Border War Not Quite Over: Hostess Moving Headquarters to Kansas

Politicians on both sides of the state line have said that they plan not to offer tax incentives to businesses moving their operations between Kansas and Missouri, but Hostess Brands has skirted those newly agreed-to rules, and management just announced that it is moving its headquarters from Kansas City, Mo., to yet-to-be-revealed town in Kansas, right before the Aug. 28 deadline prohibiting incentives.

Chief Financial Officer Thomas Peterson said during Hostess’ second-quarter earnings call that the company is receiving “significant future tax incentives and credits” to move from Kansas City to Kansas.  The company announced in May that is opening its main distribution center at Logistics Park Kansas City, in Edgerton, Kan., moving it from Illinois. But Edgerton Mayor Donald Roberts confirmed that Hostess’ headquarters is not part of that development, and the company isn’t moving to his municipality.

In response to an analyst question on the earnings call, Peterson said that the Kansas tax credits would kick in one year after the company moves, which is planned to take place during next 2020’s first quarter. He did not disclose how much in incentives Hostess will receive, and management did not specifically say what city where the corporate operations will open. Hostess representatives were not immediately available for comment.

Just week Kansas Gov. Laura Kelly signed an executive order that encourages economic development agencies to stop encouraging companies to move from the Missouri side of the metro area to neighboring counties in Kansas. Kansas Executive Order No. 19-09 says that on or after Aug. 28, no state-level authority under the governor’s jurisdiction would use incentive programs to attract businesses and jobs from Clay, Jackson and Platte counties  in Missouri.

Meanwhile, Hostess Brands reported second-quarter revenue of $241.1 million, up 11.7 percent from 2018’s second quarter, while net income fell to $16.7 million from $24.6 million. The company announced earlier this week that it is selling its Superior Cake Products business, which has operations in Massachusetts, to Sara Lee Frozen Bakery, for $65 million.