Hostess Brands, Inc.

Greetings. Welcome to Hostess Brand's first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A 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. Please note this conference is being recorded. I will now turn the conference over to Chris Mandeville with ICR. Thank you. You may begin.

Good morning, and welcome to Hostess Brands' first quarter 2021 earnings conference call. Joining me on today's call are Andy Callahan, Hostess Brands' President and CEO, and Brian Purcell, Chief Financial Officer. By now, everyone should have access to the earnings release for the period ended March 31, 2021, that went out this morning at approximately 7.05 a.m. Eastern Time. The press release and an updated investor presentation are available on Hostess' 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'll see a discussion of factors that could cause the company's actual results to materially differ from these forward-looking statements. Please remember the company undertakes no obligation to update or revise these forward-looking statements. The company will make 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 most comparable GAAP measures. And now, I will turn the call over to Mr. Andy Callahan.

Thank you, Chris, and good morning. We appreciate you joining us today. I'd like to begin by offering a few highlights from our first quarter performance to emphasize and reinforce the strength of our business. I will then turn it over to Brian to discuss our financial results in greater detail. And we'll wrap it up with a discussion of our outlook before opening it up to you for questions. In short, Hostess continues our strong profitable growth with our 13th consecutive quarter of revenue growth in the first quarter and very strong momentum leading into the second quarter. I am extremely proud of our entire team of Hostess Heroes' execution in a fluid environment. Our results are a testament to the strength of the Hostess and Bortman brand, our leading position in consumer snacking occasions, the impact of our insight and data investments, our latest marketing and merchandising efforts, and the remarkable talent who execute against our proven playbook on a daily basis. Underpinning these very strong results and building momentum is the outstanding execution of the hostess supply chain who are executing today to service our consumers and customers while building the foundation for continued profitable growth tomorrow. We are consistently and profitably growing, and our solid foundation is getting stronger. A few takeaways to highlight our quality results before I provide greater color on the quarter. Net revenue grew 9% with our sweet baked goods sales contributing five points and our Bortman sales contributing four points to total growth. Sweet baked goods point of sale was very strong, up 8.7%, once again led by our hostess branded growth of 10.6%. The growth resulted in 163 basis points of market share gains across multiple channels, demonstrating our strength in growing consumer occasions and the benefit of our broad-based distribution model. On a two-year stack basis, we had point-of-sale growth of 13.7% versus the category of 5.8%. exemplifying our continued strong consumer demand and successful execution both before and during COVID. Consumer mobility is increasing and in-home snacking occasions remain elevated, providing a solid foundation for continued strong growth. Wortmann continues to deliver strong growth as well, with net revenue up over 60% year over year, as we lap transition from the direct store distribution model in the prior year and drive increased distribution and velocities. Total Vortman point of sale achieved 18.3% two-year stacked growth, as compared to 7.8% growth for the cookie category, demonstrating, again, the strong performance in faster-growing snacking subsegments. Insights and quality innovation are driving improved contribution of new products versus a year ago. LTOs are also contributing nicely to overall results. Additionally, Q2 has two big launches with Baby Buns and Crispy Minis, which are both off to good starts to help continue the momentum. Our small format success in the quarter was simply remarkable. We touched new highs in market share for C-Store, Dollar, and Drug, with year-on-year share gains of 327, 786, and 570 basis points, respectively. The strategic decision to drive shelf and customer expansion, our consumer-focused innovation created for the needs of the channel, and our advantage warehouse distribution model helped drive these impressive results. We are positioned for continued growth as mobility increases consumers are vaccinated, and communities lift restrictions. Now on the innovation. Our very strong three-year innovation pipeline, which leverages key consumer insights and is tethered to fast-growing consumer usage occasions, is performing very well to start 2021 and has been a strong contributor to our performance of the sweet baked goods category, while Vortman's innovation is realizing steady distribution gains. These offerings are more incremental and more profitable than previous years, and we expect them to drive us towards our 15% vitality target rate by year-end. Shifting to occasions, Hostess breakfast products continue to perform tremendously well, with point-of-sale growth of 17.6%, growing our share of breakfast and sweet baked goods by 290 basis points to 20.5%. Strong growth of hostess coffee cakes, including our new cream cheese flavor, updated packaging for a multi-pack Danish, as well as our early introduction to market of our baby buns at select retailers, are all resonating with consumers. These initiatives build off previous successful launches like Donette snack packs and base breakfast item core growth across Donettes, Honey Buns, and Danish's. Grounded in our consumer insights and strategic investments in the on-the-go consumer, innovation specifically curated for convenience has proven critical to our success. During the quarter, we launched pecan spins and muffin sticks with positive early consumer reception. C-Store retail partners are showing good interest in our Bortman Mega Wafers. And in recent weeks, we launched our Crispy Minis with a key national chain. Again, heading into the all-important summer driving season, We are confident that our core business strength and new products position us well to capitalize on increased mobility as the economy continues to reopen. Longer term, we believe we have best-in-class innovation pipeline tailored to both on-the-go and eat-at-home snacking occasions. We are focused on four key strategic growth priorities for innovation that will help deliver sustainable growth. Invigorating our icons, growing household penetration with young families, continuing C-store consumer growth, and establishing Vortman's distinct positioning to optimize growth potential. Underpinning the remarkable results this quarter is the success of our marketing and merchandising efforts. We continue to drive incremental growth through our strong Hostess Partnership Program in the convenience channel as we are able to leverage the data and insights we have mined to maximize our sales and profit for our retailers. These strong partnerships have been instrumental in managing through the evolving consumer demands over the last year and helped steadily increase our leading market share in the convenience channel. We are seeing the benefits of these partnerships pay off and expect this to continue. Our dollar channel performance is impressive. Our dollar channel point of sale grew 36.5% in the quarter as we grew share 786 basis points, driven by revitalized shelf set, expansion of our breakfast platform, and continued strong partnerships and customer service. We continue to work with our partners in the mass channel to develop programs that are mutually beneficial and have seen sequential improvements this quarter as we implement new changes to our product assortment and merchandising programs. We have iconic brands that consumers love. As we look forward, we're committed to building on our great foundation through targeted, proven marketing investments that we are confident will deliver incremental growth. To that end, we executed a handful of e-commerce advertising trials during the quarter with very encouraging results. We were pleased that each of our trials delivered return on advertising spend and response rates well above benchmarks, providing us the confidence that future programs can drive growth and unlock another lever in our already formidable growth toolbox. Our merchandising efforts for Bortman are also beginning to pay off, as total Bortman point of sale grew 8.7% in the quarter, fueled by accelerated growth of sugar-free, which grew 18% year over year. Contributing to the strong point of sale growth is the increase in our total Bortman ACV, which we have grown by six points since the acquisition with good improvement across all channels, particularly within the grocery channel, which expanded by nine points. We expect to continue to drive growth in Bortman as we introduce more innovation and drive awareness with targeted marketing programs. We also continue to make great strides on our ESG initiative. We have embedded ESG goals into our operating model, including the continued focus on retention and diversity. We were also thrilled to add two new board members to our board of directors, Olu Beck and Hugh Deneen, who bring with them a wealth of experience and knowledge that will be very valuable to our organization as we move forward in our journey. We also continue to build our management team and last week announced the addition of Dan O'Leary as our chief growth officer. Dan brings valuable experience of having profitably grown iconic brands at Kraft, MizCan, and Tyson Foods, where he was most recently the Senior Vice President and General Manager for Tyson Prepared Foods. We are excited to have Dan on board to help drive our important growth initiatives. POSUS once again delivered industry-leading revenue growth at leading margins. We closed Q1 strong and are headed into Q2 with momentum. Although early in the year in this dynamic market, we are very well positioned to deliver on our full-year guidance. We will continue to prioritize the safety of our dedicated and loyal employees while we execute with agility and efficiency to continue catering to consumer needs in a highly profitable manner. And with that, I'll turn it over to Brian to go through the quarter's financial results in greater detail.