Hostess Brands’ Sweet Baked Goods Segment Grows 6.8%

The acquisition of Clovenhill and its sweet baked goods segment brought growth for Hostess Brands, as reported in its financial results for the first quarter ending March 31, 2019..

Net revenue increased USD14.0m, or 6.7%, to USD222.7m. Organic growth contributed USD7.2m or 345 basis points of incremental net revenue, primarily from strong growth in the club channel and higher revenue due to price increases. The acquisition of the Cloverhill business contributed USD6.8m or 326 basis points of incremental net revenue.

For the sweet baked goods segment, net revenue was USD212.9m, an increase of USD13.6m, or 6.8%, compared to USD199.3m driven by additional volume, primarily in the club channel as well as price increases. Gross profit was USD73.1m, or 34.4% of net revenue, compared to USD69.4m, or 34.8% of net revenue. The increase in gross profit was the result of increased net revenue partially offset by higher transportation and other input costs.

For its in-store bakery segment, net revenue was USD9.9m, an increase of USD0.4m, or 4.3%, compared to USD9.5m. The increase in net revenue was attributable to increased sales volume. Gross profit was USD2.0m, or 20.7% of net revenue, compared to gross profit of USD1.8m, or 19.1% of net revenue. The increase in gross profit was also primarily a result of increased sales volume.