UTZ Brands (UTZ) Q2 2024 Prepared Remarks earnings summary

Executive summary

• Achieved 1.6% organic net sales growth in Q2 2024, led by branded volume and market share gains in salty snacks, despite reported net sales declining 1.8% due to divestitures.

• Sixth consecutive quarter of year-over-year adjusted EBITDA margin expansion, with adjusted EBITDA up 10% and adjusted EPS up 46%.

• Continued execution of portfolio strategy, focusing on Power Brands and de-emphasizing lower-margin businesses, with divestitures of brands and plants to optimize the network.

• Productivity and cost savings enabled increased marketing investment and geographic expansion.

• Guidance for FY 2024 organic net sales was modestly revised to 3% due to softer salty snack trends, while adjusted EPS growth guidance was raised to 28%-32%.

Financial highlights

• Q2 2024 organic net sales: $356.7M (+1.6% YoY); reported net sales: $356.2M (-1.8% YoY, impacted by divestitures).

• Adjusted gross margin expanded by 260 basis points year-over-year to 37.6%; gross profit margin improved to 35.0%.

• Adjusted EBITDA: $49.7M (+10% YoY), margin 14.0%; adjusted net income $27.5M (+46.3% YoY), adjusted EPS $0.19 (+46.2% YoY).

• Net debt at quarter end was $747.5M, or 3.8x trailing 12 months' normalized adjusted EBITDA.

• Interest expense decreased due to significant debt repayments following asset sales.

Outlook and guidance

• FY 2024 organic net sales growth outlook revised to approximately 3%, reflecting softer salty snack category trends.

• Reaffirmed adjusted EBITDA growth outlook of 5%-8% and raised adjusted EPS growth guidance to 28%-32%.

• Net leverage expected at 3.6x by year-end; capital investment outlook remains $80-$90 million.

• Effective normalized tax rate expected at 17%-19%; net interest expense ~$47M.

• Expect second-half net sales growth to accelerate due to easier comparisons and increased marketing investments.