Hostess Brands (NASDAQ:TWNK) shares gained nearly 8% on Wednesday after the company reported its Q4 results, with EPS coming in at $0.25, better than the Street estimate of $0.24. Revenue was $339.5 million, beating the Street estimate of $331.31 million.

For fiscal 2023, the company expects EPS to be in the range of $1.08-$1.13, compared to the Street estimate of $1.09. The company's outlook for flat gross margin (due to lingering high-single-digit inflation and Arkadelphia startup costs), while light of expectations, likely embeds a fair degree of conservatism, and implies greater leverage on operating costs to drive above-algorithm EBITDA growth for the year.

Over time, the company expects its productivity and RGM initiatives, alongside normalizing supply chain conditions/commodity inflation, to drive gross margin expansion.