Hostess Brands, Inc.

Greetings, ladies and gentlemen, and welcome to the Hostess Brand's first quarter of 2023 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press start in zero on your telephone keypad. As a reminder, this conference is being recorded. It is my pleasure to introduce your host, Amit Sharma, Vice President of Investor Relations. You may begin, sir.

Good afternoon and welcome to Hostess Brand's first quarter 2023 earnings conference call. Joining me on today's call is Andy Callahan, Hostess Brand's President and CEO, and Travis Leonard, Chief Financial Officer. By now, everyone should have access to the earnings release for the period ended March 31st that was published at approximately 4 p.m. Eastern time. The press release and investor presentation are available on Hostess website at hostessbrands.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 obligations 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 gap measures is included in the earnings release. With that, I will turn the call over to Andy Callahan, our President and CEO.

Andy Callahan Good afternoon. Today, I will begin with a few highlights of yet another quarter of strong performance, offer a few comments on our long-term growth drivers, and then Travis will provide a more detailed review of our quarterly financial results. We will close with a discussion of our full-year outlook before opening up to questions. 2023 started strong as we delivered another quarter of net revenue and profit growth while lapping very strong year-ago comparisons. We continue to execute at a high level, and as we look towards the remainder of the year, we are confident in reaffirming our revenue and above-algo profit growth guide in 2023. Now, to a few highlights for the quarter. Net revenue increased by 4% as we lacked 25% growth in the year-ago quarter. As expected, quarterly net revenue was driven by higher price mix, which offset lower volumes as we lacked strong volume growth in the year-ago quarter. As a reminder, our year-ago results benefited from our extremely strong supply chain execution in a dynamic environment. We are proud of the sustainability of our top-line growth as we build a premier, pure-play snacking company with a focused strategy, a proven go-to-market model, new advanced capabilities, and consistent and disciplined execution. Our sweet baked goods point-of-sale dollars increased 0.5% during the quarter and up 25.2% on a two-year stacked basis. As expected, pricing was a large driver of hostess growth during the quarter due to the carryover impact of last year's pricing actions. Long-term snacking trends, including for sweet indulgent snacks, continue to increase as consumption behavior remains sticky and consumers continue to adopt a balance sheet approach to their snacking choices. Turning to the Vortman brand. Wortmann POS increased 10% in the quarter, including 14% growth for the recently rebranded Wortmann Zero Sugar segment. On a two-year stacked basis, Wortmann's POS increased 39% as our leading position in the faster-growing Zero Sugar cookie subsegment continues to be fueled by our strong innovation and ongoing investments that drive brand awareness. Our continued focus on execution and discipline across the supply chain enabled quarterly adjusted EBITDA growth of nearly 4% during the first quarter and drove a 13.4% CAGR over the last two years. Adjusted EPS also increased by nearly 4% in the quarter and an 18.3% CAGR over the last two years. The first quarter results were in line with our expectations, enabling us to reaffirm our full-year top-line and above-algo profit guidance for the year, and we remain well-positioned to deliver even stronger volume growth in the second half of 2023. Underpinning my confidence in the second half 2023 growth are a few key points. The volume impact of last year's multiple pricing actions combined with the distortion caused by strong year-ago execution, which are muting growth this quarter, will dissipate in the second half. Second, the positive impact of our strong innovation lineup, increased year-on-year advertising support, particularly in Q2 and Q3, and strong customer execution, including shelf resets, distribution, and merchandising will become more evident as we lap the majority of our pricing in Q3. Let's discuss these drivers in a little more detail. Our prolific and insight-driven innovation continues to be a driver of our sustained profitable growth. Led by baby bunts, family packs, and bouncers, we drove the most absolute innovation retail sales in the sweet baked goods category in 22, with over two times our fair share contribution. In the first quarter, we were once again the number one innovator in the category for the last 52 weeks. We continue to advance our new product development capabilities to fully unlock the potential of our iconic brands and access to attractive snacking occasions to drive overall hostess and category growth. Our 2023 innovation is headlined by Hostess Caz Bars, which started shipping in late March. And wow, what a start. With Caz Bars, we have taken what Hostess does best, our iconic moist cake, and transformed it into a multi-textured layered snack bar with six layers of gooey caramel or chocolate fudge and candy crunch wrapped in chocolate. A truly unique product in the broader $65 billion addressable snack market. Again, bringing what Hostess does best, high quality cake to an indulgent bar form. Initial distribution and merchandising have been excellent with very strong customer support. And while it's too early to tell, the first few weeks of retail takeaway and consumer feedback has been very encouraging. CASBARs is indeed an exciting innovation, but it's not alone in our lineup. In addition to CASBARs, in the first quarter, we introduced old-fashioned donuts and chocolate baby buns under the Hostess brand. Under the Vortman brand, we rebranded our sugar-free cookie and wafer products line to Zero Sugar as we worked to broaden the appeal and interest of these great products to a wider consumer demographic. We also launched two flavors of zero sugar mini wafers during the quarter. Additionally, we launched packaging innovation this quarter. All of our Bortman cookie packaging now includes an easy open and reseal feature. This new pull tab open feature and reseal capability is sure to be a consumer delighter, driving higher purchase intent and overall consumer satisfaction. We are continuing to support our innovation as well as our core through strategic marketing and advertising. Our high ROI 100% digital advertising is focused on digital video, social media, e-commerce, and retail media. And it's highly effective and highly efficient at driving top of mind awareness, a key hurdle for consumers who currently do not buy Hostess products. We continue to build our national advertising campaign to support our core icons, as well as remind millennial parents of what they love most about Hostess and what makes us distinctive, our high quality baked cakes and our great tasting flavors. And lastly, I'm confident that our continued focus on growing our partnerships and servicing our customers, as well as investing in our brands, will drive our sustained growth over time while expanding the category. With this solid foundation, I continue to see us getting stronger year after year, and this is certainly true now as I look at our customer plans and initiatives for the remainder of the year. As we look ahead, we expect a more historical cadence of merchandising activities with strong retailer support across all formats. We are also gaining additional permanent and temporary displays to drive multiple points of availability within stores. including at the front end, which is a key driver of our impulse-driven snacking portfolio. As we grow, we continue to focus on agility, efficiency, safety, and quality. Our dedicated and talented workforce continues to execute at high levels, driving significant improvements across the supply chain and advancing our productivity agenda. The build-out of our new bakery in Arkadelphia, Arkansas remains on track and is expected to come online in the fourth quarter. We remain focused on growing the right way over the long term. We are making great progress on our corporate responsibility initiatives and look forward to sharing this progress with the release of our annual corporate responsibility report in June. In addition, we continue to work with our national nonprofit partner, NAMI, the National Alliance on Mental Illness, to support mental health programming and help eliminate the stigma associated with mental health in the workplace. In support of Mental Health Awareness Month, just last week, we hosted an incredible session with NAMI and our employees to discuss ways to manage anxiety, highlighting a number of mental health resources, both through our benefits program and our NAMI partners. At Hostess Brands, We will continue to care about each other as we inspire moments of joy by putting our hearts into everything we do. Attaining all of our key corporate responsibility goals is an important component of the strategic objectives of our executive team, and it has direct oversight from our board of directors. In summary, I am pleased with our solid start to the year, enabling us to reaffirm our full year net revenue, EBITDA, and EPS guidance while building on our track record of delivering strong results. We are executing on our strategic priorities to build a premier snacking company, and I believe we have the right consumer insights, the right innovation pipeline, the right brand building strategy, and the best team to deliver long-term sustainable growth and shareholder value. With that, let me turn it over to Travis to go through the quarterly financial results and our reaffirmed outlook in greater detail.