UTZ Brands (UTZ) Q3 2024 Prepared Remarks earnings summary

Executive summary

• Achieved organic net sales growth of 1.9% in Q3 2024, with reported net sales of $365.5 million, driven by branded volume growth and increased marketing investments, despite divestitures impacting reported sales by -3.6%.

• Adjusted EBITDA increased 3.6% to $54.0 million, marking the seventh consecutive quarter of margin expansion, supported by productivity gains and cost controls.

• Adjusted EPS grew 23.5% to $0.21, while reported net income was $0.8 million, down from $16.2 million, mainly due to a loss on warrant liability remeasurement.

• Maintained disciplined pricing and gained volume share in the salty snack category for the fifth consecutive quarter.

• Reaffirmed full-year 2024 outlook for organic net sales, adjusted EBITDA, adjusted EPS, and net leverage ratio.

Financial highlights

• Adjusted gross margin expanded by 270 basis points to 39.0%; gross profit margin improved to 35.8% from 32.1% year-over-year.

• Adjusted EBITDA margin improved to 14.8% from 14.0% in Q3 2023.

• Adjusted net income rose 20.3% to $29.6 million.

• Cash flow from operations for the first 39 weeks was $52.0 million; capital expenditures totaled $60.9 million; dividends and distributions paid were $30.8 million.

• Net debt at quarter-end was $731.5 million, with a net leverage ratio of 3.7x trailing twelve months adjusted EBITDA.

Outlook and guidance

• Reaffirmed FY2024 guidance: organic net sales growth of 2–2.5%, adjusted EBITDA growth of 5–8%, and adjusted EPS growth of 28–32%.

• Capital expenditures for 2024 expected at $80–$90 million; net leverage ratio targeted at ~3.6x by year-end.

• Expects effective tax rate of 17–19% and interest expense of ~$47 million for 2024.