Hostess Brands, Inc.

Greetings and welcome to the Hostess Brand's second quarter 2022 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, Amit Sharma, Vice President, Investor Relations. Thank you, Amit. You may begin.

Hi, good afternoon, and welcome to Hostess Brands' second quarter 2022 earnings conference call. Joining me on today's call is Andy Callahan, Hostess Brands' president and CEO, and Travis Leonard, chief financial officer. Right now, everyone should have access to the earnings release for the period ended June 30, 2022, that was published at approximately 4 p.m. Eastern time. The press release and investor presentation are available on Hosted's website at hostedbrands.com. This call is being webcast, and a replay will be available on our website. During the course of this call, management will make a number of forward-looking statements, including expectations and assumptions regarding the company's future performance. Actual results may differ materially from these forward-looking statements, and we undertake no obligation to update or revise these forward-looking statements. A detailed list of these risks and uncertainties can be found in today's earnings release and in our SEC filings. Management will make a number of references to non-GAAP financial measures that we believe will provide useful information to the investors. A full reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in the earnings release. With that, I will turn the call over to Andy Callahan, our President and CEO.

Thank you, Amit. First off, I would like to publicly welcome Travis to the Hostess Brands family. We are excited to have his leadership, talent, and experience as we continue on our journey as a leading snacking powerhouse. Moving on to our results, we delivered another quarter of strong top-line performance, highlighting Hostess Brands' position as a differentiated snack company with iconic brands and an advantaged business model. Consumption trends in our core categories remain resilient, and we continue to drive category growth. Our strong first-half results and the strength of our business gives us the confidence to raise our full-year revenue guidance to at least 15% growth, on top of last year's 11.6% growth. The strength of our revenue performance is meaningfully offsetting high inflation and supply chain inefficiencies due to heightened levels of volatility in the global markets. Our full year EBITDA and EPS outlook remain unchanged, even as we continue our increased investments behind our brand, innovation, and people to support our sustained, profitable, long-term growth strategy. First, a few highlights from our solid second quarter results, and then a few comments on why I feel confident that Hostess Brands is well positioned to successfully navigate the current operating environment. I'll then turn it over to Travis to provide a more detailed review of our quarterly financial results and our revised outlook for the full year before taking questions. Now to the quarterly highlights. Net revenue grew 16.8% in the quarter. We are growing revenue quarter after quarter, year after year. The second quarter marks the 10th consecutive quarter of at least 9% growth and fifth consecutive quarter of double digit growth. In this increasingly dynamic environment, we've benefited from our advantage business model and strength of our brands with favorability in pricing, mix, and volume. At the retail sales level, both our sweet baked goods and cookies posted impressive broad-based growth in the quarter. Sweet Baked Goods' point of sale, led by the hostess brand, grew 15.6% in the quarter. Our focus on large, growing snacking occasions, insight-driven innovation, and increasing advertising and marketing investments continue to drive the category and enable us to capture greater share of category values. Highlighting our unique access to both on-the-go and at-home consumer, Hostess Brain's single-serve and multi-pack point-of-sale each increased more than 15% during the quarter, with two-year stacked growth of 35.9% and 20.6% respectively, both well ahead of the underlying category trends. We believe our continued investment in product quality amplifies our ability to retain more consumers, which is reflected in higher repeat rates that are significantly above others in the sweet baked goods category. Turning to the Wortman brand and its ongoing growth momentum. Wortman growth continues to be driven by expanding distribution fueled by our investments in advertising to increase brand awareness. as well as the positive impact of innovation and a continued focus on improving SKU mix. These actions resulted in Bortman gaining five points of share in the fast-growing sugar-free subsegment during the quarter. I am proud of our top-line momentum and our long track record of strong organic growth. Underlying volume trends in our core snacking categories continue to hold up better than overall food, even in the current economic environment, highlighting the impact from our focus investments supporting our attractive growth potential over the long term. To fully realize our growth potential, we will continue to make targeted investments across the organization, including investments in our people, capabilities, products, and brands. As planned, we are investing in higher advertising and marketing support behind both our core portfolio and new product innovation. Our high ROI marketing investments include the recent expansion of our first national advertising campaign in over a decade and the upcoming support for the launch of Bouncers, our latest innovation platform. As we mentioned at our March Investor Day, Our iconic brands enjoy more than 90% brand awareness, at par or even higher than many of the largest snack brands. However, Hostess is not top of mind for 60% of consumers. Our rising advertising and marketing investments are designed to build top of mind awareness for Hostess snacks in order to create a powerful flywheel of growth. Our compelling and differentiated innovation remains a key element of our growth strategy. Our snacking occasions-based framework and strong consumer insights are supported by our marketing and innovation capability. I believe this is why we are now and continue to be positioned to consistently launch more impactful breakthrough innovation that brings incremental households into the franchise. Innovation is a core competency at Hostess, and we are building a multi-year pipeline of new products to continue our innovation momentum. Baby Bunce, our highest revenue innovation over the past 12 months, is a vivid example of our capabilities. We have high confidence that Bouncers, our next big innovation launch, will be another great example of how we can contemporize our iconic brands for the next generation. Bouncers reimagines our iconic Twinkies, Ding Dong, and Donets offerings in a single-serve, poppable version, ideal for the lunchbox occasion and designed to bring incremental consumers to our brand, particularly millennial parents. Bouncers is receiving strong endorsement and support from our retail partners and is expected to hit the market in early fall. At the macro level, the consumer environment is becoming more challenging. We are watching closely for signs of changing consumer behavior as consumer baskets show greater impact from overall higher inflation. However, we believe that our strong brands and innovation in our targeted snacking occasions positions us well to deliver leading growth for the remainder of 22 and beyond. A few points to amplify this point. First, We grew retail dollar sales across all channels during the quarter, demonstrating the strength and reach of our broad-based multi-channel distribution strategy as we continue to operate effectively across all channels. A key advantage as consumer spending shifts across channels. Second, even with double-digit price increases, absolute price points for Hostess products remain relatively low on a per serving basis, making them an accessible snacking option within the snacking occasions in which we compete. Third, similar to many snacking categories, the sweet baked goods category has low private label penetration of less than 3%. Our strong innovation and excellent retail execution insulates against the threat of consumer trade down in the current environment. We are pleased with our strong quarterly growth, which is helping us excel in a challenging operating environment as we face heightened inflation and continued supply chain fragility. I'm proud of our dedicated and talented workforce for continuing to execute at high levels through these challenges. enabling us to maintain our previously communicated EBITDA guidance at the upper end of our $280 to $290 million range for the full year. To demonstrate our appreciation, earlier this week we rewarded the relentless efforts and hard work of all of our hourly bakery and distribution center employees with a thank you bonus as we continue to invest in our workforce. Our frontline team members are the backbone of our hostess business, and we cannot thank them enough. We also continue to make great progress on all of our corporate responsibility initiatives, as outlined in our second corporate responsibility report, which we published in June. We recently announced the appointment of Darryl Riley as our first chief sustainability officer. Darryl will be instrumental in supporting the organization to drive accountability and transparency of our corporate responsibility initiatives as we continue to build a strong, sustainable corporate culture that values nimbleness, integrity, tenacity, inclusivity, and a commitment to quality. In summary, Our strong quarterly and year-to-date results position us well to successfully navigate through this near-term volatility and deliver our revised full-year guidance. We have built a long track record of delivering excellent results through various operating environments and continue to be excited about the growth opportunities ahead of us. We are executing on our strategic priorities and remain highly confident in our ability to deliver our attractive long-term growth algorithm. With that, let me turn it over to Travis to go through the quarterly financial results and our revised outlook in greater detail.