On August 1, 2024, Utz Brands Inc (UTZ, Financial) released its 8-K filing for the fiscal second quarter ended June 30, 2024. Utz Brands Inc is a snack food manufacturing company known for its diverse portfolio of salty snacks under popular brands such as Utz, Zapp's, Golden Flake, Boulder Canyon, and Hawaiian, among others. The company's products are distributed nationally and internationally through various channels including grocery, mass merchant, club, convenience, and drug stores.
Performance and Challenges
Utz Brands Inc (UTZ, Financial) reported net sales of $356.2 million for the second quarter of 2024, slightly below the analyst estimate of $357.51 million. Despite this, the company achieved a notable increase in organic net sales by 1.6%, driven by a 2.3% increase in volume/mix, partially offset by a 0.7% decrease in net price realization. The divestiture of the R.W. Garcia® and Good Health® brands impacted net sales growth by 3.3%, and the shift to independent operators (IOs) resulted in a 0.1% decrease in net sales growth.
Financial Achievements
Utz Brands Inc (UTZ, Financial) reported a gross profit margin expansion of 260 basis points to 35.0%, with an adjusted gross profit margin also expanding by 260 basis points to 37.6%. The company achieved a net income of $25.4 million, a significant improvement from a net loss of $8.6 million in the prior year period. Adjusted EBITDA increased by 10.0% to $49.7 million, representing 14.0% of net sales, compared to 12.5% in the prior year period. Earnings per share (EPS) were $0.23, surpassing the analyst estimate of $0.13, and adjusted EPS increased by 46.2% to $0.19.
I'm pleased with our continued strong momentum in the second quarter, as we gained dollar, pound, and unit share in the Salty Snack category for the third consecutive quarter. In addition, we delivered our sixth consecutive quarter of year-over-year Adjusted EBITDA Margin expansion, driven by strong Adjusted Gross Profit Margin growth, and we increased Adjusted Earnings per Share by 46%," said Howard Friedman, Chief Executive Officer of Utz.
Income Statement, Balance Sheet, and Cash Flow Highlights
Key details from the income statement include:
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $356.2 million | $362.9 million |
| Gross Profit | $124.8 million | $117.4 million |
| Net Income | $25.4 million | $(8.6) million |
| Adjusted EBITDA | $49.7 million | $45.2 million |
| EPS | $0.23 | $(0.05) |
On the balance sheet, Utz Brands Inc (UTZ, Financial) reported total liquidity of $196.9 million, consisting of $66.6 million in cash and $130.3 million available under the company's revolving credit facility. The company reduced its net debt by approximately $14.0 million through debt repayment and increased cash balance. The net leverage ratio stood at 3.8x based on trailing twelve months normalized adjusted EBITDA of $194.6 million.
For the twenty-six weeks ended June 30, 2024, cash flow used in operations was $(0.2) million, reflecting seasonal working capital use and impacts from the sale of Good Health® and R.W. Garcia® brands. Capital expenditures were $37.8 million, and dividends and distributions paid were $18.9 million.
Analysis and Outlook
Utz Brands Inc (UTZ, Financial) has demonstrated resilience and strategic agility in the face of market challenges. The company's ability to expand its gross profit margin and achieve significant growth in adjusted earnings per share highlights its effective cost management and productivity initiatives. The divestiture of non-core brands and the shift to independent operators have positioned the company for sustained growth and profitability.
Looking ahead, Utz Brands Inc (UTZ, Financial) has raised its outlook for adjusted earnings per share growth from 23%-28% to 28%-32%, driven by a favorable effective tax rate and lower core depreciation and amortization expenses. The company continues to expect organic net sales growth of approximately 3%, supported by increased marketing investments, product innovation, and distribution gains.
For more detailed insights and financial information, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Utz Brands Inc for further details.
