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Twinkie owner Hostess cites '20% inflation' in earnings beat

·Anchor, Editor-at-Large
·2 分鐘文章

Hostess Brands CEO Andy Callahan wasn't kidding when he told Yahoo Finance Live back in May that he saw no relief in sight amid elevated inflation.

The Twinkie-maker said in its earnings release late Wednesday that the business saw "20% inflation" in the second quarter — likely caused by elevated prices for sweeteners, oils, and packaging. For perspective, the latest Producer Price Index (PPI) showed 11.6% annualized inflation through June.

On the positive side, shoppers appear receptive to increased prices on Hostess' baked goods. The company's second quarter sales grew 16.8%, driven by a 13.8% increase in prices and a 3% gain in volume.

"Hostess Brands’ iconic brands, access to faster growing snacking occasions, broad-based distribution footprint and excellent execution continues to drive growth in a volatile environment," Callahan said in a statement. "During the second quarter, our top-line momentum continued as we posted the 10th straight quarter of double-digit growth. I am proud of our team’s timely actions to address the ongoing supply-chain fragility and higher inflation which pressured our margins in the quarter."

TODAY -- Pictured: Twinkie The Kid appears on NBC News'
Twinkie The Kid appears on NBC News' "Today" show -- (Photo by: Peter Kramer/NBC/NBC Newswire/NBCUniversal via Getty Images)

As a result of this eye-popping inflation, Hostess' adjusted gross profit margins fell 299 basis points from a year ago.

Here is how Hostess performed compared to Wall Street estimates for the second quarter:

  • Net Sales: $340.5 million vs. $327.4 million

  • Adjusted Diluted EPS: $0.22 vs. $0.22

Despite the cost pressures and economic slowdown, Hostess lifted its full year sales growth guidance to "at least" 15% from "at least" 12%. The company reiterated its full year EPS outlook of $0.93 to $0.98.

The Street was modeling for EPS of $0.97.

Shares of Hostess fell nearly 4% in after-hours trading on Wednesday. The stock has gained an impressive 12% year to date versus the 12% drop for the S&P 500, reflecting strong execution on new products and the ability to pass along price increases to shoppers.

"Since 2018, Hostess Brands has bolstered its internal capabilities and the pay-off is now," Evercore ISI food analyst David Palmer wrote in a note to clients.

Palmer added that new innovations such as caffeinated donuts and baby bundts are "working," supporting a solid outlook for sales and profits.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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