Core Viewpoint - Investors in the Food - Miscellaneous sector should consider Utz Brands (UTZ) and Kerry Group PLC (KRYAY) for potential value opportunities, with UTZ currently presenting a better value option based on various financial metrics [1]. Valuation Metrics - UTZ has a forward P/E ratio of 15.97, while KRYAY has a forward P/E of 19.48, indicating that UTZ may be undervalued compared to KRYAY [5]. - The PEG ratio for UTZ is 1.69, which is comparable to KRYAY's PEG ratio of 1.71, suggesting similar expected earnings growth rates [5]. - UTZ's P/B ratio stands at 1.38, significantly lower than KRYAY's P/B of 2.46, further supporting the notion that UTZ is a more attractive value investment [6]. Analyst Outlook - UTZ holds a Zacks Rank of 2 (Buy), reflecting a more favorable earnings estimate revision activity compared to KRYAY, which has a Zacks Rank of 3 (Hold) [3]. - The solid earnings outlook for UTZ, combined with its superior valuation metrics, positions it as the preferred choice for value investors [6].

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with Utz Brands identified as a strong candidate due to its favorable growth metrics and Zacks Rank [1][2]. Group 1: 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 8.8%, surpassing the industry average of 6% [4]. Group 2: Cash Flow Growth - The year-over-year cash flow growth for Utz Brands stands at 13.6%, significantly higher than the industry average of 5.5% [5]. - Over the past 3-5 years, the annualized cash flow growth rate for Utz Brands has been 61.3%, compared to the industry average of 4.3% [6]. Group 3: Earnings Estimate Revisions - The current-year earnings estimates for Utz Brands have been revised upward, with the Zacks Consensus Estimate increasing by 2.8% over the past month [8]. - The positive trend in earnings estimate revisions supports the stock's potential for near-term price movements [7]. Group 4: Overall Positioning - Utz Brands holds a Zacks Rank of 2 (Buy) and a Growth Score of B, positioning it well for potential outperformance in the growth stock category [9][10].

Core Viewpoint - Utz Brands (UTZ) has shown a recent price increase and analysts suggest significant upside potential based on price targets and earnings estimates [1][9]. Price Targets - The mean price target for UTZ is $18.67, indicating a potential upside of 34.2% from the current price of $13.91 [1]. - Analysts have set short-term price targets ranging from a low of $16 to a high of $23, with a standard deviation of $2.29, suggesting a consensus among analysts [2]. - The lowest estimate indicates a 15% increase, while the highest suggests a 65.4% upside [2]. Earnings Estimates - Analysts have revised earnings estimates upward, indicating a positive trend that correlates with potential stock price increases [4][9]. - The Zacks Consensus Estimate for the current year has increased by 2.8% over the past month, with three estimates going higher 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]. Analyst Behavior - Analysts often set optimistic price targets influenced by business relationships, which can lead to inflated expectations [6]. - A low standard deviation in price targets indicates a high degree of agreement among analysts regarding the stock's price movement [7]. Investment Considerations - While price targets can provide insights, relying solely on them for investment decisions may lead to disappointing returns [8][12].

Financial Data and Key Metrics Changes - The company anticipates category growth of approximately 0% to 1% for fiscal 2025, indicating a slightly better than flat performance [8] - The company delivered about $60 million in productivity in 2024 and aims for $150 million or more over the three-year period from 2024 to 2026 [26][30] - The company expects to achieve around 80 basis points of EBITDA margin expansion in 2025 [27] Business Line Data and Key Metrics Changes - The non-branded side of the business experienced an 18% decline in the fourth quarter, but management does not expect another double-digit decline in 2025 [36][37] - The tortilla chips category faced challenges due to assortment decisions and is expected to improve as the company laps previous performance [21][23] Market Data and Key Metrics Changes - The company has seen strong consumer reception for its tortilla chips, particularly in the border segment, despite competitive pressures [22] - The company is gaining distribution in expansion markets, with Power 4 brands performing well [48] Company Strategy and Development Direction - The company aims to hold its core market share while expanding in new markets through increased distribution and marketing support [8] - The company is focusing on supply chain optimization and automation to improve efficiency and reduce costs [32][35] - The company plans to continue investing in its portfolio and is open to potential acquisitions if they align with its strategic goals [74][75] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate a sluggish category and increased competition by delivering value beyond price [10][12] - The company expects promotional intensity to normalize as the year progresses, with a focus on innovation and quality [61] Other Important Information - The company is actively working on price pack architecture to offer a range of products at different price points [41][42] - The company has not experienced changes in customer allocation for display activity, indicating continued support from retailers [66] Q&A Session Summary Question: What is the category growth assumption for fiscal '25? - Management expects category growth to be around 0% to 1% for fiscal 2025, with a strategy to hold core market share and expand in new markets [8] Question: What gives confidence in building flexibility despite sluggish category data? - Management believes in delivering value beyond price and expects normalization in promotional activity as the year progresses [10][12] Question: Will there be a further breakout of branded salty versus non-branded non-salty? - Management confirmed they will provide historical components for net sales breakdown [18] Question: When will the dips and spreads weakness lap? - Management indicated that the lapping will begin in May and improve through the back half of the year [20] Question: What are the building blocks for expanding EBITDA margin? - Management highlighted productivity programs and capital investments as key drivers for margin expansion [26][30] Question: What is the outlook for the non-branded side of the business? - Management does not expect another double-digit decline in the non-branded segment moving forward [37] Question: Can you elaborate on price pack architecture adjustments? - Management discussed the introduction of bonus bags and a focus on various price points to enhance consumer value [41][42] Question: What are the expectations for distribution expansion? - Management expects continued growth in distribution, particularly in expansion markets, with investments in consumer awareness [49] Question: How does the company view channel dynamics, particularly in C-stores? - Management acknowledged challenges in the C-store channel but expects modest growth as the year progresses [55] Question: Are there any notable changes in promotional activity for 2025? - Management reported no changes in customer allocation for display activity and plans to increase promotional efforts in core and expansion markets [66]

Distribution Network - The Direct-Store-Delivery (DSD) network includes approximately 2,500 routes reaching over 81,500 retail stores in 2024[65] - Third-party distributors operate an additional approximately 500 DSD-style routes, reaching over 15,000 retail stores[66] Direct-to-Consumer Growth - Direct-to-consumer shipments have significantly grown since 2019, originating from orders via the company website and select third-party retailer sites[67] Employment and Workforce - As of December 29, 2024, the company employed approximately 3,000 full-time associates and 200 part-time associates[77] Plant Operations - The company has reduced its plant footprint by three plants in fiscal year 2023 and an additional five plants in the first quarter of fiscal year 2024[78] Commodity Pricing Impact - A 1% increase in the price of commodities used within products and packaging would result in a reduction of gross profit of approximately $6.0 million[276] Cost Structure Changes - The company has transitioned from a predominantly company-owned route sales professionals model to using independent operators, creating a more variable cost structure[65] Sustainability Initiatives - The company’s sustainability program is guided by frameworks such as SASB, TCFD, and the U.N. Sustainable Development Goals[79] Gender Diversity in Leadership - The company has seen an increase in gender diversity in senior leadership, with women in senior leadership rising from 16% in 2021 to 27% in 2023[73] Trademark Licensing Sales - Sales under trademark licensing agreements represent approximately 1% of the company's 2024 invoice sales[84] Interest Expense and Rates - The company incurred $21.0 million higher interest expense without interest rate swap agreements during the fiscal year ended December 29, 2024[277] - The weighted average interest rates were 5.1% and 6.7% as of December 29, 2024, and December 31, 2023, respectively[277] - A 1% increase in the SOFR rate would have resulted in an additional $2.0 million of interest expense during the fiscal year 2024 based on the unhedged portion of debt[277] Bad Debt Expense - The net bad debt expense was $0.7 million for the fiscal year ended December 29, 2024, compared to $1.2 million for the fiscal year ended December 31, 2023[278] - The reserve for potential future bad debt was $3.3 million as of December 29, 2024, up from $2.9 million as of December 31, 2023[278]

Core Insights - Utz Brands (UTZ) shares increased by 6% following the release of better-than-expected profits driven by higher sales of salty snack products [1] - The company reported fourth-quarter adjusted earnings per share (EPS) of $0.22, surpassing analyst expectations, while revenue decreased by 3% year-over-year to $341.0 million, falling short of forecasts [1][3] Sales Performance - Organic net sales for Branded Salty Snacks grew by 3%, supported by the firm's Power Four Brands [2] - In contrast, organic net sales for Non-Branded & Non-Salty Snacks declined by 18%, primarily due to reduced demand for Partner Brands and Dips & Salsas [2] Management Commentary - CEO Howard Friedman highlighted strong sales in salty snacks while managing low-margin partner brands and private label products [2] - The company anticipates a full-year adjusted EPS increase of 10% to 15% due to improved operating profit and lower interest expenses [2] Future Outlook - Utz expects organic net sales to rise by a low-single-digit percentage, driven by continued growth in Branded Salty Snacks, particularly the Power Four Brands, and a reduced decline in Non-Branded & Non-Salty Snacks [2][3] - Despite the recent share price increase, Utz Brands has experienced a nearly 25% decline in share value over the past year [2]

Core Viewpoint - Utz Brands reported quarterly earnings of $0.22 per share, exceeding the Zacks Consensus Estimate of $0.19 per share, and showing an increase from $0.16 per share a year ago, indicating a 15.79% earnings surprise [1][2] Financial Performance - The company posted revenues of $341.05 million for the quarter ended December 2024, which was 1.66% below the Zacks Consensus Estimate and a decrease from $352.1 million in the same quarter last year [2] - Over the last four quarters, Utz Brands has surpassed consensus EPS estimates three times but has only topped revenue estimates once [2] Stock Performance - Utz Brands shares have declined approximately 14% since the beginning of the year, contrasting with a 4.5% gain in the S&P 500 [3] - The current Zacks Rank for Utz Brands is 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.16 on revenues of $349.3 million, and for the current fiscal year, it is $0.82 on revenues of $1.45 billion [7] - The trend of estimate revisions for Utz Brands has been unfavorable leading up to the earnings release [6] Industry Context - The Food - Miscellaneous industry, to which Utz Brands belongs, is currently ranked in the bottom 28% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact investor sentiment [5]

Financial Performance - Fourth quarter net sales were $341.0 million, a decrease of 3.2% compared to $352.1 million in the prior year, impacted by the divestiture of R.W. Garcia® and Good Health® brands [8]. - Organic net sales were flat, with branded salty snacks increasing by 2.9%, while non-branded and non-salty snacks declined by 18.2% [8]. - Adjusted EBITDA increased by 7.5% to $53.1 million, representing 15.6% of net sales, driven by gross margin expansion [12]. - Adjusted net income rose by 41.5% to $32.4 million, with adjusted earnings per share increasing by 37.5% to $0.22 [11]. - For the fiscal year ended December 29, 2024, net sales were $1,409,281,000, a decrease of 2.0% from $1,438,237,000 in 2023 [42]. - The fiscal year 2024 gross profit increased to $494,777,000, up 8.4% from $456,486,000 in 2023 [42]. - Net income attributable to controlling interest for the fiscal year ended December 29, 2024, was $15,974,000, compared to a net loss of $24,937,000 in 2023 [42]. - Net income improved to $30,737 thousand for the fiscal year ended December 29, 2024, compared to a net loss of $40,032 thousand for the fiscal year ended December 31, 2023 [46]. - Reported net sales for the 52 weeks ended December 29, 2024, were $1,409.3 million, a decrease of 2.0% from $1,438.2 million in 2023 [47]. - Organic net sales for the 52 weeks ended December 29, 2024, increased by 1.3% to $1,411.3 million compared to $1,393.7 million in 2023 [47]. - Gross profit for the 52 weeks ended December 29, 2024, was $494.8 million, up from $456.5 million in 2023, reflecting a gross profit margin increase from 31.7% to 35.1% [50]. Liquidity and Debt - Total liquidity as of December 29, 2024, was $214.8 million, with net debt of $727.3 million and a net leverage ratio of 3.6x [14]. - Total current liabilities rose to $285,270 thousand as of December 29, 2024, compared to $230,686 thousand as of December 31, 2023, an increase of 23.6% [45]. - Cash and cash equivalents at the end of the period increased to $56,138 thousand from $52,023 thousand, marking an increase of 7.5% [46]. - Total Net Debt as of December 29, 2024, is $727.3 million, with a Gross Debt of $783.4 million [59]. - The Net Leverage Ratio stands at 3.6x based on a Normalized Adjusted EBITDA of $200.2 million [59][60]. - Cash and Cash Equivalents as of December 29, 2024, are $56.1 million, providing liquidity against total debt [59]. Expenses and Costs - Selling, distribution, and administrative expenses for the thirteen weeks ended December 29, 2024, totaled $111,711,000, an increase from $107,076,000 in 2023 [40]. - Adjusted Selling, Distribution, and Administrative Expense for the 13 weeks ended December 29, 2024, was $81.6 million, compared to $81.3 million for the same period in 2023, representing an increase of 0.4% [51]. - Total Depreciation and Amortization for the 52 weeks ended December 29, 2024, was $70.9 million, down from $79.5 million in the same period of 2023 [53]. - Acquisition, Divestiture, and Integration Costs for the fiscal year ended December 29, 2024, amounted to $20.9 million, compared to $9.7 million for the previous fiscal year [61]. - Business Transformation Initiatives incurred costs of $28.1 million for the fiscal year ended December 29, 2024, down from $31.0 million in the prior year [61]. Gains and Losses - The company reported a gain on the sale of business amounting to $44,015,000 for the fiscal year ended December 29, 2024 [42]. - A gain of $44.0 million was recorded related to the Good Health and R.W. Garcia Sale for the fiscal year ended December 29, 2024 [61]. - The company recorded a non-cash loss on sale of $13.7 million related to fixed assets for the sale of the Bluffton, Indiana plant for the fiscal year ended December 31, 2023 [56]. Future Outlook - For fiscal year 2025, the company expects low-single digit organic net sales growth and adjusted EBITDA growth of 6% to 10% [19]. - The effective tax rate for fiscal year 2025 is expected to be in the range of 17% to 19% [19]. - Capital expenditures for the fiscal year 2025 are projected to be between $90 million and $100 million, focusing on increasing manufacturing capacity [19].

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