UTZ Brands (UTZ) Q2 2024 [Q&A] earnings summary

Executive summary

• Organic net sales grew 1.6% year-over-year, driven by volume/mix growth and disciplined promotional activity, with Power Brands leading performance and Foundation Brands declining.

• Net income for Q2 2024 was $25.4M, a turnaround from a net loss in Q2 2023, supported by gains from divestitures and improved margins.

• Adjusted EBITDA increased 10.0% to $49.7M, with margin expanding to 14.0% of net sales, marking the sixth consecutive quarter of year-over-year margin expansion.

• Supply chain optimization included divesting plants and brands, reducing plant count, and improving productivity and cost structure.

• Expansion into new markets, increased marketing, and innovation continue to drive growth and brand awareness.

Financial highlights

• Q2 2024 net sales were $356.2M (down 1.8% YoY due to divestitures), with organic net sales up 1.6% YoY; adjusted gross profit margin expanded 260bps to 37.6%.

• Adjusted EBITDA for Q2 2024 was $49.7M (14.0% margin), up from $45.2M (12.5%) in Q2 2023.

• Adjusted net income for Q2 2024 was $27.5M (+46.3% YoY); adjusted EPS grew 46.2% to $0.19.

• Productivity programs, lower interest expense, and cost savings contributed to margin and earnings growth.

• Net debt stood at $747.5M, with a net leverage ratio of 3.8x as of June 30, 2024.

Outlook and guidance

• FY 2024 organic net sales growth outlook revised to ~3% due to a softer category and divestitures; adjusted EBITDA growth guidance maintained at 5%-8%.

• Adjusted EPS growth outlook raised to 28%-32% due to a favorable tax rate and lower core D&A.

• Net leverage expected at ~3.6x by year-end 2024; capex guidance at $80-$90M.

• Management expects continued growth in Power Brands and stable demand in the $39B U.S. salty snacks market.

• Ongoing cost-saving and productivity initiatives are expected to support profitability.