UTZ Brands (UTZ) Stephens Annual Investment Conference summary

California expansion and margin outlook

• California market entry involves a one-time $4–$6 million startup cost in 2026, modeled after the Florida playbook, with no ongoing impact on long-term margin targets.

• The 16% margin target for 2026 remains achievable, with the California investment expected to normalize after initial setup.

• Acquired assets in California provide statewide coverage and enable direct-store delivery, supporting growth with minimal capital outlay.

• Key success metrics include distribution gains, shelf space, market share growth, and margin normalization over the next 24–36 months.

• Leverage and cash flow targets are unaffected by the California investment, with a focus on deleveraging to below 3x by end of 2026.

Growth drivers and brand strategy

• Outperformance in salty snacks is driven by market share gains in both core and expansion markets, especially through the power four brands.

• Marketing investment has increased, with a focus on driving consumer awareness and supporting new market entries.

• Brand investment is guided by margin, momentum, and materiality, with Boulder Canyon and Utz leading household penetration in expansion and core markets, respectively.

• Innovation pipeline includes quick flavor launches and longer-term trends like non-seed oils and protein, leveraging existing brands for new benefits.

• Marketing spend is balanced between core and expansion markets, with high ROI in both as distribution scales.

Pricing, productivity, and operational efficiency

• Pricing has been rational, with a 1% headwind from targeted promotions; mix has been positive, especially for Boulder Canyon.

• Price pack architecture is managed to hit key consumer price points, with variety packs and club sizes supporting value perception.

• Productivity initiatives have delivered 6% of COGS savings in 2024, with a long-term target of 3–4% driven by supply chain transformation and automation.

• Plant consolidation from 15 to 7 sites is on track, with sufficient capacity to support growth and further efficiency gains.

• Free cash flow is expected to improve in 2026 as CapEx steps down and working capital initiatives continue.