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|
|
|
|
(Mark One)
|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the three months ended March 31, 2018
|
|
OR
|
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from to
|
Delaware
(State or other jurisdiction of incorporation or organization) |
47‑4168492
(I.R.S. Employer Identification No.) |
1 East Armour Boulevard
Kansas City, MO (Address of principal executive offices) |
64111
(Zip Code) |
Large accelerated filer
x
|
Accelerated
filer
o
|
Non‑accelerated filer
o
(Do not check if a smaller reporting company) |
Smaller reporting company
o
|
Emerging growth company
o
|
|
|
Page
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Item 1.
|
|
|
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Consolidated Balance Sheets
(Unaudited)
|
|
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Consolidated Statements of Operations
(Unaudited)
|
|
|
Consolidated Statements of Comprehensive Income
(Unaudited)
|
|
|
Consolidated Statements of Stockholders’ Equity
(Unaudited)
|
|
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Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
|
March 31,
|
|
|
December 31,
|
||||
ASSETS
|
2018
|
|
|
2017
|
||||
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
100,450
|
|
|
|
$
|
135,701
|
|
Accounts receivable, net
|
113,450
|
|
|
|
101,012
|
|
||
Inventories
|
39,970
|
|
|
|
34,345
|
|
||
Prepaids and other current assets
|
5,915
|
|
|
|
7,970
|
|
||
Total current assets
|
259,785
|
|
|
|
279,028
|
|
||
Property and equipment, net
|
192,514
|
|
|
|
174,121
|
|
||
Intangible assets, net
|
1,917,093
|
|
|
|
1,923,088
|
|
||
Goodwill
|
579,446
|
|
|
|
579,446
|
|
||
Other assets, net
|
15,683
|
|
|
|
10,592
|
|
||
Total assets
|
$
|
2,964,521
|
|
|
|
$
|
2,966,275
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
||||
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Long-term debt and capital lease obligation payable within one year
|
$
|
11,268
|
|
|
|
$
|
11,268
|
|
Tax receivable agreement payments payable within one year
|
8,100
|
|
|
|
14,200
|
|
||
Accounts payable
|
65,753
|
|
|
|
49,992
|
|
||
Customer trade allowances
|
40,073
|
|
|
|
40,511
|
|
||
Accrued expenses and other current liabilities
|
8,714
|
|
|
|
11,880
|
|
||
Total current liabilities
|
133,908
|
|
|
|
127,851
|
|
||
Long-term debt and capital lease obligation
|
985,124
|
|
|
|
987,920
|
|
||
Tax receivable agreement
|
70,289
|
|
|
|
110,160
|
|
||
Deferred tax liability
|
273,279
|
|
|
|
267,771
|
|
||
Total liabilities
|
1,462,600
|
|
|
|
1,493,702
|
|
||
Commitments and Contingencies (Note 13)
|
|
|
|
|
||||
Class A common stock, $0.0001 par value, 200,000,000 shares authorized, 99,915,614 and 99,791,245 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
|
10
|
|
|
|
10
|
|
||
Class B common stock, $0.0001 par value, 50,000,000 shares authorized, 30,255,184 and 30,319,564 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
|
3
|
|
|
|
3
|
|
||
Additional paid in capital
|
922,720
|
|
|
|
920,723
|
|
||
Accumulated other comprehensive income
|
3,407
|
|
|
|
1,318
|
|
||
Retained earnings
|
232,311
|
|
|
|
208,279
|
|
||
Stockholders’ equity
|
1,158,451
|
|
|
|
1,130,333
|
|
||
Non-controlling interest
|
343,470
|
|
|
|
342,240
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,964,521
|
|
|
|
$
|
2,966,275
|
|
|
Three Months Ended
|
|||||||
|
March 31,
2018 |
|
|
March 31,
2017 |
||||
|
|
|
|
|
||||
Net revenue
|
$
|
208,743
|
|
|
|
$
|
184,538
|
|
Cost of goods sold
|
137,502
|
|
|
|
105,243
|
|
||
Gross profit
|
71,241
|
|
|
|
79,295
|
|
||
Operating costs and expenses:
|
|
|
|
|
||||
Advertising and marketing
|
8,870
|
|
|
|
7,322
|
|
||
Selling expense
|
7,387
|
|
|
|
8,112
|
|
||
General and administrative
|
14,562
|
|
|
|
13,183
|
|
||
Amortization of customer relationships
|
5,994
|
|
|
|
5,872
|
|
||
Business combination transaction costs
|
47
|
|
|
|
—
|
|
||
Impairment of property and equipment
|
1,417
|
|
|
|
—
|
|
||
Related party expenses
|
92
|
|
|
|
83
|
|
||
Total operating costs and expenses
|
38,369
|
|
|
|
34,572
|
|
||
Operating income
|
32,872
|
|
|
|
44,723
|
|
||
Other expense (income):
|
|
|
|
|
||||
Interest expense, net
|
9,340
|
|
|
|
9,830
|
|
||
Gain on buyout of tax receivable agreement
|
(12,372
|
)
|
|
|
—
|
|
||
Other expense
|
83
|
|
|
|
714
|
|
||
Total other expense (income)
|
(2,949
|
)
|
|
|
10,544
|
|
||
Income before income taxes
|
35,821
|
|
|
|
34,179
|
|
||
Income tax expense
|
6,519
|
|
|
|
9,980
|
|
||
Net income
|
29,302
|
|
|
|
24,199
|
|
||
Less: Net income attributable to the non-controlling interest
|
5,461
|
|
|
|
8,367
|
|
||
Net income attributable to Class A stockholders
|
$
|
23,841
|
|
|
|
$
|
15,832
|
|
|
|
|
|
|
||||
Earnings per Class A share:
|
|
|
|
|
||||
Basic
|
$
|
0.24
|
|
|
|
$
|
0.16
|
|
Diluted
|
$
|
0.23
|
|
|
|
$
|
0.15
|
|
Weighted-average shares outstanding:
|
|
|
|
|
||||
Basic
|
99,895,075
|
|
|
|
98,250,917
|
|
||
Diluted
|
105,041,015
|
|
|
|
104,773,887
|
|
|
Three Months Ended
|
||||||
|
March 31,
2018 |
|
March 31,
2017 |
||||
|
|
|
|
||||
Net income
|
$
|
29,302
|
|
|
$
|
24,199
|
|
Other comprehensive loss:
|
|
|
|
||||
Unrealized gain on cash flow hedge
|
3,739
|
|
|
—
|
|
||
Income tax expense
|
(787
|
)
|
|
—
|
|
||
Comprehensive income
|
32,254
|
|
|
24,199
|
|
||
Less: Comprehensive income attributed to non-controlling interest
|
6,331
|
|
|
8,367
|
|
||
Comprehensive income attributed to class A stockholders
|
$
|
25,923
|
|
|
$
|
15,832
|
|
|
Class A Voting
Common Stock |
|
Class B Voting
Common Stock |
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Income
|
|
Accumulated
Losses / Retained Earnings |
|
Total
Stockholders’ Equity |
|
Non-controlling
Interest |
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance–December 31, 2016
|
98,250,917
|
|
|
$
|
10
|
|
|
31,704,988
|
|
|
$
|
3
|
|
|
$
|
912,824
|
|
|
$
|
—
|
|
|
$
|
(15,618
|
)
|
|
$
|
897,219
|
|
|
$
|
334,192
|
|
Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,832
|
|
|
15,832
|
|
|
8,367
|
|
|||||||
Share-based compensation
|
435,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
521
|
|
|
—
|
|
|
—
|
|
|
521
|
|
|
—
|
|
|||||||
Balance–March 31, 2017
|
98,685,917
|
|
|
$
|
10
|
|
|
31,704,988
|
|
|
$
|
3
|
|
|
$
|
913,345
|
|
|
$
|
—
|
|
|
$
|
214
|
|
|
$
|
913,572
|
|
|
$
|
342,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Balance–December 31, 2017
|
99,791,245
|
|
|
$
|
10
|
|
|
30,319,564
|
|
|
$
|
3
|
|
|
$
|
920,723
|
|
|
$
|
1,318
|
|
|
$
|
208,279
|
|
|
$
|
1,130,333
|
|
|
$
|
342,240
|
|
Comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,082
|
|
|
23,841
|
|
|
25,923
|
|
|
6,331
|
|
|||||||
Share-based compensation, including income taxes of $98
|
59,989
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,721
|
|
|
—
|
|
|
—
|
|
|
1,721
|
|
|
—
|
|
|||||||
Adoption of new accounting standards, net of income taxes of $83
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
191
|
|
|
198
|
|
|
85
|
|
|||||||
Exchanges
|
64,380
|
|
|
—
|
|
|
(64,380
|
)
|
|
—
|
|
|
1,033
|
|
|
—
|
|
|
—
|
|
|
1,033
|
|
|
(1,033
|
)
|
|||||||
Distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,153
|
)
|
|||||||
Payment of taxes for employee stock awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(407
|
)
|
|
—
|
|
|
—
|
|
|
(407
|
)
|
|
—
|
|
|||||||
Tax receivable agreement arising from exchanges, net of income taxes of $50
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(350
|
)
|
|
—
|
|
|
—
|
|
|
(350
|
)
|
|
—
|
|
|||||||
Balance–March 31, 2018
|
99,915,614
|
|
|
$
|
10
|
|
|
30,255,184
|
|
|
$
|
3
|
|
|
$
|
922,720
|
|
|
$
|
3,407
|
|
|
$
|
232,311
|
|
|
$
|
1,158,451
|
|
|
$
|
343,470
|
|
|
|
|
Three Months Ended
|
||||||
|
|
|
March 31,
2018 |
|
March 31,
2017 |
||||
|
|
|
|
|
|
||||
Operating activities
|
|
|
|
||||||
|
Net income
|
$
|
29,302
|
|
|
$
|
24,199
|
|
|
|
Depreciation and amortization
|
10,091
|
|
|
9,266
|
|
|||
|
Impairment of property and equipment
|
1,417
|
|
|
—
|
|
|||
|
Debt premium amortization
|
(271
|
)
|
|
(248
|
)
|
|||
|
Non-cash gain on tax receivable agreement
|
(12,372
|
)
|
|
—
|
|
|||
|
Share-based compensation
|
1,623
|
|
|
521
|
|
|||
|
Deferred taxes
|
4,786
|
|
|
5,455
|
|
|||
|
Change in operating assets and liabilities
|
|
|
|
|||||
|
|
Accounts receivable
|
(11,437
|
)
|
|
(6,823
|
)
|
||
|
|
Inventories
|
2,006
|
|
|
(1,645
|
)
|
||
|
|
Prepaids and other current assets
|
2,055
|
|
|
(19
|
)
|
||
|
|
Accounts payable and accrued expenses
|
11,560
|
|
|
(4,152
|
)
|
||
|
|
Customer trade allowances
|
(438
|
)
|
|
(278
|
)
|
||
|
|
Other
|
—
|
|
|
(8
|
)
|
||
|
Net cash provided by operating activities
|
38,322
|
|
|
26,268
|
|
|||
|
|
|
|
|
|
||||
Investing activities
|
|
|
|
||||||
|
Purchases of property and equipment
|
(8,019
|
)
|
|
(4,519
|
)
|
|||
|
Business acquisition
|
(23,910
|
)
|
|
—
|
|
|||
|
Proceeds from sale of assets
|
—
|
|
|
54
|
|
|||
|
Acquisition of software assets
|
(558
|
)
|
|
(446
|
)
|
|||
|
Net cash used in investing activities
|
(32,487
|
)
|
|
(4,911
|
)
|
|||
|
|
|
|
|
|
||||
Financing activities
|
|
|
|
||||||
|
Repayments of long-term debt and capital lease obligation
|
(2,526
|
)
|
|
(2,537
|
)
|
|||
|
Distributions to non-controlling interest
|
(4,153
|
)
|
|
—
|
|
|||
|
Tax payments related to issuance of shares to employees
|
(407
|
)
|
|
—
|
|
|||
|
Tax receivable agreement buyout
|
(34,000
|
)
|
|
—
|
|
|||
|
Net cash used in financing activities
|
(41,086
|
)
|
|
(2,537
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
(35,251
|
)
|
|
18,820
|
|
||||
Cash and cash equivalents at beginning of period
|
135,701
|
|
|
26,855
|
|
||||
Cash and cash equivalents at end of period
|
$
|
100,450
|
|
|
$
|
45,675
|
|
Supplemental Disclosures of Cash Flow Information:
|
|
|
|
|
||||||
Cash paid during the period for:
|
|
|
|
|
|
|
||||
|
Interest
|
$
|
9,942
|
|
|
$
|
14,759
|
|
|
|
|
Taxes paid
|
$
|
507
|
|
|
$
|
—
|
|
|
|
Supplemental disclosure of non-cash investing:
|
|
|
|
|
||||||
|
Purchases of property and equipment funded by accounts payable
|
$
|
642
|
|
|
$
|
3,325
|
|
|
(In thousands)
|
March 31,
2018 |
|
December 31, 2017
|
||||
|
|
|
|
||||
Ingredients and packaging
|
$
|
18,522
|
|
|
$
|
14,826
|
|
Finished goods
|
18,642
|
|
|
15,471
|
|
||
Inventory in transit to customers
|
2,806
|
|
|
4,048
|
|
||
|
$
|
39,970
|
|
|
$
|
34,345
|
|
|
As
Reported
|
|
Adjustments
|
|
Balances
Without Adoption of Topic 606
|
||||||
Net revenue
|
$
|
208,743
|
|
|
$
|
(846
|
)
|
|
$
|
207,897
|
|
Cost of goods sold
|
137,502
|
|
|
(485
|
)
|
|
$
|
137,017
|
|
||
|
|
|
|
|
|
||||||
Operating costs and expenses:
|
|
|
|
|
|
||||||
Advertising and marketing
|
8,870
|
|
|
(4
|
)
|
|
8,866
|
|
|||
Selling expense
|
7,387
|
|
|
(15
|
)
|
|
7,372
|
|
|||
Income tax expense
|
6,519
|
|
|
(72
|
)
|
|
6,447
|
|
|
As
Reported
|
|
Adjustments
|
|
Balances
without Adoption of Topic 606
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
$
|
113,450
|
|
|
$
|
(846
|
)
|
|
$
|
112,604
|
|
Inventories
|
39,970
|
|
|
446
|
|
|
40,416
|
|
|||
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Accounts payable
|
65,753
|
|
|
(58
|
)
|
|
65,695
|
|
|||
Accrued expenses and other current liabilities
|
8,714
|
|
|
(72
|
)
|
|
8,642
|
|
|
|
Balance at
December 31, 2017
|
|
Adjustments
Due to Topic 606
|
|
Balance at
January 1, 2018
|
||||||
Current assets:
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
|
$
|
101,012
|
|
|
$
|
1,000
|
|
|
$
|
102,012
|
|
Inventories
|
|
34,345
|
|
|
(531
|
)
|
|
33,814
|
|
|||
|
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
|
||||||
Accounts payable
|
|
49,992
|
|
|
103
|
|
|
50,095
|
|
|||
|
|
|
|
|
|
|
||||||
Long-term liabilities:
|
|
|
|
|
|
|
||||||
Deferred tax liability
|
|
267,771
|
|
|
83
|
|
|
267,854
|
|
|||
|
|
|
|
|
|
|
||||||
Stockholders’ equity:
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
208,279
|
|
|
198
|
|
|
208,477
|
|
|||
Accumulated other comprehensive income
|
|
1,318
|
|
|
—
|
|
|
1,318
|
|
|||
Non-controlling interest
|
|
342,240
|
|
|
85
|
|
|
342,325
|
|
|
Three Months Ended
|
|||||
(% of Consolidated Net Revenues)
|
March 31,
2018 |
|
|
March 31,
2017 |
||
|
|
|
|
|
||
Sweet Baked Goods
|
21.3
|
%
|
|
|
18.3
|
%
|
In-Store Bakery
|
0.6
|
%
|
|
|
0.7
|
%
|
Total
|
21.9
|
%
|
|
|
19.0
|
%
|
Inventory
|
$
|
8,162
|
|
Property and equipment
|
16,838
|
|
|
Other liabilities
|
(1,090
|
)
|
|
Net assets acquired
|
$
|
23,910
|
|
(In thousands)
|
March 31,
2018
|
|
|
December 31,
2017
|
||||
|
|
|
|
|
||||
Land and buildings
|
$
|
37,332
|
|
|
|
$
|
32,088
|
|
Machinery and equipment
|
151,860
|
|
|
|
141,995
|
|
||
Construction in progress
|
20,062
|
|
|
|
13,489
|
|
||
|
209,254
|
|
|
|
187,572
|
|
||
Less accumulated depreciation
|
(16,740
|
)
|
|
|
(13,451
|
)
|
||
|
$
|
192,514
|
|
|
|
$
|
174,121
|
|
(In thousands)
|
Three Months Ended
March 31, 2018 |
|
Three Months Ended
March 31, 2017 |
||||
|
|
|
|
||||
Net revenue:
|
|
|
|
||||
Sweet Baked Goods
|
$
|
199,293
|
|
|
$
|
174,793
|
|
In-Store Bakery
|
9,450
|
|
|
9,745
|
|
||
Net revenue
|
$
|
208,743
|
|
|
$
|
184,538
|
|
|
|
|
|
||||
Depreciation and amortization:
|
|
|
|
||||
Sweet Baked Goods
|
$
|
9,394
|
|
|
$
|
8,624
|
|
In-Store Bakery
|
697
|
|
|
642
|
|
||
Depreciation and amortization
|
$
|
10,091
|
|
|
$
|
9,266
|
|
|
|
|
|
||||
Gross profit:
|
|
|
|
||||
Sweet Baked Goods
|
$
|
69,438
|
|
|
$
|
76,781
|
|
In-Store Bakery
|
1,803
|
|
|
2,514
|
|
||
Gross profit
|
$
|
71,241
|
|
|
$
|
79,295
|
|
|
|
|
|
||||
Capital expenditures (1):
|
|
|
|
||||
Sweet Baked Goods
|
$
|
9,165
|
|
|
$
|
7,916
|
|
In-Store Bakery
|
54
|
|
|
374
|
|
||
Capital expenditures
|
$
|
9,219
|
|
|
$
|
8,290
|
|
(1)
|
Capital expenditures consists of purchases of property and equipment and acquisition and development of software assets paid in cash or acquired through accounts payable during the three months ended March 31, 2018 and 2017.
|
(In thousands)
|
March 31,
2018 |
|
|
December 31,
2017 |
||||
|
|
|
|
|
||||
Total segment assets:
|
|
|
|
|
||||
Sweet Baked Goods
|
$
|
2,889,048
|
|
|
|
$
|
2,884,642
|
|
In-Store Bakery
|
75,473
|
|
|
|
81,633
|
|
||
Total segment assets
|
$
|
2,964,521
|
|
|
|
$
|
2,966,275
|
|
(In thousands)
|
March 31,
2018
|
|
December 31,
2017
|
||||
|
|
|
|
||||
Intangible assets with indefinite lives (Trademarks and Trade Names)
|
$
|
1,408,848
|
|
|
$
|
1,408,848
|
|
Intangible assets with definite lives (Customer Relationships)
|
542,011
|
|
|
542,011
|
|
||
Less accumulated amortization (Customer Relationships)
|
(33,766
|
)
|
|
(27,771
|
)
|
||
Intangible assets, net
|
$
|
1,917,093
|
|
|
$
|
1,923,088
|
|
(In thousands)
|
March 31,
2018
|
|
|
December 31,
2017
|
||||
|
|
|
|
|
||||
Payroll, vacation and other compensation
|
$
|
3,086
|
|
|
|
$
|
4,342
|
|
Annual incentive bonuses
|
2,171
|
|
|
|
4,259
|
|
||
Workers compensation reserve
|
1,614
|
|
|
|
1,650
|
|
||
Self-insurance reserves
|
987
|
|
|
|
1,192
|
|
||
Taxes
|
507
|
|
|
|
99
|
|
||
Accrued interest
|
349
|
|
|
|
338
|
|
||
|
$
|
8,714
|
|
|
|
$
|
11,880
|
|
(In thousands)
|
March 31, 2018
|
|
|
December 31,
2017 |
||||
|
|
|
|
|
||||
Third First Lien Term Loan (3.9% as of March 31, 2018)
|
|
|
|
|
||||
Principal
|
$
|
991,278
|
|
|
|
$
|
993,762
|
|
Unamortized debt premium and issuance costs
|
4,586
|
|
|
|
4,857
|
|
||
|
995,864
|
|
|
|
998,619
|
|
||
Capital lease obligation (6.8%)
|
528
|
|
|
|
569
|
|
||
Total debt and capital lease obligation
|
996,392
|
|
|
|
999,188
|
|
||
Less: Amounts due within one year
|
(11,268
|
)
|
|
|
(11,268
|
)
|
||
Long-term portion
|
$
|
985,124
|
|
|
|
$
|
987,920
|
|
|
|
Three Months Ended
March 31, 2018 |
|
Three Months Ended
March 31, 2017 |
||||
|
|
|
|
|
||||
Numerator:
|
|
|
|
|
||||
Net income attributable to Class A shareholders (in thousands)
|
|
$
|
23,841
|
|
|
$
|
15,832
|
|
Denominator:
|
|
|
|
|
||||
Weighted-average Class A shares outstanding - basic
|
|
99,895,075
|
|
|
98,250,917
|
|
||
Dilutive effect of warrants
|
|
5,048,437
|
|
|
6,521,341
|
|
||
Dilutive effect of restricted stock and restricted stock units
|
|
97,503
|
|
|
1,629
|
|
||
Weighted-average shares outstanding - diluted
|
|
105,041,015
|
|
|
104,773,887
|
|
||
|
|
|
|
|
||||
Net income per Class A share - basic
|
|
$
|
0.24
|
|
|
$
|
0.16
|
|
|
|
|
|
|
||||
Net income per Class A share - diluted
|
|
$
|
0.23
|
|
|
$
|
0.15
|
|
(In thousands)
|
|
|
||
Balance December 31, 2017
|
|
$
|
124,360
|
|
Exchange of Class B units for Class A shares
|
|
400
|
|
|
Reduction of future payments due to the Buyout
|
|
(46,371
|
)
|
|
Balance March 31, 2018
|
|
$
|
78,389
|
|
(In thousands)
|
|
||
Remainder of 2018
|
$
|
8,100
|
|
2019
|
4,400
|
|
|
2020
|
4,300
|
|
|
2021
|
4,300
|
|
|
2022
|
4,300
|
|
|
Thereafter
|
52,989
|
|
|
Three Months Ended
|
||||||||||||
(
In thousands, except shares and per share data
)
|
March 31,
2018
|
|
%
of Net Revenues |
|
March 31,
2017
|
|
%
of Net Revenues |
||||||
Net revenue
|
$
|
208,743
|
|
|
100.0
|
%
|
|
$
|
184,538
|
|
|
100.0
|
%
|
Cost of goods sold
|
137,502
|
|
|
65.9
|
|
|
105,243
|
|
|
57.0
|
|
||
Gross profit
|
71,241
|
|
|
34.1
|
|
|
79,295
|
|
|
43.0
|
|
||
|
|
|
|
|
|
|
|
||||||
Operating costs and expenses
|
38,369
|
|
|
18.4
|
|
|
34,572
|
|
|
18.7
|
|
||
Operating income
|
32,872
|
|
|
15.7
|
|
|
44,723
|
|
|
24.2
|
|
||
Other expense (benefit)
|
(2,949
|
)
|
|
(1.4
|
)
|
|
10,544
|
|
|
5.7
|
|
||
Income tax expense
|
6,519
|
|
|
3.1
|
|
|
9,980
|
|
|
5.4
|
|
||
Net income
|
29,302
|
|
|
14.0
|
|
|
24,199
|
|
|
13.1
|
|
||
Less: Net income attributable to the non-controlling interest
|
5,461
|
|
|
2.6
|
|
|
8,367
|
|
|
4.5
|
|
||
Net income attributable to Class A shareholders
|
$
|
23,841
|
|
|
11.4
|
%
|
|
$
|
15,832
|
|
|
8.6
|
%
|
|
|
|
|
|
|
|
|
||||||
Earnings per Class A share:
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
0.24
|
|
|
|
|
$
|
0.16
|
|
|
|
||
Diluted
|
$
|
0.23
|
|
|
|
|
$
|
0.15
|
|
|
|
||
|
|
|
|
|
|
|
|
||||||
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||||
Basic
|
99,895,075
|
|
|
|
|
98,250,917
|
|
|
|
||||
Diluted
|
105,041,015
|
|
|
|
|
104,773,887
|
|
|
|
•
|
does not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments;
|
•
|
does not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
does not reflect the significant interest expenses, or the cash requirements necessary to service interest or principal payments, on our debt; and
|
•
|
does not reflect payments related to income taxes, the Tax Receivable Agreement or distributions to the non-controlling interest to reimburse its tax liability.
|
Reconciliation of Adjusted EBITDA
(Unaudited) |
|||||||||
|
|
|
|
|
|
||||
(In thousands)
|
|
Three Months Ended
March 31, 2018 |
|
|
Three Months Ended
March 31, 2017 |
||||
|
|
|
|
|
|
||||
Net income
|
|
$
|
29,302
|
|
|
|
$
|
24,199
|
|
Plus non-GAAP adjustments:
|
|
|
|
|
|
||||
Income tax provision
|
|
6,519
|
|
|
|
9,980
|
|
||
Interest expense, net
|
|
9,340
|
|
|
|
9,830
|
|
||
Depreciation and amortization
|
|
10,091
|
|
|
|
9,266
|
|
||
Share-based compensation
|
i.
|
1,623
|
|
|
|
521
|
|
||
Gain on buyout of tax receivable agreement
|
ii.
|
(12,372
|
)
|
|
|
—
|
|
||
Impairment of property and equipment
|
iii.
|
1,417
|
|
|
|
—
|
|
||
Tax Reform bonuses
|
iv.
|
983
|
|
|
|
—
|
|
||
Business combination transaction costs
|
v.
|
47
|
|
|
|
—
|
|
||
Other expense
|
vi.
|
83
|
|
|
|
714
|
|
||
Adjusted EBITDA
|
|
$
|
47,033
|
|
|
|
$
|
54,510
|
|
i.
|
For the three months ended March 31, 2018, and 2017, we recognized expense related to stock compensation awarded under the Hostess Brands, Inc. 2016 Incentive Plan.
|
ii.
|
Represents the difference between the carrying value of the Tax Receivable Agreement liability terminated during the three months ended March 31, 2018, and the related cash payment of $34.0 million.
|
iii.
|
For the three months ended March 31, 2018 we recorded an impairment loss of
$1.4 million
related to a planned improvement in production that was abandoned.
|
iv.
|
For the three months ended March 31, 2018, we utilized a portion of the tax savings expected to be realized from the legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Reform”) to pay bonuses to certain hourly employees.
|
v.
|
Represents fees incurred related to the acquisition of certain assets from Aryzta, LLC on February 1, 2018.
|
vi.
|
For the three months ended March 31, 2018, we incurred professional services fees related to the pursuit of potential acquisitions. For the three months ended March 31, 2017, we recorded expenses of $0.7 million which primarily consisted of legal and professional fees related to a secondary public offering of common stock which occurred in April 2017.
|
|
Unaudited Segment Financial Data
|
|
|||||||
(In thousands)
|
Three Months
Ended March 31, 2018 |
|
|
Three Months
March 31, 2017 |
|
||||
|
|
|
|
|
|
||||
Net revenue:
|
|
|
|
|
|
||||
Sweet Baked Goods
|
$
|
199,293
|
|
|
|
$
|
174,793
|
|
|
In-Store Bakery
|
9,450
|
|
|
|
9,745
|
|
|
||
Net revenue
|
$
|
208,743
|
|
|
|
$
|
184,538
|
|
|
|
|
|
|
|
|
|
|
||
Gross profit:
|
|
|
|
|
|
||||
Sweet Baked Goods
|
$
|
69,438
|
|
|
|
$
|
76,781
|
|
|
In-Store Bakery
|
1,803
|
|
|
|
2,514
|
|
|
||
Gross profit
|
$
|
71,241
|
|
|
|
$
|
79,295
|
|
|
|
|
|
|
|
|
|
|
Item 4.
|
Controls and Procedures
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
|
|
|
|
|
|
|
10.2
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
HOSTESS BRANDS, INC.
|
|
|
|
By
|
/s/ Thomas Peterson
|
|
Thomas Peterson
Executive Vice President, Chief Financial Officer
|
•
|
The Plan Year begins on January 1
st
and ends on December 31
st
. The calculation will be based on the employee’s Incentive Compensation (Incentive Comp) level and current salary. Eligible employees, as defined below, are assigned an Incentive Comp level (percentage of base salary) based on their position or specified in their offer letter. So, for example, if a person’s salary is $100,000, paid in equal increments over a year, that person had a 20% Incentive Comp level and the Metric(s) set were attained at 100%, that person’s incentive would be 20% x $100,000 or $20,000.
|
•
|
Plan metrics will measure (i) Net Revenue (ii) EBITDA achievement and (iii) Strategic Team goals weighted as follows:
|
o
|
40% - EBITDA
|
o
|
40% - Net Revenue
|
o
|
20% - Strategic Team Goals (or individual as applicable)
|
•
|
Attainment of not less than 93% of the Company’s Annual Operating Plan established EBITDA must be achieved in order to establish the Plan pool for Incentive Comp payments under
each
Metric to occur. If achieved, funding for each Metric is independent and will be calculated based on the weighting noted above.
|
•
|
Net Revenue will be paid based on attainment of the Net Revenue goal set for the bonus year at the same payment percentage schedule as set out in the table of % of EBITDA achieved to fund the Plan Pool. So, for example, if 98% of the Net Revenue Metric is achieved, 80% of the Net Revenue Metric will be paid.
|
•
|
Strategic Team Goals will be based on actual performance on budgeted financial goals, such as revenue growth, cost control, case or dollar volume, etc.
|
o
|
Payout percentage, on Strategic Team Goals, would range from 0% to 100% based on the proportion of goals achieved. So, for example, if three out of four team goals were achieved, team component for that group would fund at 75% of target.
|
o
|
Minimum of three goals and a maximum of 5 goals are set by the functional Manager near the start of the year.
|
•
|
Overall Manager discretion:
|
o
|
Working with the available Plan pool of funds and within the established guidelines, Managers will be able to differentiate final award payouts by performance as to Strategic Team Goals. Any and all Incentive Comp payout remains subject to overall Manager and Company discretion related to the overall individual and functional team performance.
|
•
|
The Plan Pool will fund on the following schedule:
|
Element
|
Weighting
|
Performance % of Plan
|
Funding % of Metric
|
Amount
|
Description
|
EBITDA
|
40%
|
100%
|
100%
|
$8,000
|
$20,000 Incentive Comp potential x 40% EBITDA performance paid at 100%
|
Net Revenue
|
40%
|
98%
|
80%
|
$6,400
|
$20,000 Incentive Comp potential x 40% Net Revenue performance paid at 80%
|
Strategic Team Goals
Case Volume – Met (1/3)
Trade Spend +/- 2% - Met (1/3)
Snack Cake AOP – Not Met (1/3)
|
20%
|
100%
(33.3% for each met metric)
|
100%
|
$4,000
|
$20,000 Incentive Comp potential x 20% for three out of three metrics achieved
|
Total Incentive Comp Achieved
|
|
|
|
$18,400
|
|
•
|
Employees who commence employment or are promoted to an eligible position prior to October 1st of a Plan Year will receive a pro-rated Incentive Comp based upon their service date. As such, actual salary for the period of employment, while in an Incentive Comp eligible position, paid during the Plan Year to the employee will be the base salary used for Incentive Compensation calculation purposes. Thus, a person who has been hired at an annual salary of $100,000 on September 30 and was paid $25,000 as salary (1/4 of annual salary for working 1/4 of the year) during the short year and had a 20% incentive level and having attained 100% of Target(s) would be paid an Incentive Compensation payment of $25,000 x 20% = $5,000 for the short year. Employees hired on or after October 1 of a Plan Year will not be eligible for an Incentive Compensation for that year.
|
•
|
An Employee must be an active employee of the Company and on the payroll as of the date on which the applicable Incentive Compensation is paid.
|
•
|
As consideration for being eligible for receipt of Incentive Compensation in any Plan Year, an Employee must have executed and delivered to the Company a mutually agreed form of Confidentiality Agreement and any other agreement requested by the Company in connection with such Employee’s employment.
|
•
|
Any sums paid to an eligible employee that are other than base salary payments will not be included in Incentive Compensation payment calculation.
|
•
|
The Incentive Compensation payment will be pro-rated for any approved
unpaid
leave of absence lasting 4 consecutive weeks or more, to the extent permitted by law.
|
•
|
If during a Plan Year, an Employee becomes Incentive Comp eligible before October 1
st
of a Plan Year, or changes from Incentive Comp eligible to non-Incentive Comp eligible after June 30
th
of a Plan Year, the amount of any the Incentive Compensation payable to such employee will be pro-rated for the time in the eligible position.
|
Date: May 9, 2018
|
|
/s/ Andrew P. Callahan
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
Date: May 9, 2018
|
|
/s/ Thomas A. Peterson
|
|
|
Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Date: May 9, 2018
|
|
/s/ Andrew P. Callahan
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
Date: May 9, 2018
|
|
/s/ Thomas A. Peterson
|
|
|
Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
|