10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

	(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the three months ended
	September 30, 2022
	OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 001-37540

HOSTESS BRANDS, INC.

(Exact name of registrant as specified in its charter)

Delaware		47-4168492
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
7905 Quivira Road		66215
Lenexa,	KS	(Zip Code)
(Address of principal executive offices)

(816) 701-4600

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class	Ticker Symbol	Name of each exchange on which registered
Class A Common Stock, Par Value of $0.0001 per share	TWNK	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.:

Large accelerated filer ☒ Accelerated
filer  ☐ Non‑accelerated  filer  ☐ Smaller reporting company  ☐ Emerging growth company  ☐

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Act). Yes ☐ No ☒

Shares of Class A common stock outstanding - 133,886,737 shares at October 31, 2022

HOSTESS BRANDS, INC.

FORM 10-Q

For the Three Months Ended September 30, 2022

INDEX

		Page
PART I - Financial Information
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets (Unaudited)	4
	Condensed Consolidated Statements of Operations (Unaudited)	5
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	6
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)	7
	Condensed Consolidated Statements of Cash Flows (Unaudited)	9
	Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22
PART II - Other Information
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Default Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	25
Item 6.	Exhibits	26

Cautionary Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains statements reflecting our views about our future performance that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. All statements contained in this Quarterly Report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. Statements that constitute forward-looking statements are generally identified through the inclusion of words such as “believes,” “expects,” “intends,” “estimates,” “projects,” “anticipates,” “will,” “plan,” “may,” “should,” or similar language. Statements addressing events and developments that we expect or anticipate will occur are also considered forward-looking statements. All forward-looking statements included herein are made only as of the date hereof. It is routine for our internal projections and expectations to change throughout the year, and any forward-looking statements based upon these projections or expectations may change prior to the end of the next quarter or year. Readers of this Quarterly Report are cautioned not to place undue reliance on any such forward-looking statements. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Risks and uncertainties are identified under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, as updated by subsequent filings. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these risk factors. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise, except to the extent required by law.

3

PART I

Item 1. Financial Statements (Unaudited)

HOSTESS BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands, except shares and per share data)

	September 30,		December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	190,828	$	249,159
Short-term investments	41,891		—
Accounts receivable, net	199,917		148,180
Inventories	65,444		52,813
Prepaids and other current assets	10,914		10,564
Total current assets	508,994		460,716
Property and equipment, net	385,085		335,305
Intangible assets, net	1,926,758		1,944,392
Goodwill	706,615		706,615
Other assets, net	72,732		19,283
Total assets	$	3,600,184	$	3,466,311
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Long-term debt and lease obligations payable within one year	$	14,251	$	14,170
Tax receivable agreement payments payable within one year	11,100		11,600
Accounts payable	95,958		68,104
Customer trade allowances	68,799		52,746
Accrued expenses and other current liabilities	54,513		47,009
Total current liabilities	244,621		193,629
Long-term debt and lease obligations	1,088,914		1,099,975
Tax receivable agreement obligations	124,592		134,265
Deferred tax liability	343,009		317,847
Other long-term liabilities	1,568		1,605
Total liabilities	1,802,704		1,747,321
Commitments and Contingencies (Note 9)
Class A common stock, $0.0001 par value, 200,000,000 shares authorized, 142,567,808 shares issued and 134,570,118 shares outstanding as of September 30, 2022 and 142,031,329 shares issued and 138,278,573 shares outstanding as of December 31, 2021	14		14
Additional paid in capital	1,307,813		1,303,254
Accumulated other comprehensive income (loss)	36,172		(506)
Retained earnings	606,703		475,400
Treasury stock	(153,222)		(59,172)
Stockholders’ equity	1,797,480		1,718,990
Total liabilities and stockholders’ equity	$	3,600,184	$	3,466,311

See accompanying notes to the unaudited condensed consolidated financial statements.

4

HOSTESS BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, amounts in thousands, except shares and per share data)

	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Net revenue	$	346,226	$	287,969	$	1,018,749	$	844,875
Cost of goods sold	230,805		188,990		675,004		545,271
Gross profit	115,421		98,979		343,745		299,604
Operating costs and expenses:
Advertising and marketing	15,816		14,767		43,353		39,692
Selling	9,696		8,166		29,610		26,250
General and administrative	30,502		23,565		90,301		69,254
Amortization of customer relationships	5,878		5,877		17,634		17,633
Tax receivable agreement remeasurement	(860)		—		(860)		—
Total operating costs and expenses	61,032		52,375		180,038		152,829
Operating income	54,389		46,604		163,707		146,775
Other expense (income):
Interest expense, net	10,276		9,928		29,683		29,899
Change in fair value of warrant liabilities	—		228		—		683
Other expense (income)	(31,921)		378		(31,992)		1,808
Total other expense (income)	(21,645)		10,534		(2,309)		32,390
Income before income taxes	76,034		36,070		166,016		114,385
Income tax expense	9,765		9,878		34,713		31,614
Net income	$	66,269	$	26,192	$	131,303	$	82,771
Earnings per Class A share:
Basic	$	0.49	$	0.20	$	0.95	$	0.63
Diluted	$	0.48	$	0.19	$	0.95	$	0.60
Weighted-average shares outstanding:
Basic	136,436,428		129,846,551		137,636,441		130,679,974
Diluted	137,604,256		138,058,866		138,702,172		138,036,371

See accompanying notes to the unaudited condensed consolidated financial statements.

5

HOSTESS BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, amounts in thousands)

	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Net income	$	66,269	$	26,192	$	131,303	$	82,771
Other comprehensive income:
Unrealized gain (loss) on interest rate swap and foreign currency contracts designated as a cash flow hedge	19,058		(192)		49,041		5,058
Reclassification into net income	(1,188)		962		697		3,441
Income tax expense	(4,691)		(203)		(13,060)		(2,253)
Comprehensive income	$	79,448	$	26,759	$	167,981	$	89,017

See accompanying notes to the unaudited condensed consolidated financial statements.

6

HOSTESS BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, amounts in thousands)

	Class A Voting Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained  Earnings		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount								Shares	Amount
Balance–December 31, 2021	138,279	$	14	$	1,303,254	$	(506)	$	475,400	3,753	$	(59,172)	$	1,718,990
Comprehensive income	—	—		—		18,226		34,558		—	—		52,784
Share-based compensation	350	—		2,339		—		—		—	—		2,339
Exercise of employee stock options	105	—		1,662		—		—		—	—		1,662
Payment of taxes for employee stock awards	—	—		(5,216)		—		—		—	—		(5,216)
Repurchase of common stock	(459)	—		—		—		—		459	(9,680)		(9,680)
Balance–March 31, 2022	138,275	$	14	$	1,302,039	$	17,720	$	509,958	4,212	$	(68,852)	$	1,760,879
Comprehensive income	—	—		—		5,273		30,476		—	—		35,749
Share-based compensation	23	—		2,648		—		—		—	—		2,648
Exercise of employee stock options	37	—		579		—		—		—	—		579
Payment of taxes for employee stock awards	—	—		(296)		—		—		—	—		(296)
Repurchase of common stock	(1,848)	—		—		—		—		1,848	(38,826)		(38,826)
Balance–June 30, 2022	136,487	$	14	$	1,304,970	$	22,993	$	540,434	6,060	$	(107,678)	$	1,760,733
Comprehensive income	—	—		—		13,179		66,269		—	—		79,448
Share-based compensation	1	—		2,613		—		—		—	—		2,613
Exercise of employee stock options	20	—		300		—		—		—	—		300
Payment of taxes for employee stock awards	—	—		(70)		—		—		—	—		(70)
Repurchase of common stock	(1,938)	—		—		—		—		1,938	(45,544)		(45,544)
Balance–September 30, 2022	134,570	$	14	$	1,307,813	$	36,172	$	606,703	7,998	$	(153,222)	$	1,797,480

7

	Class A Voting Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Retained  Earnings		Treasury Stock			Total Stockholders’ Equity
	Shares	Amount								Shares	Amount
Balance–December 31, 2020	130,347	$	13	$	1,281,018	$	(10,407)	$	356,101	444	$	(6,000)	$	1,620,725
Comprehensive income	—	—		—		6,162		26,732		—	—		32,894
Share-based compensation	146	—		2,723		—		—		—	—		2,723
Exercise of employee stock options	20	—		262		—		—		—	—		262
Payment of taxes for employee stock awards	—	—		(843)		—		—		—	—		(843)
Exercise of public warrants	672	—		7,722		—		—		—	—		7,722
Balance–March 31, 2021	131,185	$	13	$	1,290,882	$	(4,245)	$	382,833	444	$	(6,000)	$	1,663,483
Comprehensive income (loss)	—	—		—		(483)		29,847		—	—		29,364
Share-based compensation	22	—		1,640		—		—		—	—		1,640
Exercise of employee stock options	220	—		3,135		—		—		—	—		3,135
Exercise of public warrants	209	—		2,405		—		—		—	—		2,405
Payment of taxes for employee stock awards	—	—		(392)		—		—		—	—		(392)
Repurchase of common stock	(1,176)	—		—		—		—		1,176	(16,691)		(16,691)
Balance–June 30, 2021	130,460	$	13	$	1,297,670	$	(4,728)	$	412,680	1,620	$	(22,691)	$	1,682,944
Comprehensive income	—	—		—		567		26,192		—	—		26,759
Share-based compensation	—	—		2,642		—		—		—	—		2,642
Exercise of employee stock options	19	—		255		—		—		—	—		255
Exercise of public warrants, net of fees of $500	643	—		(494)		—		—		—	—		(494)
Payment of taxes for employee stock awards	—	—		(42)		—		—		—	—		(42)
Reclassification of warrants	—	—		298		—		—		—	—		298
Repurchase of common stock	(1,952)	—		—		—		—		1,952	(33,372)		(33,372)
Balance–September 30, 2021	129,170	$	13	$	1,300,329	$	(4,161)	$	438,872	3,572	$	(56,063)	$	1,678,990

See accompanying notes to the unaudited condensed consolidated financial statements.

8

HOSTESS BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, amounts in thousands)

			Nine Months Ended
			September 30, 2022		September 30, 2021
Operating activities
	Net income		$	131,303	$	82,771
	Depreciation and amortization		44,500		37,992
	Debt discount amortization		921		931
	Change in fair value of warrant liabilities		—		683
	Tax receivable agreement remeasurement		(860)		—
	Unrealized foreign exchange losses (gains)		790		(177)
	Non-cash lease expense		375		971
	Share-based compensation		7,600		7,005
	Deferred taxes		12,104		18,280
	Change in operating assets and liabilities:
		Accounts receivable	(51,904)		(31,240)
		Inventories	(12,631)		39
		Prepaids and other current assets	(468)		13,991
		Accounts payable and accrued expenses	16,332		7,949
		Customer trade allowances	16,143		8,441
	Net cash provided by operating activities		164,205		147,636
Investing activities
	Purchases of property and equipment		(55,240)		(33,360)
	Acquisition of short-term investments		(62,891)		—
	Proceeds from maturity of short-term investments		21,000		—
	Acquisition and development of software assets		(8,578)		(3,330)
	Net cash used in investing activities		(105,709)		(36,690)
Financing activities
	Repayments of long-term debt and lease obligations		(8,375)		(8,375)
	Repurchase of common stock		(94,050)		(50,063)
	Tax payments related to issuance of shares to employees		(5,582)		(1,277)
	Cash received from exercise of options and warrants		2,541		13,285
	Payments on tax receivable agreement		(9,313)		(9,270)
	Net cash used in financing activities		(114,779)		(55,700)
	Effect of exchange rate changes on cash and cash equivalents		(2,048)		(184)
Net increase (decrease) in cash and cash equivalents			(58,331)		55,062
Cash and cash equivalents at beginning of period			249,159		173,034
Cash and cash equivalents at end of period			$	190,828	$	228,096

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
	Interest, net of amounts capitalized	$	29,342	$	29,019
	Net taxes paid	$	19,023	$	1,568
Supplemental disclosure of non-cash investing:
	Accrued capital expenditures	$	23,103	$	5,603

See accompanying notes to the unaudited condensed consolidated financial statements.

9

HOSTESS BRANDS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Description of Business

Hostess Brands, Inc. is a Delaware corporation headquartered in Lenexa, Kansas. The condensed consolidated financial statements include the accounts of Hostess Brands, Inc. and its subsidiaries (collectively, the “Company”). The Company is a leading sweet snacks company focused on developing, manufacturing, marketing, selling and distributing snacks in the U.S. under the Hostess® brands and in North America under the Voortman® brands. The Company produces a variety of new and classic treats including iconic Hostess® Donettes®, Twinkies®, CupCakes, Ding Dongs® and Zingers®, as well as a variety of Voortman® branded cookies and wafers.

Basis of Presentation

The Company’s operations are conducted through wholly-owned operating subsidiaries. The condensed consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The results of operations for any quarter or a partial fiscal year period are not necessarily indicative of the results to be expected for other periods or the full fiscal year. For the periods presented, the Company has one reportable segment.

Adoption of New Accounting Standards

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments in this update apply only to contracts, hedging relationships, and other transactions that reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued as a result of reference rate reform. ASU No. 2020-04 is elective and effective as of March 12, 2020 through December 31, 2022. Once elected, this ASU must be applied prospectively for all eligible contract modifications. The Company will adopt Topic 848 when its relevant contracts are modified upon transition to alternative reference rates. The Company does not expect the adoption of Topic 848 to have a material impact on its consolidated financial statements.

Principles of Consolidation

All intercompany balances and transactions related to activity between the Company and its wholly-owned subsidiaries have been eliminated in consolidation.    

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements and for the reported amounts of revenues and expenses during the reporting period.

Investments

The Company considers all investments purchased with original maturities of greater than three months, but less than one year as short-term investments and all investments purchased with original maturities of greater than one year as long-term investments.

10

HOSTESS BRANDS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company classifies its investments in debt securities where it has positive intent and ability to hold until maturity as held-to-maturity. As of September 30, 2022, the Company’s held-to-maturity investments classified as cash equivalents on the condensed consolidated balance sheet totaled $63.6 million, which consisted of $34.8 million of commercial paper, $12.9 million of U.S. treasury securities and $15.9 million of U.S. agency bonds and held-to-maturity investments classified as short-term investments on the condensed consolidated balance sheet totaled $41.9 million, which consisted of $20.0 million of commercial paper, $12.9 million of U.S. treasury securities and $9.0 million of U.S. agency bonds. As of December 31, 2021, the Company had no held-to-maturity investments. Held-to-maturity investments are recorded at amortized cost, which approximates fair value, and realized gains or losses are reported in interest expense, net on the condensed consolidated statements of operations. For the three and nine months ended September 30, 2022, the Company recognized $0.5 million and $0.6 million in realized gains, respectively. The Company’s held-to-maturity investments are classified as Level 2 in the fair value hierarchy because they are valued using inputs other than quoted prices, which are directly or indirectly observable in the market, including prices for similar assets in active markets as well as quoted prices for identical or similar assets in markets that are not active.

Accounts Receivable

Accounts receivable represents amounts invoiced to customers for performance obligations which have been satisfied. As of September 30, 2022 and December 31, 2021, the Company’s accounts receivable were $199.9 million and $148.2 million, respectively, which have been reduced by an allowance for damages occurring during shipment, quality claims and doubtful accounts in the amount of $4.3 million and $3.0 million for the periods ended September 30, 2022 and December 31, 2021, respectively.

The allowance for doubtful accounts represents the Company’s estimate of expected credit losses related to trade receivables. To estimate the allowance for doubtful accounts, the Company leverages information on historical losses, current conditions, and reasonable and supportable forecasts of future conditions. Account balances are written off against the allowance when the Company deems the amount is uncollectible.

Inventories

Inventories are stated at the lower of cost or net-realizable value on a first-in first-out basis. Abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) are expensed in the period they are incurred.

The components of inventories are as follows:

(In thousands)	September 30, 2022		December 31, 2021
Ingredients and packaging	$	33,629	$	22,607
Finished goods	28,047		26,988
Inventory in transit to customers	3,768		3,218
	$	65,444	$	52,813

Capitalized Interest

The Company capitalizes a portion of the interest on its term loan (see Note 4. Debt and Lease Obligations) related to certain property and equipment during its construction period. The capitalized interest is recorded as part of the asset to which it relates and depreciated over the asset’s estimated useful life. The Company capitalized interest of $0.3 million and $0.5 million during the three and nine months ended September 30, 2022, respectively. No interest was capitalized during the three and nine months ended September 30, 2021. Capitalized interest is included in property and equipment, net on the condensed consolidated balance sheets.

11

HOSTESS BRANDS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Software Costs

Capitalized software is included in other assets on the condensed consolidated balance sheets in the amount of $20.1 million and $14.7 million as of September 30, 2022 and December 31, 2021, respectively. Capitalized software costs are amortized over their estimated useful life of up to five years commencing when such assets are ready for their intended use. Software amortization expense included in general and administrative expense on the condensed consolidated statements of operations was $1.1 million and $3.2 million for the three and nine months ended September 30, 2022, respectively, compared to $1.0 million and $2.9 million for the three and nine months ended September 30, 2021, respectively.

Disaggregation of Revenue

Net revenue consists of sales of packaged food products primarily within the Sweet Baked Goods (“SBG”) category in the United States, as well as in the Cookie category in the United States and Canada.

The following tables disaggregate revenue by geographical market and category.

	Three Months Ended September 30, 2022
(In thousands)	Sweet Baked Goods		Cookies		Total
United States	$	307,332	$	33,573	$	340,905
Canada	—		5,321		5,321
	$	307,332	$	38,894	$	346,226

	Three Months Ended September 30, 2021
(In thousands)	Sweet Baked Goods		Cookies		Total
United States	$	258,818	$	25,185	$	284,003
Canada	—		3,966		3,966
	$	258,818	$	29,151	$	287,969

	Nine Months Ended September 30, 2022
(In thousands)	Sweet Baked Goods		Cookies		Total
United States	$	907,141	$	96,837	$	1,003,978
Canada	—		14,771		14,771
	$	907,141	$	111,608	$	1,018,749

	Nine Months Ended September 30, 2021
(In thousands)	Sweet Baked Goods		Cookies		Total
United States	$	759,010	$	73,394	$	832,404
Canada	—		12,471		12,471
	$	759,010	$	85,865	$	844,875

Concentrations

The Company had one customer (together with its affiliates) that accounted for 19.7% and 20.2% of total net revenue for the three and nine months ended September 30, 2022, respectively, and 18.0% and 18.8% for the three and nine months ended September 30, 2021, respectively.

12

HOSTESS BRANDS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Property and Equipment

Property and equipment consists of the following:

(In thousands)	September 30, 2022		December 31, 2021
Land and buildings	$	74,872	$	70,692
Right of use assets, operating	32,637		32,192
Machinery and equipment	306,272		299,071
Construction in progress	86,093		26,027
	499,874		427,982
Less accumulated depreciation and amortization	(114,789)		(92,677)
	$	385,085	$	335,305

Depreciation expense was $9.5 million and $23.7 million for the three and nine months ended September 30, 2022, compared to $5.9 million and $17.4 million for the three and nine months ended September 30, 2021, respectively.

3. Accrued Expenses and Other Current Liabilities

Included in accrued expenses and other current liabilities are the following:

(In thousands)	September 30, 2022		December 31, 2021
Incentive compensation	$	22,756	$	21,172
Payroll, vacation and other compensation	12,870		7,791
Accrued interest	5,645		4,828
Interest rate swap and foreign currency contracts	639		2,042
Other	12,603		11,176
	$	54,513	$	47,009

13

HOSTESS BRANDS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4. Debt and Lease Obligations

A summary of the carrying value of the debt and lease obligations are as follows:

(In thousands)	September 30, 2022		December 31, 2021
Term loan (5.1% as of September 30, 2022)
Principal	$	1,083,221	$	1,091,596
Unamortized debt premium and issuance costs	(3,101)		(3,679)
	1,080,120		1,087,917
Lease obligations	23,045		26,228
Total debt and lease obligations	1,103,165		1,114,145
Less: Current portion of long term debt and lease obligations	(14,251)		(14,170)
Long-term portion	$	1,088,914	$	1,099,975

At September 30, 2022, minimum debt repayments under the term loan are due as follows:

(In thousands)
2022	$	2,792
2023	11,167
2024	11,167
2025	1,058,095

Leases

The Company has entered into operating leases for certain properties which expire at various times through 2026. The Company determines if an arrangement is a lease at inception.

At September 30, 2022 and December 31, 2021, right of use assets related to operating leases are included in property and equipment, net on the condensed consolidated balance sheets (see Note 2. Property and Equipment). As of September 30, 2022 and December 31, 2021, the Company had no outstanding financing leases. Lease liabilities for operating leases are included in the current and non-current portions of long-term debt and lease obligations on the condensed consolidated balance sheets.

The table below shows the composition of lease expense:

	Three Months Ended				Nine Months Ended
(In thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Operating lease expense	$	1,623	$	1,504	$	4,811	$	4,928
Short-term lease expense	645		501		1,479		1,083
Variable lease expense	403		367		1,176		1,109
	$	2,671	$	2,372	$	7,466	$	7,120

14

HOSTESS BRANDS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5. Derivative Instruments

Interest Rate Swap and Foreign Currency Contracts

The Company entered into interest rate swap contracts with counterparties to make a series of payments based on fixed rates ranging from 1.11% to 2.06% in addition to the term loan margin of 2.25% and receive a series of payments based on the greater of LIBOR or 0.75%. Both the fixed and floating payment streams are based on the September 30, 2022 notional amount of $700 million, outstanding through August 2025. The Company entered into these transactions to reduce its exposure to changes in cash flows associated with its variable rate debt and has designated these derivatives as cash flow hedges. At September 30, 2022, the interest on the Company’s variable rate debt hedged by these contracts is effectively fixed at rates ranging from 3.36% to 4.31%.

To reduce the effect of fluctuations in Canadian dollar (“CAD”) denominated expenses relative to their U.S. dollar equivalents originating from its Canadian operations, the Company entered into CAD purchase contracts. The contracts provide for the Company to sell a total of $9.5 million USD for $12.1 million CAD at varying defined settlement dates through June 2023. The Company has designated these contracts as cash flow hedges.

A summary of the fair value of interest rate and foreign currency instruments is as follows:

(In thousands)		September 30, 2022		December 31, 2021
Asset derivatives	Location
Interest rate swap contracts (1)	Other non-current assets	$	50,219	$	1,803
Liability derivatives	Location
Interest rate swap contracts (1)	Accrued expenses	$	—	$	1,798
Foreign currency contracts (2)	Accrued expenses	639		244
		$	639	$	2,042

(1) The fair values of interest rate swap contracts are measured on a recurring basis by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves (Level 2).

(2) The fair values of foreign currency contracts are measured at each reporting period by comparison to available market information on similar contracts (Level 2).

A summary of the gains and losses related to interest rate and foreign currency instruments on the condensed consolidated statements of operations is as follows:

		Three Months Ended				Nine Months Ended
(In thousands)		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
(Gain ) Loss on derivative contracts designated as cash flow hedges	Location
Interest rate swap contracts	Interest expense, net	$	(1,325)	$	962	$	560	$	3,441
Foreign currency contracts	Cost of goods sold	137		—		137		—
		$	(1,188)	$	962	$	697	$	3,441

15

HOSTESS BRANDS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Earnings per Share

Basic earnings per share is calculated by dividing net income for the period by the weighted average number of shares of Class A common stock outstanding for the period excluding non-vested share-based awards. In computing diluted earnings per share, basic earnings per share is adjusted for the assumed issuance of all applicable potentially dilutive share-based awards including RSUs and stock options as well as public and private placement warrants.

Below are basic and diluted net income per share:

	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Numerator:
Net income (in thousands)	$	66,269	$	26,192	$	131,303	$	82,771
Denominator:
Weighted-average Class A shares outstanding - basic	136,436,428		129,846,551		137,636,441		130,679,974
Dilutive effect of warrants	—		7,462,176		—		6,700,256
Dilutive effect of RSUs	646,474		564,237		566,463		515,334
Dilutive effect of stock options	521,354		185,902		499,268		140,807
Weighted-average shares outstanding - diluted	137,604,256		138,058,866		138,702,172		138,036,371
Net income per Class A share - basic	$	0.49	$	0.20	$	0.95	$	0.63
Net income per Class A share - diluted	$	0.48	$	0.19	$	0.95	$	0.60

For warrants that are liability-classified, during periods when the impact would be dilutive, the Company assumes share settlement of the instruments as of the beginning of the reporting period and adjusts the numerator to remove the change in fair value of the warrant liability and adjusts the denominator to include the dilutive shares calculated using the treasury stock method. All warrants were exercised or expired as of December 31, 2021.

7. Income Taxes

The Company is subject to U.S. federal, state and local income taxes as well as Canadian income tax on its controlled foreign subsidiary. The income tax provision is determined based on the estimated full year effective tax rate, adjusted for infrequent or unusual items, which are recognized on a discrete basis in the period they occur. The Company’s estimated annual effective tax rate is 27.3% prior to taking into account any discrete items.

16

HOSTESS BRANDS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. Tax Receivable Agreement Obligations

The following table summarizes activity related to the tax receivable agreement for the nine months ended September 30, 2022:

(In thousands)
Balance December 31, 2021	$	145,865
Remeasurement due to change in estimated state tax rate	(860)
Payments	(9,313)
Balance September 30, 2022	$	135,692

As of September 30, 2022 the future expected payments under the tax receivable agreement are as follows:

(In thousands)
2022	$	2,300
2023	10,300
2024	6,700
2025	8,500
2026	11,200
Thereafter	96,692

9. Commitments and Contingencies

Liabilities related to legal proceedings are recorded when it is probable that a liability has been incurred and the associated amount can be reasonably estimated. Where the estimated amount of loss is within a range of amounts and no amount within the range is a better estimate than any other amount, the minimum amount is accrued. As additional information becomes available, potential liabilities are reassessed and the estimates revised, if necessary. Any accrued liabilities are subject to change in the future based on new developments in each matter, or changes in circumstances, which could have a material effect on the Company’s financial condition and results of operations.

In December 2020, the Company asserted claims for indemnification against the sellers under the terms of the Share Purchase Agreement pursuant to which the Company acquired Voortman (the “Agreement”). The claims arose out of alleged breaches by the sellers of certain representations, warranties and covenants contained in the Agreement relating to periods prior to the closing of the acquisition. The Company also submitted claims relating to these alleged breaches under the representation and warranty insurance policy (“RWI”) it purchased in connection with the acquisition. In June 2022, the RWI insurers agreed to pay the Company $42.5 million CAD (the RWI coverage limit) (the “Proceeds”) related to these breaches. During the three months ended September 30, 2022, the Company received the Proceeds and recognized a gain of $42.5 million CAD ($33.0 million) in other expense (income) on its condensed consolidated statement of operations. Per agreement with the RWI insurers, under no circumstances will the Company be required to return the Proceeds.

On November 1, 2022, pursuant to the agreement with the RWI insurer, the Company, through its subsidiary Voortman Cookies Limited requested that the Ontario (Canada) Superior Court of Justice issue a Statement of Claim (the “Claim”) related to the breaches against certain of the sellers from whom Voortman was acquired. The Claim alleges the seller defendants made certain non-disclosures and misrepresentations to induce the Company to overpay for Voortman. The Company is seeking damages of $109 million CAD representing the amount of the aggregate liability of the sellers for indemnification under the Agreement, $5.0 million CAD in punitive or aggravated damages, interest, proceedings fees and any other relief the presiding court deems appropriate. A portion of any recovery will be shared with the RWI insurers. Although the Company strongly believes that its Claim against the

17

HOSTESS BRANDS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

sellers is meritorious, no assurance can be given as to whether the Company will recover all, or any part, of the amounts it is pursuing.

18

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and capital resources of Hostess Brands, Inc. This discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included herein, and our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. The terms “our”, “we,” “us,” and “Company” as used herein refer to Hostess Brands, Inc. and its consolidated subsidiaries.

Overview

We are a leading sweet snacks company focused on developing, manufacturing, marketing, selling and distributing snacks in the U.S. under the Hostess® brands and in North America under the Voortman® brands. Our direct-to-warehouse (“DTW”) product distribution system allows us to deliver to our customers’ warehouses. Our customers in turn distribute to the retail stores.

Hostess® is the second leading brand by market share within the Sweet Baked Goods (SBG) category, according to Nielsen U.S. total universe. For the 13-week period ended October 1, 2022, our branded SBG (which includes Hostess®, Dolly Madison®, Cloverhill® and Big Texas®) market share was 21.4% per Nielsen’s U.S. SBG category data.

Factors Impacting Recent Results

We believe volatility in certain aspects of the global supply chain have had a continued impact on our operations, including the cost and availability of labor, transportation and raw materials. Various macro factors, including, but not limited to, the COVID-19 pandemic, labor market trends, rising fuel and transportation costs, the conflict in Ukraine, the Avian Influenza and overall elevated demand for goods, have led to fragility in the supply chain. We have attempted to mitigate the impact of these cost increases on our business, to the extent possible, by locking in prices on certain raw materials and through pricing actions implemented with customers in 2021 and 2022.

Given the fragility of the global supply-chain environment, our ability to source raw materials for our production facilities or produce and ship products to meet the needs of our customers may be materially impacted. We continue to work closely with all of our vendors, distributors, contract manufacturers and other external business partners to maintain availability of our products for our customers and consumers.

19

Operating Results

	Three Months Ended						Nine Months Ended
(In thousands, except per share data)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Net revenue	$	346,226		$	287,969		$	1,018,749		$	844,875
Gross profit	115,421			98,979			343,745			299,604
As a % of net revenue	33.3		%	34.4		%	33.7		%	35.5		%
Operating costs and expenses	61,032			52,375			180,038			152,829
Operating income	54,389			46,604			163,707			146,775
Other expense (income)	(21,645)			10,534			(2,309)			32,390
Income tax expense	9,765			9,878			34,713			31,614
Net income	66,269			26,192			131,303			82,771
Earnings per Class A share:
Basic	$	0.49		$	0.20		$	0.95		$	0.63
Diluted	$	0.48		$	0.19		$	0.95		$	0.60

Results of Operations

Net Revenue

Net revenue for the three months ended September 30, 2022 increased $58.2 million, or 20.2%, compared to the three months ended September 30, 2021. Contribution from previously taken pricing actions and product mix provided 20.1% of the growth, while higher volumes accounted for 0.1% of the quarterly growth. Compared to the same period last year, SBG net revenue increased $48.5 million or 18.7%, while cookies net revenue increased $9.7 million or 33.2%.

Net revenue for the nine months ended September 30, 2022 increased $173.8 million, or 20.6%, compared to the nine months ended September 30, 2021. Contribution from previously taken pricing actions and favorable product mix provided nearly 14.8% of the growth, while higher volumes accounted for 5.8% of the year-to-date growth. Compared to the same period last year, SBG net revenue increased $148.1 million or 19.5%, while cookies net revenue increased $25.7 million or 29.9%.

Gross Profit

Gross profit increased 16.6% and was 33.3% of net revenue for the three months ended September 30, 2022, a decrease of 105 basis points from a gross margin of 34.4% for the three months ended September 30, 2021. The decrease in gross margin was due to inflation and inefficiencies caused by supply-chain fragility, partially offset by favorable price/mix, including revenue growth management initiatives, and productivity benefits. The increase in gross profit was attributed to favorable price/mix.

Gross profit increased 14.7% and was 33.7% of net revenue for the nine months ended September 30, 2022, a decrease of 172 basis points from a gross margin of 35.5% for the nine months ended September 30, 2021. The decrease in gross margin was attributed to inflation and inefficiencies caused by supply-chain fragility, partially offset by favorable price/mix, including revenue growth management initiatives, and productivity benefits. Gross profit increased due to favorable price/mix and higher volume.

Operating Costs and Expenses

Operating costs and expenses for the three months ended September 30, 2022 were $61.0 million, compared to $52.4 million for the three months ended September 30, 2021. The increase was primarily attributed to higher investments in our workforce, depreciation expense and advertising expense.

Operating costs and expenses for the nine months ended September 30, 2022 were $180.0 million, compared to $152.8 million for the nine months ended September 30, 2021. The increase was primarily attributed to higher investments in our workforce as well as higher advertising expense and depreciation expense.

20

Other Expense (Income)

Other income for the three months ended September 30, 2022 was $21.6 million compared to expense of $10.5 million for the three months ended September 30, 2021. The increase in other income was primarily due to a gain from receipt of insurance proceeds of $33.0 million under the representation and warranty insurance policy purchased in connection with the Voortman acquisition. Interest expense on our term loan was $11.1 million and $9.6 million for the three months ended September 30, 2022 and 2021, respectively.

Other income for the nine months ended September 30, 2022 was $2.3 million compared to expense of $32.4 million for the nine months ended September 30, 2021. The increase in other income was due to a gain from receipt of insurance proceeds of $33.0 million under the representation and warranty insurance policy purchased in connection with the Voortman acquisition as well as lapping costs related to certain corporate initiatives in the prior year period. Interest expense on our term loan was $30.2 million and $29.0 million for the nine months ended September 30, 2022 and 2021, respectively.

Income Taxes

Our effective tax rate for the three months ended September 30, 2022 was 12.8% compared to 27.4% for the three months ended September 30, 2021. The effective tax rate for the three months ended September 30, 2022, was impacted favorably by the $33.0 million non-taxable gain related to receipt of proceeds under the representation and warranty insurance policy. Additionally, the effective tax rate for the three months ended September 30, 2022 reflects a tax benefit related to revaluing our deferred tax liabilities due to a change in the estimated state tax rate.

Our effective tax rate for the nine months ended September 30, 2022 was 20.9% compared to 27.6% for the nine months ended September 30, 2021. The effective tax rate for the nine months ended September 30, 2022 was impacted favorably by the $33.0 million non-taxable gain related to receipt of proceeds under the representation and warranty insurance policy. Additionally, the effective tax rate for the nine months ended September 30, 2022 reflects a tax benefit related to revaluing our deferred tax liabilities due to a change in the estimated state tax rate.

Liquidity and Capital Resources

Our primary sources of liquidity are from cash on hand, future cash flow generated from operations, and availability under our revolving credit agreement (“Revolver”). We believe that cash flows from operations and the current cash and cash equivalents and short-term investments on the balance sheet will be sufficient to satisfy the anticipated cash requirements associated with our existing operations for at least the next 12 months. Our future cash requirements include, but are not limited to, the purchase commitments for certain raw materials and packaging used in our production process, scheduled rent on leased facilities, scheduled debt service payments on our term loan, settlements on related interest rate swap contracts, payments on our tax receivable agreement, settlements on our outstanding foreign currency contracts and outstanding purchase orders on capital projects.

Our ability to generate sufficient cash from our operating activities depends on our future performance, which is subject to general economic, political, financial, competitive and other factors beyond our control. In addition, future cash requirements could be higher than we currently expect as a result of various factors, including any expansion of our business that we undertake, such as acquisitions or bringing new production facilities on line. We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

We had working capital, excluding cash and short-term investments, as of September 30, 2022 and December 31, 2021 of $31.7 million and $17.9 million, respectively. We have the ability to borrow under the Revolver to meet obligations as they come due. As of September 30, 2022, we had approximately $93.9 million available for borrowing, net of letters of credit, under our Revolver.

Cash Flows from Operating Activities

Cash flows provided by operating activities for the nine months ended September 30, 2022 and 2021 were $164.2 million and $147.6 million, respectively. Operating cash flow benefited from current year improvement in profitability, including the insurance proceeds of $33.0 million, partially offset by an increase in tax payments and an increase in working capital.

21

Cash Flows from Investing Activities

Investing activities used $105.7 million and $36.7 million of cash for the nine months ended September 30, 2022 and 2021, respectively. On February 22, 2022, we purchased a facility in Arkadelphia, Arkansas for a total purchase price of $11.5 million. Additional capital expenditures were incurred on this project during the nine months ended September 30, 2022, and we expect elevated capital expenditures due to this project throughout the remainder of 2022. Additionally, during the nine months ended September 30, 2022, we invested in short-term marketable securities of $62.9 million and received proceeds from maturity of short-term marketable securities of $21.0 million.

Cash Flows from Financing Activities

Financing activities used $114.8 million and $55.7 million for the nine months ended September 30, 2022 and 2021. The net outflow in the current-year period consisted of cash used to repurchase 4.2 million shares of our common stock under existing securities repurchase authorizations, as well as scheduled payments under the tax receivable agreement and term loan. The net outflow in the prior-year period reflects proceeds on exercise of employee stock options and proceeds from the exercise of public warrants, offset by cash used to repurchase 3.1 million shares of our common stock under existing securities repurchase authorizations and scheduled payments under the tax receivable agreement and term loan.

Long-Term Debt

As of September 30, 2022, $1,083.2 million aggregate principal amount of the term loan was outstanding and letters of credit worth up to $6.1 million aggregate principal amount were available, reducing the amount available under the Revolver. We had no outstanding borrowings under our Revolver as of September 30, 2022, with a remaining borrowing capacity of $93.9 million. As of September 30, 2022, we were in compliance with the covenants under the term loan and the Revolver.

Contractual Obligations, Commitments and Contingencies

There were no material changes, outside the ordinary course of business, in our outstanding contractual obligations from those disclosed within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021.

During the three months ended September 30, 2022, we received the proceeds from the agreement with the insurers of the representation and warranty insurance policy related to the acquisition of Voortman and recognized as a gain of $33.0 million in other expense (income) on our condensed consolidated statement of operations.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

For quantitative and qualitative disclosures about market risk, see Item 7A “Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the year ended December 31, 2021. Our exposures to market risk have not changed materially since December 31, 2021.

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities and Exchange Act of 1934, as amended (the Exchange Act)) as of September 30, 2022, the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2022 to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that information relating to the Company is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

22

During the three months ended September 30, 2022, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

23

PART II

Item 1. Legal Proceedings

We are involved from time to time in lawsuits, claims and proceedings arising in the ordinary course of business. These matters typically involve personnel and employment issues, personal injury claims, contract matters and other proceedings arising in the ordinary course of business. Although we do not expect the outcome of these matters to have a material adverse effect on our financial condition or results of operations, litigation is inherently unpredictable. Therefore, we could incur judgments, enter into settlements or be subject to claims that could materially impact our results.

On November 1, 2022, our subsidiary, Voortman Cookies Limited, a British Columbia corporation, issued a Statement of Claim (the “Claim”) in the Ontario (Canada) Superior Court of Justice against certain sellers from whom we acquired Voortman (SPC Partners V, LP, Douglas MacFarlane, Diana Fife, Kenrick Cross, Joseph Nischbach, Chester Czerny and Stephanie Musika). See Note 9. Commitments and Contingencies, to our Unaudited Condensed Consolidated Financial Statements for more information.

Item 1A. Risk Factors

Our risk factors are set forth in the “Risk Factors” section of our Annual Report on Form 10-K filed on March 1, 2022. There have been no material changes to our risk factors since the filing of the Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchase of Equity Securities

Period	Total number of securities repurchased	Average price paid per share		Total number of securities purchased as part of publicly announced plans or programs	Approximate dollar value of securities that may yet be purchased under the program (in millions) (1)
July 1 - 31, 2022	—	$	—	—	$	103.0
August 1 - 31, 2022 (2)	537,226	23.24		537,226	91.0
September 1 -30, 2022 (2)	1,400,627	23.63		1,400,627	58.0
	1,937,853			1,937,853

(1)In February 2022, our Board of Directors approved a securities repurchase program of up to $150 million of our outstanding securities. As of September 30, 2022, there was $58.0 million remaining under this program. The program has no expiration date. The program may be amended, suspended or discontinued at any time at our discretion and does not commit us to repurchase our securities.

(2)Repurchase of shares of Class A common stock

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

24

Item 5. Other Information

None.

25

Item 6. Exhibits

Exhibit No.	Description
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL 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
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 2, 2022.

HOSTESS BRANDS, INC.
By:	/s/ Travis E. Leonard
	Travis E. Leonard Executive Vice President, Chief Financial Officer

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002 

I, Andrew P. Callahan, certify that:

        1.     I have reviewed this Quarterly Report on Form 10-Q of Hostess Brands, Inc.;

        2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

        4.     The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

        a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

        b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

        d)     Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

        5.     The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

        a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

        b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 2, 2022	/s/ Andrew P. Callahan
	President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002 

I, Travis E. Leonard, certify that:

        1.     I have reviewed this Quarterly Report on Form 10-Q of Hostess Brands, Inc.;

        2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

        4.     The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

        a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

        b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

        d)     Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

        5.     The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

        a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

        b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 2, 2022	/s/ Travis E. Leonard
	Executive Vice President, Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002 

       In connection with the quarterly report of Hostess Brands, Inc., (the "Company") on Form 10-Q for the fiscal quarter ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Andrew P. Callahan, Chief Executive Officer of the Company, certify, based on my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

        (1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

        (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 2, 2022	/s/ Andrew P. Callahan
	President and Chief Executive Officer (Principal Executive Officer)

This certification accompanies the Report to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002 

        In connection with the quarterly report of Hostess Brands, Inc., (the "Company") on Form 10-Q for the fiscal quarter ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Travis E. Leonard, Principal Financial Officer of the Company, certify, based on my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

        (1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

        (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 2, 2022	/s/ Travis E. Leonard
	Executive Vice President, Chief Financial Officer (Principal Financial Officer)

This certification accompanies the Report to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

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Cover - shares	9 Months Ended
	Sep. 30, 2022	Oct. 31, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	001-37540
Entity Registrant Name	HOSTESS BRANDS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-4168492
Entity Address, Address Line One	7905 Quivira Road
Entity Address, City or Town	Lenexa,
Entity Address, State or Province	KS
Entity Address, Postal Zip Code	66215
City Area Code	816
Local Phone Number	701-4600
Title of 12(b) Security	Class A Common Stock, Par Value of $0.0001 per share
Trading Symbol	TWNK
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		133,886,737
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001644406
Current Fiscal Year End Date	--12-31

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 190,828	$ 249,159
Short-term investments	41,891	0
Accounts receivable, net	199,917	148,180
Inventories	65,444	52,813
Prepaids and other current assets	10,914	10,564
Total current assets	508,994	460,716
Property and equipment, net	385,085	335,305
Intangible assets, net	1,926,758	1,944,392
Goodwill	706,615	706,615
Other assets, net	72,732	19,283
Total assets	3,600,184	3,466,311
Current liabilities:
Long-term debt and lease obligations payable within one year	14,251	14,170
Tax receivable agreement payments payable within one year	11,100	11,600
Accounts payable	95,958	68,104
Customer trade allowances	68,799	52,746
Accrued expenses and other current liabilities	54,513	47,009
Total current liabilities	244,621	193,629
Long-term debt and lease obligations	1,088,914	1,099,975
Tax receivable agreement obligations	124,592	134,265
Deferred tax liability	343,009	317,847
Other long-term liabilities	1,568	1,605
Total liabilities	1,802,704	1,747,321
Commitments and Contingencies (Note 9)
Class A common stock, $0.0001 par value, 200,000,000 shares authorized, 142,567,808 shares issued and 134,570,118 shares outstanding as of September 30, 2022 and 142,031,329 shares issued and 138,278,573 shares outstanding as of December 31, 2021	14	14
Additional paid in capital	1,307,813	1,303,254
Accumulated other comprehensive income (loss)	36,172	(506)
Retained earnings	606,703	475,400
Treasury stock	(153,222)	(59,172)
Stockholders’ equity	1,797,480	1,718,990
Total liabilities and stockholders’ equity	$ 3,600,184	$ 3,466,311

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Common stock, par value (in usd per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	200,000,000	200,000,000
Common stock, issued (in shares)	142,567,808	142,031,329
Common stock, outstanding (in shares)	134,570,118	138,278,573

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Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Statement [Abstract]
Net revenue	$ 346,226	$ 287,969	$ 1,018,749	$ 844,875
Cost of goods sold	230,805	188,990	675,004	545,271
Gross profit	115,421	98,979	343,745	299,604
Operating costs and expenses:
Advertising and marketing	15,816	14,767	43,353	39,692
Selling	9,696	8,166	29,610	26,250
General and administrative	30,502	23,565	90,301	69,254
Amortization of customer relationships	5,878	5,877	17,634	17,633
Tax receivable agreement remeasurement	(860)	0	(860)	0
Total operating costs and expenses	61,032	52,375	180,038	152,829
Operating income	54,389	46,604	163,707	146,775
Other expense (income):
Interest expense, net	10,276	9,928	29,683	29,899
Change in fair value of warrant liabilities	0	228	0	683
Other expense (income)	(31,921)	378	(31,992)	1,808
Total other expense (income)	(21,645)	10,534	(2,309)	32,390
Income before income taxes	76,034	36,070	166,016	114,385
Income tax expense	9,765	9,878	34,713	31,614
Net income	$ 66,269	$ 26,192	$ 131,303	$ 82,771
Earnings per Class A share:
Basic (in usd per share)	$ 0.49	$ 0.20	$ 0.95	$ 0.63
Diluted (in usd per share)	$ 0.48	$ 0.19	$ 0.95	$ 0.60
Weighted-average shares outstanding:
Basic (in shares)	136,436,428	129,846,551	137,636,441	130,679,974
Diluted (in shares)	137,604,256	138,058,866	138,702,172	138,036,371

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 66,269	$ 26,192	$ 131,303	$ 82,771
Other comprehensive income:
Unrealized gain (loss) on interest rate swap and foreign currency contracts designated as a cash flow hedge	19,058	(192)	49,041	5,058
Reclassification into net income	(1,188)	962	697	3,441
Income tax expense	(4,691)	(203)	(13,060)	(2,253)
Comprehensive income	$ 79,448	$ 26,759	$ 167,981	$ 89,017

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Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Treasury Stock
Beginning balance (in shares) at Dec. 31, 2020		130,347,000
Beginning balance at Dec. 31, 2020	$ 1,620,725	$ 13	$ 1,281,018	$ (10,407)	$ 356,101	$ (6,000)
Treasury stock, beginning balance (in shares) at Dec. 31, 2020						444,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income (loss)	32,894			6,162	26,732
Share-based compensation (in shares)		146,000
Share-based compensation	2,723		2,723
Exercise of employee stock options (in shares)		20,000
Exercise of employee stock options	262		262
Exercise of public warrants (in shares)		672,000
Exercise of public warrants	7,722		7,722
Payment of taxes for employee stock awards	(843)		(843)
Ending balance (in shares) at Mar. 31, 2021		131,185,000
Ending balance at Mar. 31, 2021	1,663,483	$ 13	1,290,882	(4,245)	382,833	$ (6,000)
Treasury stock, ending balance (in shares) at Mar. 31, 2021						444,000
Beginning balance (in shares) at Dec. 31, 2020		130,347,000
Beginning balance at Dec. 31, 2020	1,620,725	$ 13	1,281,018	(10,407)	356,101	$ (6,000)
Treasury stock, beginning balance (in shares) at Dec. 31, 2020						444,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income (loss)	89,017
Ending balance (in shares) at Sep. 30, 2021		129,170,000
Ending balance at Sep. 30, 2021	1,678,990	$ 13	1,300,329	(4,161)	438,872	$ (56,063)
Treasury stock, ending balance (in shares) at Sep. 30, 2021						3,572,000
Beginning balance (in shares) at Mar. 31, 2021		131,185,000
Beginning balance at Mar. 31, 2021	1,663,483	$ 13	1,290,882	(4,245)	382,833	$ (6,000)
Treasury stock, beginning balance (in shares) at Mar. 31, 2021						444,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income (loss)	29,364			(483)	29,847
Share-based compensation (in shares)		22,000
Share-based compensation	1,640		1,640
Exercise of employee stock options (in shares)		220,000
Exercise of employee stock options	3,135		3,135
Exercise of public warrants (in shares)		209,000
Exercise of public warrants	2,405		2,405
Payment of taxes for employee stock awards	(392)		(392)
Repurchase of common stock (in shares)		1,176,000				1,176,000
Repurchase of common stock	(16,691)					$ (16,691)
Ending balance (in shares) at Jun. 30, 2021		130,460,000
Ending balance at Jun. 30, 2021	1,682,944	$ 13	1,297,670	(4,728)	412,680	$ (22,691)
Treasury stock, ending balance (in shares) at Jun. 30, 2021						1,620,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income (loss)	26,759			567	26,192
Share-based compensation	2,642		2,642
Exercise of employee stock options (in shares)		19,000
Exercise of employee stock options	255		255
Exercise of public warrants (in shares)		643,000
Exercise of public warrants	(494)		(494)
Payment of taxes for employee stock awards	(42)		(42)
Reclassification of warrants	298
Repurchase of common stock (in shares)		1,952,000				1,952,000
Repurchase of common stock	(33,372)					$ (33,372)
Ending balance (in shares) at Sep. 30, 2021		129,170,000
Ending balance at Sep. 30, 2021	$ 1,678,990	$ 13	1,300,329	(4,161)	438,872	$ (56,063)
Treasury stock, ending balance (in shares) at Sep. 30, 2021						3,572,000
Beginning balance (in shares) at Dec. 31, 2021	138,278,573	138,279,000
Beginning balance at Dec. 31, 2021	$ 1,718,990	$ 14	1,303,254	(506)	475,400	$ (59,172)
Treasury stock, beginning balance (in shares) at Dec. 31, 2021						3,753,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income (loss)	52,784			18,226	34,558
Share-based compensation (in shares)		350,000
Share-based compensation	2,339		2,339
Exercise of employee stock options (in shares)		105,000
Exercise of employee stock options	1,662		1,662
Payment of taxes for employee stock awards	(5,216)		(5,216)
Repurchase of common stock (in shares)		459,000				459,000
Repurchase of common stock	(9,680)					$ (9,680)
Ending balance (in shares) at Mar. 31, 2022		138,275,000
Ending balance at Mar. 31, 2022	$ 1,760,879	$ 14	1,302,039	17,720	509,958	$ (68,852)
Treasury stock, ending balance (in shares) at Mar. 31, 2022						4,212,000
Beginning balance (in shares) at Dec. 31, 2021	138,278,573	138,279,000
Beginning balance at Dec. 31, 2021	$ 1,718,990	$ 14	1,303,254	(506)	475,400	$ (59,172)
Treasury stock, beginning balance (in shares) at Dec. 31, 2021						3,753,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income (loss)	$ 167,981
Ending balance (in shares) at Sep. 30, 2022	134,570,118	134,570,000
Ending balance at Sep. 30, 2022	$ 1,797,480	$ 14	1,307,813	36,172	606,703	$ (153,222)
Treasury stock, ending balance (in shares) at Sep. 30, 2022						7,998,000
Beginning balance (in shares) at Mar. 31, 2022		138,275,000
Beginning balance at Mar. 31, 2022	1,760,879	$ 14	1,302,039	17,720	509,958	$ (68,852)
Treasury stock, beginning balance (in shares) at Mar. 31, 2022						4,212,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income (loss)	35,749			5,273	30,476
Share-based compensation (in shares)		23,000
Share-based compensation	2,648		2,648
Exercise of employee stock options (in shares)		37,000
Exercise of employee stock options	579		579
Payment of taxes for employee stock awards	(296)		(296)
Repurchase of common stock (in shares)		1,848,000				1,848,000
Repurchase of common stock	(38,826)					$ (38,826)
Ending balance (in shares) at Jun. 30, 2022		136,487,000
Ending balance at Jun. 30, 2022	1,760,733	$ 14	1,304,970	22,993	540,434	$ (107,678)
Treasury stock, ending balance (in shares) at Jun. 30, 2022						6,060,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income (loss)	79,448			13,179	66,269
Share-based compensation (in shares)		1,000
Share-based compensation	2,613		2,613
Exercise of employee stock options (in shares)		20,000
Exercise of employee stock options	300		300
Payment of taxes for employee stock awards	(70)		(70)
Repurchase of common stock (in shares)		1,938,000				1,938,000
Repurchase of common stock	$ (45,544)					$ (45,544)
Ending balance (in shares) at Sep. 30, 2022	134,570,118	134,570,000
Ending balance at Sep. 30, 2022	$ 1,797,480	$ 14	$ 1,307,813	$ 36,172	$ 606,703	$ (153,222)
Treasury stock, ending balance (in shares) at Sep. 30, 2022						7,998,000

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Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) $ in Thousands	3 Months Ended
	Sep. 30, 2021 USD ($)
Statement of Stockholders' Equity [Abstract]
Exercise of public warrants, fees	$ 500

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Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Operating activities
Net income	$ 131,303,000	$ 82,771,000
Depreciation and amortization	44,500,000	37,992,000
Debt discount amortization	921,000	931,000
Change in fair value of warrant liabilities	0	683,000
Tax receivable agreement remeasurement	(860,000)	0
Unrealized foreign exchange losses (gains)	790,000	(177,000)
Non-cash lease expense	375,000	971,000
Share-based compensation	7,600,000	7,005,000
Deferred taxes	12,104,000	18,280,000
Change in operating assets and liabilities:
Accounts receivable	(51,904,000)	(31,240,000)
Inventories	(12,631,000)	39,000
Prepaids and other current assets	(468,000)	13,991,000
Accounts payable and accrued expenses	16,332,000	7,949,000
Customer trade allowances	16,143,000	8,441,000
Net cash provided by operating activities	164,205,000	147,636,000
Investing activities
Purchases of property and equipment	(55,240,000)	(33,360,000)
Acquisition of short-term investments	(62,891,000)	0
Proceeds from maturity of short-term investments	21,000,000	0
Acquisition and development of software assets	(8,578,000)	(3,330,000)
Net cash used in investing activities	(105,709,000)	(36,690,000)
Financing activities
Repayments of long-term debt and lease obligations	(8,375,000)	(8,375,000)
Repurchase of common stock	(94,050,000)	(50,063,000)
Tax payments related to issuance of shares to employees	(5,582,000)	(1,277,000)
Cash received from exercise of options and warrants	2,541,000	13,285,000
Payments on tax receivable agreement	(9,313,000)	(9,270,000)
Net cash used in financing activities	(114,779,000)	(55,700,000)
Effect of exchange rate changes on cash and cash equivalents	(2,048,000)	(184,000)
Net increase (decrease) in cash and cash equivalents	(58,331,000)	55,062,000
Cash and cash equivalents at beginning of period	249,159,000	173,034,000
Cash and cash equivalents at end of period	190,828,000	228,096,000
Cash paid during the period for:
Interest, net of amounts capitalized	29,342,000	29,019,000
Net taxes paid	19,023,000	1,568,000
Supplemental disclosure of non-cash investing:
Accrued capital expenditures	$ 23,103,000	$ 5,603,000

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Description of Business

Hostess Brands, Inc. is a Delaware corporation headquartered in Lenexa, Kansas. The condensed consolidated financial statements include the accounts of Hostess Brands, Inc. and its subsidiaries (collectively, the “Company”). The Company is a leading sweet snacks company focused on developing, manufacturing, marketing, selling and distributing snacks in the U.S. under the Hostess® brands and in North America under the Voortman® brands. The Company produces a variety of new and classic treats including iconic Hostess® Donettes®, Twinkies®, CupCakes, Ding Dongs® and Zingers®, as well as a variety of Voortman® branded cookies and wafers.

Basis of Presentation

The Company’s operations are conducted through wholly-owned operating subsidiaries. The condensed consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The results of operations for any quarter or a partial fiscal year period are not necessarily indicative of the results to be expected for other periods or the full fiscal year. For the periods presented, the Company has one reportable segment.

Adoption of New Accounting Standards

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments in this update apply only to contracts, hedging relationships, and other transactions that reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued as a result of reference rate reform. ASU No. 2020-04 is elective and effective as of March 12, 2020 through December 31, 2022. Once elected, this ASU must be applied prospectively for all eligible contract modifications. The Company will adopt Topic 848 when its relevant contracts are modified upon transition to alternative reference rates. The Company does not expect the adoption of Topic 848 to have a material impact on its consolidated financial statements.

Principles of Consolidation

All intercompany balances and transactions related to activity between the Company and its wholly-owned subsidiaries have been eliminated in consolidation.    

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements and for the reported amounts of revenues and expenses during the reporting period.

Investments

The Company considers all investments purchased with original maturities of greater than three months, but less than one year as short-term investments and all investments purchased with original maturities of greater than one year as long-term investments.

The Company classifies its investments in debt securities where it has positive intent and ability to hold until maturity as held-to-maturity. As of September 30, 2022, the Company’s held-to-maturity investments classified as cash equivalents on the condensed consolidated balance sheet totaled $63.6 million, which consisted of $34.8 million of commercial paper, $12.9 million of U.S. treasury securities and $15.9 million of U.S. agency bonds and held-to-maturity investments classified as short-term investments on the condensed consolidated balance sheet totaled $41.9 million, which consisted of $20.0 million of commercial paper, $12.9 million of U.S. treasury securities and $9.0 million of U.S. agency bonds. As of December 31, 2021, the Company had no held-to-maturity investments. Held-to-maturity investments are recorded at amortized cost, which approximates fair value, and realized gains or losses are reported in interest expense, net on the condensed consolidated statements of operations. For the three and nine months ended September 30, 2022, the Company recognized $0.5 million and $0.6 million in realized gains, respectively. The Company’s held-to-maturity investments are classified as Level 2 in the fair value hierarchy because they are valued using inputs other than quoted prices, which are directly or indirectly observable in the market, including prices for similar assets in active markets as well as quoted prices for identical or similar assets in markets that are not active.

Accounts Receivable

Accounts receivable represents amounts invoiced to customers for performance obligations which have been satisfied. As of September 30, 2022 and December 31, 2021, the Company’s accounts receivable were $199.9 million and $148.2 million, respectively, which have been reduced by an allowance for damages occurring during shipment, quality claims and doubtful accounts in the amount of $4.3 million and $3.0 million for the periods ended September 30, 2022 and December 31, 2021, respectively.

The allowance for doubtful accounts represents the Company’s estimate of expected credit losses related to trade receivables. To estimate the allowance for doubtful accounts, the Company leverages information on historical losses, current conditions, and reasonable and supportable forecasts of future conditions. Account balances are written off against the allowance when the Company deems the amount is uncollectible.

Inventories

Inventories are stated at the lower of cost or net-realizable value on a first-in first-out basis. Abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) are expensed in the period they are incurred.

The components of inventories are as follows:

(In thousands)	September 30, 2022		December 31, 2021
Ingredients and packaging	$	33,629	$	22,607
Finished goods	28,047		26,988
Inventory in transit to customers	3,768		3,218
	$	65,444	$	52,813

Capitalized Interest

The Company capitalizes a portion of the interest on its term loan (see Note 4. Debt and Lease Obligations) related to certain property and equipment during its construction period. The capitalized interest is recorded as part of the asset to which it relates and depreciated over the asset’s estimated useful life. The Company capitalized interest of $0.3 million and $0.5 million during the three and nine months ended September 30, 2022, respectively. No interest was capitalized during the three and nine months ended September 30, 2021. Capitalized interest is included in property and equipment, net on the condensed consolidated balance sheets.

Software Costs

Capitalized software is included in other assets on the condensed consolidated balance sheets in the amount of $20.1 million and $14.7 million as of September 30, 2022 and December 31, 2021, respectively. Capitalized software costs are amortized over their estimated useful life of up to five years commencing when such assets are ready for their intended use. Software amortization expense included in general and administrative expense on the condensed consolidated statements of operations was $1.1 million and $3.2 million for the three and nine months ended September 30, 2022, respectively, compared to $1.0 million and $2.9 million for the three and nine months ended September 30, 2021, respectively.

Disaggregation of Revenue

Net revenue consists of sales of packaged food products primarily within the Sweet Baked Goods (“SBG”) category in the United States, as well as in the Cookie category in the United States and Canada.

The following tables disaggregate revenue by geographical market and category.

	Three Months Ended September 30, 2022
(In thousands)	Sweet Baked Goods		Cookies		Total
United States	$	307,332	$	33,573	$	340,905
Canada	—		5,321		5,321
	$	307,332	$	38,894	$	346,226

	Three Months Ended September 30, 2021
(In thousands)	Sweet Baked Goods		Cookies		Total
United States	$	258,818	$	25,185	$	284,003
Canada	—		3,966		3,966
	$	258,818	$	29,151	$	287,969

	Nine Months Ended September 30, 2022
(In thousands)	Sweet Baked Goods		Cookies		Total
United States	$	907,141	$	96,837	$	1,003,978
Canada	—		14,771		14,771
	$	907,141	$	111,608	$	1,018,749

	Nine Months Ended September 30, 2021
(In thousands)	Sweet Baked Goods		Cookies		Total
United States	$	759,010	$	73,394	$	832,404
Canada	—		12,471		12,471
	$	759,010	$	85,865	$	844,875

Concentrations

The Company had one customer (together with its affiliates) that accounted for 19.7% and 20.2% of total net revenue for the three and nine months ended September 30, 2022, respectively, and 18.0% and 18.8% for the three and nine months ended September 30, 2021, respectively.

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Property and Equipment

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

Property and equipment consists of the following:

(In thousands)	September 30, 2022		December 31, 2021
Land and buildings	$	74,872	$	70,692
Right of use assets, operating	32,637		32,192
Machinery and equipment	306,272		299,071
Construction in progress	86,093		26,027
	499,874		427,982
Less accumulated depreciation and amortization	(114,789)		(92,677)
	$	385,085	$	335,305

Depreciation expense was $9.5 million and $23.7 million for the three and nine months ended September 30, 2022, compared to $5.9 million and $17.4 million for the three and nine months ended September 30, 2021, respectively.

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Accrued Expenses and Other Current Liabilities

9 Months Ended

Sep. 30, 2022

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

Included in accrued expenses and other current liabilities are the following:

(In thousands)	September 30, 2022		December 31, 2021
Incentive compensation	$	22,756	$	21,172
Payroll, vacation and other compensation	12,870		7,791
Accrued interest	5,645		4,828
Interest rate swap and foreign currency contracts	639		2,042
Other	12,603		11,176
	$	54,513	$	47,009

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Debt and Lease Obligations

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Debt and Lease Obligations

Debt and Lease Obligations

A summary of the carrying value of the debt and lease obligations are as follows:

(In thousands)	September 30, 2022		December 31, 2021
Term loan (5.1% as of September 30, 2022)
Principal	$	1,083,221	$	1,091,596
Unamortized debt premium and issuance costs	(3,101)		(3,679)
	1,080,120		1,087,917
Lease obligations	23,045		26,228
Total debt and lease obligations	1,103,165		1,114,145
Less: Current portion of long term debt and lease obligations	(14,251)		(14,170)
Long-term portion	$	1,088,914	$	1,099,975

At September 30, 2022, minimum debt repayments under the term loan are due as follows:

(In thousands)
2022	$	2,792
2023	11,167
2024	11,167
2025	1,058,095

Leases

The Company has entered into operating leases for certain properties which expire at various times through 2026. The Company determines if an arrangement is a lease at inception.

At September 30, 2022 and December 31, 2021, right of use assets related to operating leases are included in property and equipment, net on the condensed consolidated balance sheets (see Note 2. Property and Equipment). As of September 30, 2022 and December 31, 2021, the Company had no outstanding financing leases. Lease liabilities for operating leases are included in the current and non-current portions of long-term debt and lease obligations on the condensed consolidated balance sheets.

The table below shows the composition of lease expense:

	Three Months Ended				Nine Months Ended
(In thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Operating lease expense	$	1,623	$	1,504	$	4,811	$	4,928
Short-term lease expense	645		501		1,479		1,083
Variable lease expense	403		367		1,176		1,109
	$	2,671	$	2,372	$	7,466	$	7,120

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Derivative Instruments

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

Interest Rate Swap and Foreign Currency Contracts

The Company entered into interest rate swap contracts with counterparties to make a series of payments based on fixed rates ranging from 1.11% to 2.06% in addition to the term loan margin of 2.25% and receive a series of payments based on the greater of LIBOR or 0.75%. Both the fixed and floating payment streams are based on the September 30, 2022 notional amount of $700 million, outstanding through August 2025. The Company entered into these transactions to reduce its exposure to changes in cash flows associated with its variable rate debt and has designated these derivatives as cash flow hedges. At September 30, 2022, the interest on the Company’s variable rate debt hedged by these contracts is effectively fixed at rates ranging from 3.36% to 4.31%.

To reduce the effect of fluctuations in Canadian dollar (“CAD”) denominated expenses relative to their U.S. dollar equivalents originating from its Canadian operations, the Company entered into CAD purchase contracts. The contracts provide for the Company to sell a total of $9.5 million USD for $12.1 million CAD at varying defined settlement dates through June 2023. The Company has designated these contracts as cash flow hedges.

A summary of the fair value of interest rate and foreign currency instruments is as follows:

(In thousands)		September 30, 2022		December 31, 2021
Asset derivatives	Location
Interest rate swap contracts (1)	Other non-current assets	$	50,219	$	1,803
Liability derivatives	Location
Interest rate swap contracts (1)	Accrued expenses	$	—	$	1,798
Foreign currency contracts (2)	Accrued expenses	639		244
		$	639	$	2,042

(1) The fair values of interest rate swap contracts are measured on a recurring basis by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves (Level 2).

(2) The fair values of foreign currency contracts are measured at each reporting period by comparison to available market information on similar contracts (Level 2).

A summary of the gains and losses related to interest rate and foreign currency instruments on the condensed consolidated statements of operations is as follows:

		Three Months Ended				Nine Months Ended
(In thousands)		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
(Gain ) Loss on derivative contracts designated as cash flow hedges	Location
Interest rate swap contracts	Interest expense, net	$	(1,325)	$	962	$	560	$	3,441
Foreign currency contracts	Cost of goods sold	137		—		137		—
		$	(1,188)	$	962	$	697	$	3,441

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Earnings per Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

Basic earnings per share is calculated by dividing net income for the period by the weighted average number of shares of Class A common stock outstanding for the period excluding non-vested share-based awards. In computing diluted earnings per share, basic earnings per share is adjusted for the assumed issuance of all applicable potentially dilutive share-based awards including RSUs and stock options as well as public and private placement warrants.

Below are basic and diluted net income per share:

	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Numerator:
Net income (in thousands)	$	66,269	$	26,192	$	131,303	$	82,771
Denominator:
Weighted-average Class A shares outstanding - basic	136,436,428		129,846,551		137,636,441		130,679,974
Dilutive effect of warrants	—		7,462,176		—		6,700,256
Dilutive effect of RSUs	646,474		564,237		566,463		515,334
Dilutive effect of stock options	521,354		185,902		499,268		140,807
Weighted-average shares outstanding - diluted	137,604,256		138,058,866		138,702,172		138,036,371
Net income per Class A share - basic	$	0.49	$	0.20	$	0.95	$	0.63
Net income per Class A share - diluted	$	0.48	$	0.19	$	0.95	$	0.60

For warrants that are liability-classified, during periods when the impact would be dilutive, the Company assumes share settlement of the instruments as of the beginning of the reporting period and adjusts the numerator to remove the change in fair value of the warrant liability and adjusts the denominator to include the dilutive shares calculated using the treasury stock method. All warrants were exercised or expired as of December 31, 2021.

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Income Taxes	9 Months Ended
	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Company is subject to U.S. federal, state and local income taxes as well as Canadian income tax on its controlled foreign subsidiary. The income tax provision is determined based on the estimated full year effective tax rate, adjusted for infrequent or unusual items, which are recognized on a discrete basis in the period they occur. The Company’s estimated annual effective tax rate is 27.3% prior to taking into account any discrete items.

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Tax Receivable Agreement Obligations

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Tax Receivable Agreement Obligations

Tax Receivable Agreement Obligations

The following table summarizes activity related to the tax receivable agreement for the nine months ended September 30, 2022:

(In thousands)
Balance December 31, 2021	$	145,865
Remeasurement due to change in estimated state tax rate	(860)
Payments	(9,313)
Balance September 30, 2022	$	135,692

As of September 30, 2022 the future expected payments under the tax receivable agreement are as follows:

(In thousands)
2022	$	2,300
2023	10,300
2024	6,700
2025	8,500
2026	11,200
Thereafter	96,692

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Liabilities related to legal proceedings are recorded when it is probable that a liability has been incurred and the associated amount can be reasonably estimated. Where the estimated amount of loss is within a range of amounts and no amount within the range is a better estimate than any other amount, the minimum amount is accrued. As additional information becomes available, potential liabilities are reassessed and the estimates revised, if necessary. Any accrued liabilities are subject to change in the future based on new developments in each matter, or changes in circumstances, which could have a material effect on the Company’s financial condition and results of operations.

In December 2020, the Company asserted claims for indemnification against the sellers under the terms of the Share Purchase Agreement pursuant to which the Company acquired Voortman (the “Agreement”). The claims arose out of alleged breaches by the sellers of certain representations, warranties and covenants contained in the Agreement relating to periods prior to the closing of the acquisition. The Company also submitted claims relating to these alleged breaches under the representation and warranty insurance policy (“RWI”) it purchased in connection with the acquisition. In June 2022, the RWI insurers agreed to pay the Company $42.5 million CAD (the RWI coverage limit) (the “Proceeds”) related to these breaches. During the three months ended September 30, 2022, the Company received the Proceeds and recognized a gain of $42.5 million CAD ($33.0 million) in other expense (income) on its condensed consolidated statement of operations. Per agreement with the RWI insurers, under no circumstances will the Company be required to return the Proceeds.

On November 1, 2022, pursuant to the agreement with the RWI insurer, the Company, through its subsidiary Voortman Cookies Limited requested that the Ontario (Canada) Superior Court of Justice issue a Statement of Claim (the “Claim”) related to the breaches against certain of the sellers from whom Voortman was acquired. The Claim alleges the seller defendants made certain non-disclosures and misrepresentations to induce the Company to overpay for Voortman. The Company is seeking damages of $109 million CAD representing the amount of the aggregate liability of the sellers for indemnification under the Agreement, $5.0 million CAD in punitive or aggravated damages, interest, proceedings fees and any other relief the presiding court deems appropriate. A portion of any recovery will be shared with the RWI insurers. Although the Company strongly believes that its Claim against the

sellers is meritorious, no assurance can be given as to whether the Company will recover all, or any part, of the amounts it is pursuing.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The Company’s operations are conducted through wholly-owned operating subsidiaries. The condensed consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The results of operations for any quarter or a partial fiscal year period are not necessarily indicative of the results to be expected for other periods or the full fiscal year. For the periods presented, the Company has one reportable segment.

Adoption of New Accounting Standards

Adoption of New Accounting Standards

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments in this update apply only to contracts, hedging relationships, and other transactions that reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued as a result of reference rate reform. ASU No. 2020-04 is elective and effective as of March 12, 2020 through December 31, 2022. Once elected, this ASU must be applied prospectively for all eligible contract modifications. The Company will adopt Topic 848 when its relevant contracts are modified upon transition to alternative reference rates. The Company does not expect the adoption of Topic 848 to have a material impact on its consolidated financial statements.

Principles of Consolidation

Principles of ConsolidationAll intercompany balances and transactions related to activity between the Company and its wholly-owned subsidiaries have been eliminated in consolidation.

Use of Estimates

Use of EstimatesThe preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements and for the reported amounts of revenues and expenses during the reporting period.

Investments

Investments

The Company considers all investments purchased with original maturities of greater than three months, but less than one year as short-term investments and all investments purchased with original maturities of greater than one year as long-term investments.

The Company classifies its investments in debt securities where it has positive intent and ability to hold until maturity as held-to-maturity. As of September 30, 2022, the Company’s held-to-maturity investments classified as cash equivalents on the condensed consolidated balance sheet totaled $63.6 million, which consisted of $34.8 million of commercial paper, $12.9 million of U.S. treasury securities and $15.9 million of U.S. agency bonds and held-to-maturity investments classified as short-term investments on the condensed consolidated balance sheet totaled $41.9 million, which consisted of $20.0 million of commercial paper, $12.9 million of U.S. treasury securities and $9.0 million of U.S. agency bonds. As of December 31, 2021, the Company had no held-to-maturity investments. Held-to-maturity investments are recorded at amortized cost, which approximates fair value, and realized gains or losses are reported in interest expense, net on the condensed consolidated statements of operations. For the three and nine months ended September 30, 2022, the Company recognized $0.5 million and $0.6 million in realized gains, respectively. The Company’s held-to-maturity investments are classified as Level 2 in the fair value hierarchy because they are valued using inputs other than quoted prices, which are directly or indirectly observable in the market, including prices for similar assets in active markets as well as quoted prices for identical or similar assets in markets that are not active.

Accounts Receivable

Accounts Receivable

Accounts receivable represents amounts invoiced to customers for performance obligations which have been satisfied. As of September 30, 2022 and December 31, 2021, the Company’s accounts receivable were $199.9 million and $148.2 million, respectively, which have been reduced by an allowance for damages occurring during shipment, quality claims and doubtful accounts in the amount of $4.3 million and $3.0 million for the periods ended September 30, 2022 and December 31, 2021, respectively.

The allowance for doubtful accounts represents the Company’s estimate of expected credit losses related to trade receivables. To estimate the allowance for doubtful accounts, the Company leverages information on historical losses, current conditions, and reasonable and supportable forecasts of future conditions. Account balances are written off against the allowance when the Company deems the amount is uncollectible.

Inventories

Inventories

Inventories are stated at the lower of cost or net-realizable value on a first-in first-out basis. Abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage) are expensed in the period they are incurred.

Capitalized Interest

Capitalized Interest

The Company capitalizes a portion of the interest on its term loan (see Note 4. Debt and Lease Obligations) related to certain property and equipment during its construction period. The capitalized interest is recorded as part of the asset to which it relates and depreciated over the asset’s estimated useful life. The Company capitalized interest of $0.3 million and $0.5 million during the three and nine months ended September 30, 2022, respectively. No interest was capitalized during the three and nine months ended September 30, 2021. Capitalized interest is included in property and equipment, net on the condensed consolidated balance sheets.

Software Costs

Software Costs

Capitalized software is included in other assets on the condensed consolidated balance sheets in the amount of $20.1 million and $14.7 million as of September 30, 2022 and December 31, 2021, respectively. Capitalized software costs are amortized over their estimated useful life of up to five years commencing when such assets are ready for their intended use. Software amortization expense included in general and administrative expense on the condensed consolidated statements of operations was $1.1 million and $3.2 million for the three and nine months ended September 30, 2022, respectively, compared to $1.0 million and $2.9 million for the three and nine months ended September 30, 2021, respectively.

Disaggregation of Revenue

Disaggregation of RevenueNet revenue consists of sales of packaged food products primarily within the Sweet Baked Goods (“SBG”) category in the United States, as well as in the Cookie category in the United States and Canada.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Components of Inventories

The components of inventories are as follows:

(In thousands)	September 30, 2022		December 31, 2021
Ingredients and packaging	$	33,629	$	22,607
Finished goods	28,047		26,988
Inventory in transit to customers	3,768		3,218
	$	65,444	$	52,813

Disaggregation of Revenue

The following tables disaggregate revenue by geographical market and category.

	Three Months Ended September 30, 2022
(In thousands)	Sweet Baked Goods		Cookies		Total
United States	$	307,332	$	33,573	$	340,905
Canada	—		5,321		5,321
	$	307,332	$	38,894	$	346,226

	Three Months Ended September 30, 2021
(In thousands)	Sweet Baked Goods		Cookies		Total
United States	$	258,818	$	25,185	$	284,003
Canada	—		3,966		3,966
	$	258,818	$	29,151	$	287,969

	Nine Months Ended September 30, 2022
(In thousands)	Sweet Baked Goods		Cookies		Total
United States	$	907,141	$	96,837	$	1,003,978
Canada	—		14,771		14,771
	$	907,141	$	111,608	$	1,018,749

	Nine Months Ended September 30, 2021
(In thousands)	Sweet Baked Goods		Cookies		Total
United States	$	759,010	$	73,394	$	832,404
Canada	—		12,471		12,471
	$	759,010	$	85,865	$	844,875

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Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment consists of the following:

(In thousands)	September 30, 2022		December 31, 2021
Land and buildings	$	74,872	$	70,692
Right of use assets, operating	32,637		32,192
Machinery and equipment	306,272		299,071
Construction in progress	86,093		26,027
	499,874		427,982
Less accumulated depreciation and amortization	(114,789)		(92,677)
	$	385,085	$	335,305

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Accrued Expenses and Other Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2022

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

Included in accrued expenses and other current liabilities are the following:

(In thousands)	September 30, 2022		December 31, 2021
Incentive compensation	$	22,756	$	21,172
Payroll, vacation and other compensation	12,870		7,791
Accrued interest	5,645		4,828
Interest rate swap and foreign currency contracts	639		2,042
Other	12,603		11,176
	$	54,513	$	47,009

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Debt and Lease Obligations (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Summary of Debt and Lease Obligation

A summary of the carrying value of the debt and lease obligations are as follows:

(In thousands)	September 30, 2022		December 31, 2021
Term loan (5.1% as of September 30, 2022)
Principal	$	1,083,221	$	1,091,596
Unamortized debt premium and issuance costs	(3,101)		(3,679)
	1,080,120		1,087,917
Lease obligations	23,045		26,228
Total debt and lease obligations	1,103,165		1,114,145
Less: Current portion of long term debt and lease obligations	(14,251)		(14,170)
Long-term portion	$	1,088,914	$	1,099,975

Schedule of Maturities of Long-term Debt

At September 30, 2022, minimum debt repayments under the term loan are due as follows:

(In thousands)
2022	$	2,792
2023	11,167
2024	11,167
2025	1,058,095

Composition of Lease Expenses

The table below shows the composition of lease expense:

	Three Months Ended				Nine Months Ended
(In thousands)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Operating lease expense	$	1,623	$	1,504	$	4,811	$	4,928
Short-term lease expense	645		501		1,479		1,083
Variable lease expense	403		367		1,176		1,109
	$	2,671	$	2,372	$	7,466	$	7,120

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Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of the Fair Value of Interest Rate and Foreign Currency Instruments

A summary of the fair value of interest rate and foreign currency instruments is as follows:

(In thousands)		September 30, 2022		December 31, 2021
Asset derivatives	Location
Interest rate swap contracts (1)	Other non-current assets	$	50,219	$	1,803
Liability derivatives	Location
Interest rate swap contracts (1)	Accrued expenses	$	—	$	1,798
Foreign currency contracts (2)	Accrued expenses	639		244
		$	639	$	2,042

(1) The fair values of interest rate swap contracts are measured on a recurring basis by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves (Level 2).

(2) The fair values of foreign currency contracts are measured at each reporting period by comparison to available market information on similar contracts (Level 2).

Summary of the Gains and Losses Related to Interest Rate and Foreign Currency Instruments in the Consolidated Statement of Operations

A summary of the gains and losses related to interest rate and foreign currency instruments on the condensed consolidated statements of operations is as follows:

		Three Months Ended				Nine Months Ended
(In thousands)		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
(Gain ) Loss on derivative contracts designated as cash flow hedges	Location
Interest rate swap contracts	Interest expense, net	$	(1,325)	$	962	$	560	$	3,441
Foreign currency contracts	Cost of goods sold	137		—		137		—
		$	(1,188)	$	962	$	697	$	3,441

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Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Basic and Diluted Net Income Per Share

Below are basic and diluted net income per share:

	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Numerator:
Net income (in thousands)	$	66,269	$	26,192	$	131,303	$	82,771
Denominator:
Weighted-average Class A shares outstanding - basic	136,436,428		129,846,551		137,636,441		130,679,974
Dilutive effect of warrants	—		7,462,176		—		6,700,256
Dilutive effect of RSUs	646,474		564,237		566,463		515,334
Dilutive effect of stock options	521,354		185,902		499,268		140,807
Weighted-average shares outstanding - diluted	137,604,256		138,058,866		138,702,172		138,036,371
Net income per Class A share - basic	$	0.49	$	0.20	$	0.95	$	0.63
Net income per Class A share - diluted	$	0.48	$	0.19	$	0.95	$	0.60

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Tax Receivable Agreement Obligations (Tables)

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Summary of Tax Receivable Agreement

The following table summarizes activity related to the tax receivable agreement for the nine months ended September 30, 2022:

(In thousands)
Balance December 31, 2021	$	145,865
Remeasurement due to change in estimated state tax rate	(860)
Payments	(9,313)
Balance September 30, 2022	$	135,692

Future Expected Payments Under Tax Receivable Arrangement

As of September 30, 2022 the future expected payments under the tax receivable agreement are as follows:

(In thousands)
2022	$	2,300
2023	10,300
2024	6,700
2025	8,500
2026	11,200
Thereafter	96,692

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Summary of Significant Accounting Policies - Basis of Presentation (Details)	9 Months Ended
	Sep. 30, 2022 segment
Accounting Policies [Abstract]
Number of reportable segments	1

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Summary of Significant Accounting Policies - Investments (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 190,828,000		$ 190,828,000		$ 249,159,000
Short-term investments	41,891,000		41,891,000		0
Cash and cash equivalents and short-term investments					0
Realized gains (losses) (less than)	500,000		600,000
Interest costs capitalized	300,000	$ 0	500,000	$ 0
Held to Maturity Investment
Cash and Cash Equivalents [Line Items]
Short-term investments					$ 41,900,000
Commercial Paper, Not Included with Cash and Cash Equivalents
Cash and Cash Equivalents [Line Items]
Short-term investments	20,000,000		20,000,000
U.S. Treasury Securities
Cash and Cash Equivalents [Line Items]
Short-term investments	12,900,000		12,900,000
U.S. Agency Bonds
Cash and Cash Equivalents [Line Items]
Short-term investments	9,000,000		9,000,000
Held to Maturity Investment
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	63,600,000		63,600,000
Commercial Paper
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	34,800,000		34,800,000
U.S. Treasury Securities
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	12,900,000		12,900,000
U.S. Agency Bonds
Cash and Cash Equivalents [Line Items]
Cash and cash equivalents	$ 15,900,000		$ 15,900,000

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Summary of Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Accounts receivable	$ 199,917	$ 148,180
Reserve to cover allowances for damages occurring during shipment, quality claims and doubtful accounts	$ 4,300	$ 3,000

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Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Ingredients and packaging	$ 33,629	$ 22,607
Finished goods	28,047	26,988
Inventory in transit to customers	3,768	3,218
Inventories	$ 65,444	$ 52,813

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Summary of Significant Accounting Policies - Capitalized Interest (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Accounting Policies [Abstract]
Interest costs capitalized	$ 300,000	$ 0	$ 500,000	$ 0

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Summary of Significant Accounting Policies - Software Costs (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Accounting Policies [Abstract]
Capitalized software	$ 20.1		$ 20.1		$ 14.7
Capitalized software, estimated useful life			5 years
Software amortization expense	$ 1.1	$ 1.0	$ 3.2	$ 2.9

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Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Net revenue	$ 346,226	$ 287,969	$ 1,018,749	$ 844,875
United States
Disaggregation of Revenue [Line Items]
Net revenue	340,905	284,003	1,003,978	832,404
Canada
Disaggregation of Revenue [Line Items]
Net revenue	5,321	3,966	14,771	12,471
Sweet Baked Goods
Disaggregation of Revenue [Line Items]
Net revenue	307,332	258,818	907,141	759,010
Sweet Baked Goods | United States
Disaggregation of Revenue [Line Items]
Net revenue	307,332	258,818	907,141	759,010
Sweet Baked Goods | Canada
Disaggregation of Revenue [Line Items]
Net revenue	0	0	0	0
Cookies
Disaggregation of Revenue [Line Items]
Net revenue	38,894	29,151	111,608	85,865
Cookies | United States
Disaggregation of Revenue [Line Items]
Net revenue	33,573	25,185	96,837	73,394
Cookies | Canada
Disaggregation of Revenue [Line Items]
Net revenue	$ 5,321	$ 3,966	$ 14,771	$ 12,471

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Summary of Significant Accounting Policies - Concentrations (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
One Customer | Customer concentration risk | Consolidated net revenues
Concentration Risk [Line Items]
Percentage of total net revenues for customer	19.70%	18.00%	20.20%	18.80%

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Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 499,874		$ 499,874		$ 427,982
Less accumulated depreciation and amortization	(114,789)		(114,789)		(92,677)
Property and equipment, net	385,085		385,085		335,305
Depreciation expense	9,500	$ 5,900	23,700	$ 17,400
Land and buildings
Property, Plant and Equipment [Line Items]
Property and equipment, gross	74,872		74,872		70,692
Right of use assets, operating
Property, Plant and Equipment [Line Items]
Property and equipment, gross	32,637		32,637		32,192
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	306,272		306,272		299,071
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 86,093		$ 86,093		$ 26,027

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Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Incentive compensation	$ 22,756	$ 21,172
Payroll, vacation and other compensation	12,870	7,791
Accrued interest	5,645	4,828
Interest rate swap and foreign currency contracts	639	2,042
Other	12,603	11,176
Accrued expenses and other current liabilities	$ 54,513	$ 47,009

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Debt and Lease Obligations - Summary of Debt and Lease Obligation (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Lease obligations	$ 23,045	$ 26,228
Total debt and lease obligations	$ 1,103,165	$ 1,114,145
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Less: Current portion of long term debt and lease obligations	Less: Current portion of long term debt and lease obligations
Less: Current portion of long term debt and lease obligations	$ (14,251)	$ (14,170)
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Long-term portion	Long-term portion
Long-term portion	$ 1,088,914	$ 1,099,975
Term Loan
Debt Instrument [Line Items]
Effective fixed interest rate on long-term debt (as a percent)	5.10%
Principal	$ 1,083,221	1,091,596
Unamortized debt premium and issuance costs	(3,101)	(3,679)
Long-term debt	$ 1,080,120	$ 1,087,917

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Debt and Lease Obligations - Schedule of Maturities of Long-term Debt (Details) - Term Loan $ in Thousands	Sep. 30, 2022 USD ($)
Debt Instrument [Line Items]
2022	$ 2,792
2023	11,167
2024	11,167
2025	$ 1,058,095

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Debt and Lease Obligations - Composition of Lease Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Debt Disclosure [Abstract]
Operating lease expense	$ 1,623	$ 1,504	$ 4,811	$ 4,928
Short-term lease expense	645	501	1,479	1,083
Variable lease expense	403	367	1,176	1,109
Total lease cost	$ 2,671	$ 2,372	$ 7,466	$ 7,120

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Derivative Instruments - Narrative (Details) $ in Millions	9 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2022 CAD ($)
Term Loan
Derivative [Line Items]
Effective fixed interest rate on long-term debt (as a percent)	5.10%	5.10%
LIBOR Floor | Term Loan
Derivative [Line Items]
Effective fixed interest rate on long-term debt	2.25%
Cash Flow Hedge
Derivative [Line Items]
Maximum contracted sales amount	$ 9,500,000	$ 12.1
Designated as Hedging Instrument | Interest rate swap contracts | Cash Flow Hedge
Derivative [Line Items]
Notional amount of derivative contracts	$ 700,000,000
Designated as Hedging Instrument | Interest rate swap contracts | Cash Flow Hedge | LIBOR
Derivative [Line Items]
Basis spread on variable rate (as a percent)	0.75%	0.75%
Designated as Hedging Instrument | Interest rate swap contracts | Cash Flow Hedge | Minimum
Derivative [Line Items]
Fixed interest rate	1.11%	1.11%
Effective fixed interest rate on long-term debt (as a percent)	3.36%	3.36%
Designated as Hedging Instrument | Interest rate swap contracts | Cash Flow Hedge | Maximum
Derivative [Line Items]
Fixed interest rate	2.06%	2.06%
Effective fixed interest rate on long-term debt (as a percent)	4.31%	4.31%

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Derivative Instruments - Summary of the Fair Value of Interest Rate and Foreign Currency Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Derivative [Line Items]
Liability derivatives	$ 639	$ 2,042
Other non-current assets | Interest rate swap contracts
Derivative [Line Items]
Asset derivatives	50,219	1,803
Accrued expenses | Interest rate swap contracts
Derivative [Line Items]
Liability derivatives	0	1,798
Accrued expenses | Foreign currency contracts
Derivative [Line Items]
Liability derivatives	$ 639	$ 244

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Derivative Instruments - Summary of the Gains and Losses Related to Interest Rate and Foreign Currency Instruments in the Consolidated Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Derivative [Line Items]
(Gain ) Loss on derivative contracts designated as cash flow hedges	$ (1,188)	$ 962	$ 697	$ 3,441
Interest rate swap contracts | Interest expense, net
Derivative [Line Items]
(Gain ) Loss on derivative contracts designated as cash flow hedges	(1,325)	962	560	3,441
Foreign currency contracts | Cost of goods sold
Derivative [Line Items]
(Gain ) Loss on derivative contracts designated as cash flow hedges	$ 137	$ 0	$ 137	$ 0

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Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Numerator:
Net income (in thousands)	$ 66,269	$ 26,192	$ 131,303	$ 82,771
Denominator:
Weighted-average Class A shares outstanding - basic (in shares)	136,436,428	129,846,551	137,636,441	130,679,974
Dilutive effect of warrants (in shares)	0	7,462,176	0	6,700,256
Weighted-average shares outstanding - diluted (in shares)	137,604,256	138,058,866	138,702,172	138,036,371
Net income per Class A share - basic (in usd per share)	$ 0.49	$ 0.20	$ 0.95	$ 0.63
Net income per Class A share - dilutive (in usd per share)	$ 0.48	$ 0.19	$ 0.95	$ 0.60
RSUs
Denominator:
Dilutive effect of share-based payment arrangements (in shares)	646,474	564,237	566,463	515,334
Options
Denominator:
Dilutive effect of share-based payment arrangements (in shares)	521,354	185,902	499,268	140,807

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Income Taxes (Details)	12 Months Ended
	Dec. 31, 2022
Forecast
Income Tax Disclosure [Line Items]
Effective income tax rate (as a percent)	27.30%

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Tax Receivable Agreement Obligations - Summary of Activity (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Reconciliation Of Tax Receivable Agreement Liability [Roll Forward]
Beginning balance	$ 145,865
Remeasurement due to tax law change	(860)
Payments	(9,313)
Ending balance	$ 135,692

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Tax Receivable Agreement Obligations - Future Expected Payments (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Income Tax Disclosure [Abstract]
2022	$ 2,300
2023	10,300
2024	6,700
2025	8,500
2026	11,200
Thereafter	$ 96,692

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Commitments and Contingencies (Details) $ in Millions, $ in Millions	Nov. 01, 2022 CAD ($)	Sep. 30, 2022 CAD ($)	Sep. 30, 2022 USD ($)	Jun. 30, 2022 CAD ($)
Gain Contingencies [Line Items]
Gain contingency, unrecorded amount				$ 42.5
Gain contingency recognized		$ 42.5	$ 33.0
Subsequent Event
Gain Contingencies [Line Items]
Gain contingency, damages sought, value	$ 109.0
Gain contingency, punitive or aggravated damages, interest, proceedings fees and any other relief sought, value	$ 5.0