Utz Brands Stock Rises Following Stronger-Than-Expected Q2 Results

Utz Brands Reports Strong Second Quarter Performance

HANOVER, Pa. – Utz Brands, Inc., a leading U.S. manufacturer of branded salty snacks, announced impressive results for its second quarter, exceeding analyst expectations with earnings per share (EPS) of $0.19, surpassing the consensus estimate of $0.16 by $0.03.

The company also outperformed revenue forecasts, reporting $365.2 million for the quarter compared to the anticipated $356.49 million. Following the earnings announcement, Utz’s stock price rose by 1.75%.

In the second quarter of 2024, Utz saw a 1.6% increase in net sales on an organic basis, reflecting ongoing momentum within the salty snack category. This growth stemmed from a 2.3% increase in volume/mix, which was slightly offset by a decline in net price realization. Significant contributions came from Utz’s power brands, including Utz®, On The Border®, Zapp’s®, and Boulder Canyon®, which collectively experienced a 2.8% rise in retail sales.

Gross profit margins improved significantly, expanding by 260 basis points (bps) to 35.0%. Similarly, adjusted gross profit margins saw a 260 bps increase to 37.6%. This margin enhancement resulted from productivity improvements and favorable sales volume/mix, which managed to outweigh supply chain cost inflation and investments in productivity initiatives.

Utz’s net income for the quarter was $25.4 million, a notable recovery from the net loss of $8.6 million reported in the same period the previous year. Adjusted net income increased by 46.3% to $27.5 million, while adjusted EBITDA grew by 10.0% to $49.7 million, representing 14.0% of net sales.

Looking forward, Utz has modestly revised its fiscal year 2024 outlook for organic net sales growth to about 3%, citing a more tempered growth expectation for the salty snack market. The upcoming sale of the Good Health® and R.W. Garcia® brands is projected to impact net sales by approximately $45 million. Nevertheless, the company anticipates organic net sales growth driven by increased volume, further supported by enhanced marketing efforts, product innovation, and expanded distribution.

Utz also reaffirmed its adjusted EBITDA growth outlook of 5%-8% and adjusted its earnings per share growth forecast from 23%-28% to 28%-32%. This optimistic update is attributed to a more favorable effective tax rate and reduced core depreciation and amortization expenses following recent plant divestitures in April 2024.

CEO Howard Friedman expressed his satisfaction with the strong performance, stating, "We made necessary adjustments to our promotional activities during the quarter to address consumer value expectations. Our accelerated productivity cost savings provide us the flexibility to both continue to expand our margins and increase investments behind our brands to support our geographic expansion. We expect our growth opportunities will drive strong volume growth in the second half of the year."