Brand's president and CEO, and Brian Purcell, chief financial officer. By now, everyone should have access to the earnings release for the period ended September 30th, 2020, that went out this afternoon at approximately 4.05 p.m. Eastern Standard Time. The press release and an updated investor presentation are available on Hostess's website at www.hostessbrands.com. This call is being webcast and a replay will be available on the company's website. Hostess would like to remind you that today's discussion will include a number of forward-looking statements. If you will refer to Hostess's earnings release as well as the company's most recent SEC filings, you will see a discussion of factors that could cause the company's actual results to differ materially from these forward-looking statements. Please remember the company undertakes no obligation to update or revise these forward-looking statements. The company has made a number of references to non-GAAP financial measures. The company believes these measures provide investors with useful perspective on the underlying growth trends of the business, and has included in its earnings release a full reconciliation of non-GAAP financial measures to the most comparable GAAP measures. Now, I will turn the call over to Andy Callahan.
spk06: Thanks, Chris, and good afternoon. We appreciate you joining us today. Before we get started, I wanted to continue to send my thoughts to all those impacted by the pandemic. Special thanks to the incredible hostess heroes for their remarkable dedication and commitment on the front lines every day in our facilities, in transportation, grocery stores, and beyond, ensuring our communities are supported. As we continue to deliver strong results, the health and well-being of our entire team their families, and the communities we serve remains our top priority. Hostess is executing very well. I am very pleased with the quality of our results that demonstrate the strength of the Hostess brand with consumers, the strong execution and agility of the team, and the benefit of a transformed portfolio with Wortman. More exciting, we are well positioned to sustain profitable growth moving forward. A couple of points to emphasize the quality of the results that I will talk about more in a minute. Hostess new and one-time consumers are increasingly becoming more frequent buyers at a rate twice the category. Despite overall consumer trips to the store being down, consumers' purchases of hostess trips are up. Additionally, these consumers are younger and have longer potential for growth overall for the brand. We do not see a change in the strong at-home consumption in the short term, but do see an improvement opportunity in immediate consumption for our single-serve business as consumers gradually become more mobile and retailers adapt front-end checkouts to the new normal. Lastly, we have a terrific innovation slate across Hostess and Vortman as we build the Hostess brand in both breakfast and all-day snacking and extend Vortman into single-serve form. expanding the usage occasion into the convenience channel, and entering into an ancient grain-based platform. In summary, we are performing well now and have a high degree of conviction for continued strong results ahead as we remain actively focused on our five foundational pillars. Grow the core, grow through innovation, improve through agility and efficiency, cultivate talent and capabilities, and leverage our strong cash flow. Now let's discuss some of the numbers. Net revenue grew 18.5%, excluding the in-store bakery or ISB business. The Bortman acquisition contributed $26.8 million to this growth ahead of our acquisition economics. Core Host's branded revenue led our growth versus low-margin value brands, which was disproportionately impacted by bending and independent C-store decline. Multi-pack sales continue to lead the growth for single-serve, given the increase of at-home eating. However... Single-serve revenue did grow this quarter as consumers were on the road over the summer, all while we continued to see elevated demand due to more people eating at home. And as stated previously, we do not see this subsiding anytime soon. As I mentioned before, Kosas has been very successful at gaining new consumers this year, and we are increasing our repeat buyers twice the category rate, with repeat buyers of our multi-packs up 11%. and bagged donuts up over 15% versus a year ago, building an even larger high-quality consumer base. Even better, some of our strongest household penetration and repeat buyer growth is coming from younger consumers. This gives us confidence in our future growth potential as consumers young and old are continuing to demonstrate their preference and loyalty for Hostess products. These trends are supported by our point of sale, which increased 6.7% with a market share of 19.7%. Hostess branded point of sale was up 8.5%, and market share was up 20 basis points, representing continued growth ahead of the sweet baked goods category and demonstrating the strong consumer demand for the well-known and trusted Hostess brand during this time. During the third quarter, we were able to achieve 7.8% point of sale growth in the convenience channel despite continued, albeit less challenging conditions versus prior quarters. This was well ahead of the 1% category growth. This drove the highest share position in the history of Hostess and C-Store with an increase of 1.7 points this quarter. Based on our recent market data, the convenience channel trends are showing continued improvement through October. And given our increased share position, we are well positioned to disproportionately grow in Hostess' most developed channel as traffic fully recovers. Turning to our merchandising efforts, the adjustments we made to our programs to address changing consumer behaviors, including the smoothing of our historic back-to-school programs and our Bring Hostess Home for Halloween promotion are working. The growth of our limited-time offers for fall and Halloween alone was up almost 18% this year on top of our strong summer program, which was up 32% versus a year ago. These programs have resulted in strong year-over-year growth, and we are excited to continue to tailor our programming to best maximize our growth potential as we move forward. In addition, our marketing efforts are increasing in key areas to accelerate growth, including developing new digital programs, which will continue to support our next phase of growth. We are also pleased that our mix initiatives launched at the beginning of the year and the strategic emphasis to prioritize more profitable hostess-branded SKUs during this period of unprecedented demand have continued to help our industry-leading margin and support our profitability in the quarter. We believe the diversification we have across sales channels, value tiers, and now categories with cookies will continue to provide us multiple avenues for growth as we are able to address changing consumer behaviors with our broad-based agile network. As a result of the strategic actions the team has successfully executed during the quarter, adjusted EBITDA significantly outpaced our adjusted net revenue growth with an increase of 29.2% compared to Q3 last year, excluding ISB. Our adjusted EBITDA growth was primarily due to accretive margin expansion generated from the successful integration of Bortman and strong core hostess revenue growth. We are very excited to bring a great new slate of innovation to the market in 21, which leverages key consumer insights and trends and is tailored to address our broad channel distribution and capture new consumer usage occasions to drive incremental growth. Keenly aware of the consistent and growing trends in snacking, we embarked upon a robust meat state study. We captured the data from thousands of eating occasions and generated insights that give us precise understanding of the sweet snacking landscape. In addition to understanding the who, where, when, and why consumers choose the snacks they do, our insights have covered the unique product and packaging attributes consumers expect from various occasions. With this foundation and knowledge of our category, we have developed new Crispy Minis to tap into the mindless munch and need state, which significantly over-indexes with Gen Z consumers and no other brand in SBG is currently addressing. New Crispy Minis are bite-sized layer wafers filled with cream and topped with icing, line priced with the balance of our snacking portfolio to leverage our merchandising scale, and back with outstanding pre- and post-use feedback from consumers. We're confident that this needs state and format expansion will drive growth for Hostess and the category. Our innovation slate for breakfast will accelerate our already growing share of this day part. Over the past 13 weeks, Hostess' branded breakfast sales grew 14.3%, bringing our share of the breakfast day part in SBG up 80 basis points to 17.5%. This is behind the strength of our iconic Donets brand, which is up 14.5% and the growth of coffee cakes up 29.3% led by our new cream cheese coffee cake innovation. We define this space as morning snacking and our insights into the occasion and its relationship to our brand is sharp. Consumers want to joyfully start their day and are increasingly snacking in the morning AM snacking is driving snacking occasions, with early morning snacking in particular up four points since 15. Additionally, the share of morning snacks that are sweet is up 130 basis points. Our new baby buns tap into a growing form in a great tasting and first to the retail market execution, and our new muffin sticks bring a familiar sweet taste in a more appealing on-the-go snacking form. Our single-serve jumbo donuts are on fire, up over 45%, and we are now bringing consumers a classic glazed option. Building on our bagged donuts momentum, we're introducing strawberry cheesecake and caramel chocolate flavors, and we continue to build our Donuts On-The-Go franchise, which extends our iconic and leading brand into new usage occasions. Additionally, the Bortman Innovation Engine has started. While we continue to meet consumers' increasing share of snacking occasions, we are also expanding our Better For You portfolio under the Vortman brand. We have developed a delicious and wholesome cookie line that leverages on-trend and healthful ingredients to satisfy that need with our new super grain cookie. They are packed with real ingredients like real fruit and fiber-rich whole grain oats, rye, and buckwheat. The target subsegment for super grains is expected to grow at 30% CAGR, more than six times the total cookie category. This underserved category subsegment appeals to younger consumers with nearly half seeking grain-based cookies. Our 2021 lineup also includes exciting new pack-sized formats to penetrate new channels and usage occasions. Wortmann Mega Wafers is a large-size version of our delicious Wortmann Wafers that's a perfect on-the-go option for consumers in the convenience channel. Based on strong consumer testing and the seamless integration with our highly successful hostess partnership program, this new product form is gaining early strong reception within the convenience channel. We are excited about the profitable growth potential that lies ahead. As I mentioned above, Our LTO program is performing well, and we will continue to keep fresh and consumer relevant. 2021 includes new flavors like key lime and s'mores, as well as new cotton candy Twinkies. We are also excited about expanding the historical Bortman LTO offerings to provide consumers additional opportunities to try new, fun, seasonal flavors, which are a great way to entice new consumers into the brand. We are thrilled with the expanded capabilities of our new innovation lab. which has served as a critical launching pad for the development of many of these great new consumer insight-driven innovation items and enables fast and efficient product prototyping. Related to Bortman more specifically, we remain confident about the future growth opportunities it provides for years to come. With the transition to the warehouse distribution model and key integration activities largely behind us, we are confident that we will achieve our targeted EBITDA contribution in 2020 of $27 to $30 million, with accretive margins over 30% in Q4. We are pleased that we have been able to achieve year-over-year Bortman POS growth of 2.4%, overcoming a 50% reduction we made in SKU count. We are now transitioning into the next phase of Bortman's integration as we drive expanded depth of distribution and increasing merchandising. Relatively small gains in ACV can have a very meaningful impact, and there is ample opportunity for growth with our efficient distribution model and great sales team. The Bortman integration has driven significant value for Hostess as it diversified our portfolio, enabled new innovation platforms, and added incremental revenue at a creative margin. We remain very pleased with the performance of the team as they have executed the integration and transition with excellence. and we look forward to the future profitable growth we can achieve as we leverage the Bortman brand, its great products, team members, and complementary asset base that this acquisition has provided to the Hostess family. During the quarter, I am proud of our dedicated and talented team who successfully executed an aggressive agenda, including key operational improvements while keeping our manufacturing distribution facilities operational in this challenging environment. Our team demonstrated their agility as we made strategic adjustments to our portfolio and merchandising in response to changing consumer behavior. The continued strong consumer demand and successful execution of our operational objectives enabled us to achieve our 11th consecutive quarter of revenue growth. I am confident in the value creation we have ahead, supported by strong organic and inorganic growth potential at sustained industry-leading margins and strong in building capability. Now, I will turn it over to Brian to go through the details of the quarter's results.
spk04: Thanks, Randy. I want to reiterate my continued gratitude to our team. Our strong performance in the third quarter continues to demonstrate the team's ability to over-deliver results while continuing to build an organization that has significant opportunities for future long-term growth. Today, I will review our third quarter 2020 financials and other data from today's release, as we think about our business moving forward. Net revenue for the quarter was $260.9 million, an 18.5% increase, excluding the impact of the sale of the ISB business in August 2019. The increase in net revenue was primarily driven by the acquisition of Wortman, which contributed net revenue of $26.8 million for the quarter, as well as strong Hostess-branded revenue growth, which was partially offset by lower value brand and private label revenue. We have seen a continued upward trend in the demand for our single-serve products, with the third quarter POS up 2.6%, while continuing to achieve strong double-digit growth in our multi-pack product. Gross profit was $91.2 million for the third quarter of 2020, and gross margin was 35%. Excluding ISB, gross profit increased 32.6% from the third quarter of 2019. Adjusted gross profit increased 23.9%, excluding ISB, due to the higher revenue and accretion from Vort. During the quarter, we were able to expand adjusted gross margins by 153 basis points, excluding ISB, due to Vortman, with hostess margins staying relatively flat the prior year. As expected, operating costs were higher in the third quarter, primarily due to the addition of Vortman. Our effective tax rate was 20.8%, compared to 22% in the prior year quarter. The decrease in the effective tax rate is primarily due to a discrete tax benefit resulting from a tax law change. Net income was 24 million and diluted EPS was 18 cents. Adjusted EPS was 19 cents per share, an increase compared to 13 cents per share in Q3 last year as a result of the accretion from the Bortman acquisition and the higher EBITDA driven by the core hostess growth. Adjusted EBITDA for the quarter was $60.2 million, or 23.1% of adjusted net revenue. Excluding the sale of ISB, adjusted EBITDA increased $13.6 million, or 29.2%. The increase was primarily driven by the addition of Vortman, which contributed $9.2 million of EBITDA accretion for the quarter and a balance of growth coming from Strong Hostess branded performance. The high Vortman margins and strong Hostess brand volume more than offset the continuing COVID-related costs. We had cash and cash equivalents of $152.3 million and net debt of $953.7 million as of September 30th with a pro forma leverage ratio of four times factoring in the expected full year 2020 EBITDA contribution from Boardman. We have made meaningful progress reducing our leverage from 4.5 times following the acquisition at the end of Q1, while continuing to make strategic investments in the business to drive growth, including the investments in our Donet line, our strategic innovation lab, and the key integration activities enabling the Bortman transition. While continuing to make disciplined investments for growth, we remain committed to our long-term targeted leverage range of three to four times, enabled by our cash on hand and strong operating cash flows. Additionally, this afternoon, we announced the board's approval of a $100 million share repurchase program, which provides us another tool to deliver long-term shareholder value with the flexibility to react as we continue to navigate the ever-changing economic landscape. The buyback program underscores the confidence the board and the entire management team has in the hostess business. Our free cash flow performance with a proven track record of delivering following acquisitions and our ability to drive long-term profitability while enhancing shareholder value. The company continues to be confident that investing in the Hostess business is a great investment. We remain focused on both organic growth and value-enhancing M&A opportunities and intend to continue to prioritize use of cash for those purposes. We are pleased that our financial position provides us with flexibility to opportunistically return capital to shareholders while executing our growth strategies. Now moving to our outlook for the remainder of the year. As we continue to navigate the volatile and unpredictable environment resulting from COVID-19, we remain optimistic that we will be able to continue to deliver our expected operating performance for 2020. Assuming no significant disruptions from the COVID pandemic in the fourth quarter, we are raising the lower end of our previous guidance based on the continued strong performance of the business. We now expect our full-year adjusted EBITDA to be between $235 and $240 million, which is at the upper end of our previous guidance of 230 to 240 million. This includes our expected Bortman contribution of 27 to 30 million, an increase compared to our prior range of 25 to 30 million. We expect to achieve adjusted EPS of 73 cents to 75 cents per share for the year, up from our prior guide of $0.70 to $0.75 per share and expect to maintain our leverage around four times at the end of 2020. We remain confident in our underlying business fundamentals, which support our ability to achieve our long-term financial objectives, including organic revenue growth, adjusted EBITDA margins, and free cash flow conversion in the top quartile of our peers. With that, I will turn the call back to Andy for closing comments. Thanks, Brian.
spk06: We have consistently executed a tested and proven playbook, which has driven sustained growth, and our year-to-date performance has proven no different. I am very proud of HOSA's perseverance and nimbleness in this dynamic operating environment. Our foundation to grow is strong, and we have never had more opportunities to strategically invest in the business for profitable long-term growth. Looking ahead, I am confident in our operational excellence, innovation, and market position as we enter the last quarter of the year. With our strong cash flows, we continue to reduce our leverage and have many available levers to activate growth, including strategic acquisitions, while also providing the flexibility to opportunistically return capital to shareholders with our new share repurchase program. We enter 2021 in a strong position to drive continued industry-leading revenue growth an industry-leading margin, and the determination and commitment to increase shareholder value. With that, Ryan and I are available for your questions.
spk03: Thank you. We will now be conducting a question and answer session. In the interest of time, we ask that you please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants, using speaker equipment may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for your question. Our first question comes from the line of Ken Goldman with JP Morgan. Please proceed with your question.
spk06: Hi, thank you. Good afternoon, everybody. Hey, Ken. I wanted to ask, hey, I wanted to ask, Andy, you sounded, I thought, pretty optimistic or confident about how Halloween would turn out, both in terms of sell-in and sell-through during the quarter. I was just wondering how that holiday went for you, how you generally think it went. I know it's not the biggest deal for Hostess, but I'm just curious. Any insights you can provide would be helpful. Yeah, thanks for the question. I was confident and am confident, and I'm actually pleased with the results. You know, we talked last quarter about smoothing out our merchandising, and what we're seeing is a stronger, everyday, at-home consumer base. And our theme around Halloween, and credit off to our marketing and sales team, who right away in the pandemic shifted some of the messaging to marketing bring hostess Halloween home around usage at home and around parties, and that served really well. Our limited-time offerings around Halloween are Scary Cakes and others, Glow Balls. The enrollment on those were up mid-single digits, 15%. And as you can see from the numbers, the takeaway continued to be strong. So very pleased with that. Our multi-pack, you know, the percentage of consumers for our multi-pack business are up 5%. That's households. And the repeat of all of those are up, you know, even higher, up twice the category. So I feel really good about the quality of our consumer and then the enrollment of them as everyday consumers, and that certainly worked around Halloween as well. Okay, thank you. And then my follow-up, you know, I think it's – you know, not a very big secret or not a very, it's a well-understood secret, I guess, that one of the things holding the stock back is that, you know, there's a pretty large shareholder who has been selling and there's some concern that this individual will continue to sell. Is the share repo program in part designed to allow you to purchase shares from, you know, particular large holders or is it really more designed for, you know, hey, if there's just an opportunity, stock might be cheap, There's not an M&A opportunity on the table right now. Could you just be a little bit more, you know, tactical about that? I'm just trying to get a better sense of sort of what inspired, at this point, the board to go in that direction. Well, as Brian mentioned in his remarks, we believe our – how fast we're delevering – It gives us the opportunity to provide flexibility to invest our dollars in where we think are the greatest values. We believe anytime we invest in our stock, it's a great value. We believe that's a good investment for us to create value. And it's available for all shareholders. So we haven't purchased any shares yet, but it's available to purchase opportunistically as we see it's good value. And it should support the stock. Anything to add to that, Brian?
spk04: No, I think it's right. It's available to all shareholders. And, you know, just a quick context that I mentioned, you know, we still believe that investing in the business, you know, opportunistic M&A are good uses of cash. But this just gives us some additional flexibility to return capital to shareholders when the time is right. So it's available to all shareholders to Andy's point. Thank you.
spk03: Thank you. Our next question comes from the line of Rob Dickerson with Jefferies. Please proceed with your question.
spk05: Great. Thank you so much. So I guess the first question, I'm trying to focus a little bit on Boardman and the White Space Opportunity you pointed to, really, especially in the C-Sort channel, because it sounds like that's where just the upfront push is on the revenue synergy side. So I guess, you know, the first question is just, you know, as we think about, you know, next year, next two years, you know, it's fair to say that, yes, you know, the innovation that we will put forth is primarily going to push up front for low-hanging fruit within fee stores. And then kind of, I guess, what my follow-up question would be, you know, how much more opportunity is there, you know, with Vortman's as is or new innovation in mass club and grocery? Because there's that one slide where you show Just the delta, you know, on share just seems like where you're picking up share is not a mashup of a grocery. It's really the C-store is what's driving you home. Thanks.
spk06: Yeah, so going forward, so just as a foundation, we'll primarily have distribution in grocery. Since we've integrated, we've expanded distribution in dollar. We currently do not have distribution in convenience general. We're launching, and the selling, I might add, is going extremely well for our Mega Wafer, which is more on-the-go single-serve and fits in that format. With that being said, Rob, we have a breadth of growth and innovation, I think, vectors for Bortman that I feel really, really good about. We're the number one sugar-free brand within cookies. That is growing extremely well. We believe there's opportunity to continue to extend that and grow it. and sugar-free is growing very well. There's some recent industry reports coming out. We also have opportunities to grow our breadth and depth of distribution on our core business, which, as we look at this year, is also going well. So absolutely convenience is a large opportunity, as you've stated, but it's one of several growth opportunities we believe we have on Fortman Business. I feel terrific about the go-forward business and growth.
spk05: Um, okay, super. And then I guess just quickly, you know, on the, on the repurchase piece, uh, I know Ken, um, going to ask the question, but I will sort of, uh, you know, come at it a different way. It's just, you know, you said in, in 2021, but as you deliver, you know, you expect to hopefully be generating some excess cash too, and then absent, you know, M&A opportunities that you could find opportunistically, um, I guess to be more direct, it sounds like, yeah, we're probably going to be buying back some stock from now until year end, 21. I'm just asking for modeling purposes because if you don't buy it back, you don't want people to be modeling that, you will. I know it's authorized, but I'm trying to get a feel until you're actually going to be buying back stock.
spk04: Yeah, I think so for us, you know, the way we're looking at this is with Vortman behind us, we are generating, you know, and all the transition costs behind us, right? And we're just kind of looking forward. And, you know, roughly if you look forward out to the next year, we could deliver, you know, almost a full turn. And in terms of use of cash, as I mentioned, you know, you still have, M&A is a viable opportunity for us as we de-lever. Investing in the business is a viable opportunity. You know, we're not – I think announcing the program, we haven't bought anything back, you know, as of yet. It's certainly – you know, we could at any time at this point. There's nothing specifically that we're – any amount that we're saying or timeframe that we're limiting ourselves to. It just gives us additional flexibility. And so we've got that flexibility in Q4. We've got it going forward. and feel good about the ability to execute on that in addition to any opportunities such as M&A that might present themselves. Fair enough.
spk05: Thank you, guys. Good job.
spk03: Thank you. Once again, if you would like to ask a question, please press star 1 on your telephone keypad. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for more questions. Our next question comes from the line of Pamela Kaufman with Morgan Stanley. Please proceed with your question.
spk02: Hi, how are you? Hi, Pamela.
spk00: Hey, Pam.
spk02: Hey. So it came up a couple of times throughout the call that you are adjusting your product assortment to adapt to consumer demand in the current environment. And I think that I guess Halloween is one example of how you've done this. Can you kind of talk about other areas or ways in which you're adapting to demand, and are these going to be permanent changes to the way that you manage your product lineup?
spk06: Yeah, thanks for the question, Pam. So we have a couple of things that we've done. We've taken some of the tail end of our portfolio, And we've simplified some of the flavor assortment in the back end so that we could produce some of the highest demand items. We've obviously shifted the mix from multi-packs to a little bit more mix into multi-packs as our single-serve business has been down. But we've certainly mixed more aggressively on some of the shared lines from our value-tiered brand to host this brand. Relative to merchandise, we see that we are becoming increasingly part of the planned purchase behavior. So we have smoothed out some of the merchandising from shippers programs and big events to more everyday events and engaging consumers online in that regard. So it's more just the flowing through the demand of our portfolio to the production of our portfolio and tailoring our merchandising program that way. So it's driven – and it's been – You know, a quick change, as you can imagine, but it's helped drive some efficiency, optimize our output. And we expect some of these to maintain. As I mentioned earlier, we see, although single serve and the traffic at C-stores has somewhat plateaued after an increase in the summer, we expect that to eventually come back, that opportunity still in front of us. And I would also expect the behavior that we're driving with consumers in-home, although we're eventually going to open up the economy, I think there's a lot there that's going to stay in the in-home occasion and the new consumers that we've been able to gain for Hostess. So we've certainly smoothed out the merchandise and simplified the portfolio, maximized the output, and I think it's paying dividends now and will going forward.
spk02: Thanks. That's helpful. And as I follow up, I – I was hoping you can give an update on how you think about the opportunity to grow in breakfast. How do you define the breakfast category? What do you see as your addressable market relative to other categories that are within breakfast? And how are you targeting this day part for marketing innovation?
spk06: Yeah, so breakfast specifically is unique, and I talked about it for where we compete. It's actually a morning snack, but it has basic simple attributes around breakfast that are different, and sweets growing even greater. If you look at the total snacking landscape, it's very large. You know, consumers have a lot of options. They have savory options and they have sweet options. I mean, snacking in total – is $150 billion market, and breakfast is about a third of that in total, but growing at a greater pace. So we view our portfolio that goes into breakfast as our snack cakes, our donuts and donuts, our bag-sized large donuts. Just within the sweet baked goods category, our share is underdeveloped versus our total portfolio. We've grown that over $70 million just in the past several years by outpacing the breakfast category. So we're innovating by bringing unique items that have a specific hostess twist that contemporizes the brand and give consumers an option to choose. We've launched coffee cakes. We launched donuts on the go to address where they're coming in. As you know, we launched jumbo donuts, and we said that's on fire, and we're coming out with contemporary brands. And we're continuing the mindset our innovation and our insights to have more ideas going forward. So feel good about bringing contemporary forms that fit with the equity of the hostess brand and meet what consumers are looking for within breakfast, where what we define is that AM snacking occasion, which, as I mentioned before, is growing greater than total snacking, and sweets is growing faster than all other forms within that occasion.
spk02: Thank you. That's helpful.
spk03: Thank you. We have reached the end of our question and answer session. I'd like to turn the conference back over to Mr. Callahan for any closing remarks.
spk06: All right. Thank you. I know it's a very busy time with a lot of earnings calls here, so I appreciate all the questions and look forward to any follow-ups. But I want to thank everyone, really, for your participation and interest in hosting this. But most important, I'd like to thank the dedicated team and their tremendous efforts to maintain high-performance culture at Hostess in this dynamic operating environment. Our core capabilities give us confidence that Hostess will emerge from this time stronger, and we're in a better position for long-term and sustainable growth. Everybody have a great day, and thanks sincerely for your interest in Hostess.
spk03: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
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