UTZ Brands (UTZ) Q1 2025 Earnings Call May 01, 2025 09:30 AM ET Speaker0 Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your operator for today's call. At this time, I would like to welcome everyone to the Odds Brands Inc. First Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer I would now like to turn the conference over to Kevin Powers, Head of In ...

Company Performance - Utz Brands reported quarterly earnings of $0.16 per share, matching the Zacks Consensus Estimate, and an increase from $0.14 per share a year ago [1] - The company posted revenues of $352.08 million for the quarter ended March 2025, slightly missing the Zacks Consensus Estimate by 0.01%, and an increase from $346.52 million year-over-year [2] - Over the last four quarters, Utz Brands has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2][3] Stock Outlook - Utz Brands shares have declined approximately 15.1% since the beginning of the year, compared to a 5.3% decline in the S&P 500 [3] - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.21 for the coming quarter and $0.85 for the current fiscal year [4][7] - The estimate revisions trend for Utz Brands is currently favorable, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Food - Miscellaneous industry, to which Utz Brands belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Utz Brands, Inc. First Quarter 2025 Earnings Presentation May 1, 2025 Disclaimer Forward-LookingStatements Certain statements made herein are not historical facts but are "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, as amended. The forward-looking statements generally are accompanied by or include, without limitation, statements such as "will", "expect", "intends", "goal", "on track" or other similar words, phrases o ...

Financial Performance - Net sales for the thirteen weeks ended March 30, 2025, were $352.1 million, representing an increase of $5.6 million or 1.6% compared to $346.5 million for the same period in 2024[90]. - Gross profit decreased to $118.2 million for the thirteen weeks ended March 30, 2025, down from $119.6 million in the prior year, resulting in a gross profit margin of 33.6% compared to 34.5%[92]. - Selling, distribution, and administrative expenses increased by $3.8 million or 3.5% to $113.2 million for the thirteen weeks ended March 30, 2025, primarily due to higher personnel and delivery costs[93]. - Net income attributable to controlling interest was $7.5 million for the thirteen weeks ended March 30, 2025, compared to a net loss of $3.99 million in the same period of 2024[90]. - Adjusted EBITDA for the thirteen weeks ended March 30, 2025, was $45.1 million, compared to $43.4 million for the same period in 2024, with an Adjusted EBITDA margin of 12.8%[101]. Debt and Financing - As of March 30, 2025, the company had $739.3 million in variable rate indebtedness, an increase from $690.1 million as of December 29, 2024[81]. - The weighted average interest rate for the thirteen weeks ended March 30, 2025, was 4.9%, down from 6.6% during the same period in 2024[81]. - The company recorded a loss on debt extinguishment of $0.5 million related to the refinancing of its Term Loan B during the thirteen weeks ended March 30, 2025[107]. - As of March 30, 2025, $50.0 million was outstanding under the asset-based lending (ABL) facility, with $109.5 million available for borrowing[108]. - Net cash provided by financing activities was $67.6 million for the thirteen weeks ended March 30, 2025, primarily from net borrowings of $80.4 million, compared to net cash used of $154.0 million in the same period of 2024[115]. Operational Highlights - The company operates eight primary manufacturing facilities across the United States, distributing products through approximately 2,400 direct-store delivery routes[74]. - For the thirteen weeks ended March 30, 2025, retail volumes and retail sales in Expansion Geographies increased by 8.9% and 4.9%, respectively, compared to the prior year period[76]. - Boulder Canyon brand experienced a growth of 158.8% in same store velocities for the thirteen weeks ended March 30, 2025, compared to the prior year[84]. - The Core Geographies retail volumes and retail sales were up 2.9% and down 3.7%, respectively, for the thirteen weeks ended March 30, 2025, compared to the prior year[76]. Asset Management - The company sold certain assets and brands for $167.5 million on February 5, 2024, including the Good Health and R.W. Garcia brands[82]. - The company incurred $7.4 million in costs related to acquisitions, divestitures, and investments for the thirteen weeks ended March 30, 2025, compared to a gain of $44.0 million in the prior year[106]. - Cash used in investing activities for the thirteen weeks ended March 30, 2025 was $40.7 million, driven by purchases of property and equipment, contrasting with cash provided by investing activities of $158.0 million in the prior year, mainly from the sale of a business[114]. Tax and Other Income - Other (expense) income, net was $(0.6) million for the thirteen weeks ended March 30, 2025, a decrease of $19.9 million compared to $19.3 million in the prior year, primarily due to the absence of a $44.0 million gain on the sale of business[95]. - Income tax benefit for the thirteen weeks ended March 30, 2025, was $(0.6) million, a significant decrease from $26.5 million in the prior year, largely due to the Good Health and R.W. Garcia Sale[96]. Compliance and Risk Management - The company was in compliance with all financial and other covenants under the credit agreements as of March 30, 2025[116]. - The company partially guarantees loans made to IOs, which are collateralized by the routes purchased, allowing for recovery of outstanding loan value upon default[110]. - Long-term cash requirements include funding long-term debt repayments and related interest payments, as well as obligations related to deferred taxes and operating lease liabilities[112]. - There have been no material changes in market risk exposures since the last annual report filed on February 20, 2025[119]. - The company has not made any changes to critical accounting policies and estimates since the last annual report[118].

Financial Results - Utz Brands, Inc. announced preliminary first fiscal quarter 2025 results, reaffirming financial guidance for fiscal year 2025[4]. - The company reported GAAP Net Sales for fiscal year 2024, with a detailed summary by fiscal quarter available in the presentation[5]. - The company’s financial results are subject to completion of financial closing procedures and review by independent auditors[4]. Executive Changes - Ajay Kataria will transition from his role as CFO effective May 1, 2025, and will assist in a special advisor role until May 31, 2025[7]. - William J. Kelley Jr. has been appointed as the new CFO, with an annual base salary of $575,000 and a signing bonus of $50,000[11]. - Mark Schreiber, Executive Vice President, Sales and Chief Customer Officer, will retire effective May 31, 2025, and will assist in a special advisor role until June 30, 2025[12]. - Jeremy Stuart will assume the position of Executive Vice President, Sales and Chief Customer Officer effective May 31, 2025[13]. Compensation and Incentives - The new CFO will be eligible for annual incentive awards under the company's equity incentive plan, with a target grant value of 135% of his base salary[11]. - The company’s performance stock units and restricted stock units will continue to vest for departing executives based on performance metrics[12]. Additional Information - The press release and additional financial information are attached as exhibits to the current report[14].

Core Viewpoint - The article compares Utz Brands (UTZ) and Mondelez (MDLZ) to determine which company presents a better investment opportunity for value investors, highlighting UTZ as the superior option based on various valuation metrics [1]. Valuation Metrics - Utz Brands has a forward P/E ratio of 16.56, while Mondelez has a forward P/E of 23.10, indicating that UTZ is currently valued more favorably [5]. - The PEG ratio for UTZ is 1.75, compared to Mondelez's PEG ratio of 4.42, suggesting that UTZ offers better value relative to its expected earnings growth [5]. - The P/B ratio for UTZ is 1.43, while Mondelez has a P/B of 3.28, further supporting the notion that UTZ is undervalued compared to MDLZ [6]. Earnings Outlook - Utz Brands is experiencing an improving earnings outlook, which enhances its attractiveness in the Zacks Rank model, indicating a positive trend in earnings estimates [7].

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Core Viewpoint - Investors in the Food - Miscellaneous sector should consider Utz Brands (UTZ) and Danone (DANOY) as potential value opportunities, with a closer examination needed to determine which stock offers better value [1] Valuation Metrics - Both Utz Brands and Danone currently hold a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and improving earnings outlooks [3] - Utz Brands has a forward P/E ratio of 16.54, while Danone has a forward P/E of 19.53, suggesting that UTZ may be undervalued compared to DANOY [5] - The PEG ratio for Utz Brands is 1.75, compared to Danone's PEG ratio of 4.94, indicating that UTZ has a more favorable growth valuation [5] - Utz Brands has a P/B ratio of 1.43, while Danone's P/B ratio is 2.69, further supporting the argument that UTZ is the superior value option [6] - Based on these valuation figures, Utz Brands has a Value grade of B, while Danone has a Value grade of C, reinforcing the assessment of UTZ as the better value investment [6]

Group 1: Stock Performance and Price Targets - Utz Brands (UTZ) shares have increased by 0.8% over the past four weeks, closing at $13.47, with a mean price target of $18.11 indicating a potential upside of 34.5% [1] - The average of nine short-term price targets ranges from a low of $16 to a high of $20, with a standard deviation of $1.45, suggesting a potential increase of 18.8% to 48.5% from the current price [2] Group 2: Analyst Insights and Earnings Estimates - Analysts show a consensus that UTZ will report better earnings than previously estimated, which is a positive indicator for potential stock upside [4] - The Zacks Consensus Estimate for the current year has risen by 3.9% over the past month, with five estimates increasing and no negative revisions [10] - UTZ holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [11] Group 3: Caution on Price Targets - Solely relying on consensus price targets for investment decisions may not be wise, as analysts' ability to set accurate targets has been questioned [3][5] - Analysts often set overly optimistic price targets due to business incentives, which can lead to inflated estimates [6] - While a tight clustering of price targets indicates agreement among analysts, it does not guarantee that the stock will reach the average target [7]

Core Viewpoint - The article highlights Utz Brands as a promising growth stock, supported by its favorable growth metrics and Zacks Rank, indicating strong potential for investors seeking growth opportunities [2][10]. Earnings Growth - Utz Brands has a historical EPS growth rate of 5.4%, but projected EPS growth for the current year is expected to be 10.6%, significantly outperforming the industry average of 4.8% [5]. Cash Flow Growth - The year-over-year cash flow growth for Utz Brands stands at 13.6%, surpassing the industry average of 4.6%. Additionally, the company's annualized cash flow growth rate over the past 3-5 years is 61.3%, compared to the industry average of 4.8% [6][7]. Earnings Estimate Revisions - The current-year earnings estimates for Utz Brands have been revised upward, with the Zacks Consensus Estimate increasing by 3.9% over the past month, indicating positive momentum [9]. Overall Assessment - Utz Brands has achieved a Zacks Rank of 2 (Buy) and a Growth Score of B, reflecting its strong growth characteristics and potential as a solid choice for growth investors [10][11].