Utz Brands(UTZ) - 2026 Q2 - Quarterly Results

Performance Highlights Utz Brands reported strong Q2 2025 performance with nearly 3% organic net sales growth, driven by a 5.4% increase in its Branded Salty Snacks portfolio. The company raised its full-year Organic Net Sales growth guidance to 2.5% or better and tightened its Adjusted EBITDA growth forecast to 7-10%. However, it lowered its Adjusted EPS growth guidance to 7-10% due to higher interest and depreciation expenses from accelerated capital investments in its manufacturing network Q2 2025 Key Metrics Summary | Metric | Value | Change vs. Q2 2024 | | :--- | :--- | :--- | | Net Sales | $366.7 million | +2.9% | | Organic Net Sales | +2.9% | - | | Branded Salty Snacks Organic Net Sales | +5.4% | - | | Adjusted Gross Profit Margin | - | +220 bps | | Net Income | $10.1 million | -60.2% | | Adjusted Net Income | $23.6 million | -14.2% | | Adjusted EBITDA | $48.7 million | -2.0% | | Diluted EPS | $0.12 | -47.8% | | Adjusted EPS | $0.17 | -10.5% | * CEO Howard Friedman highlighted accelerating growth in the Branded Salty Snacks portfolio, value and volume share gains in both Core and Expansion Geographies, and significant Adjusted Gross Profit Margin expansion due to proactive cost management[4] * CFO Bill Kelley announced an increase in the 2025 Organic Net Sales outlook, a tightening of the Adjusted EBITDA growth range, and a reduction in Adjusted EPS guidance. The lower EPS forecast is attributed to higher interest and depreciation/amortization from accelerated capex investments aimed at long-term growth[4] Second Quarter 2025 Financial Results In Q2 2025, Net Sales rose 2.9% to $366.7 million, driven by a 3.9% favorable volume/mix contribution, while net price realization was slightly negative. Branded Salty Snacks sales grew 5.4%, outperforming the overall category. Despite a 220bps expansion in Adjusted Gross Profit Margin from productivity savings, higher Selling, Distribution, and Administrative (SD&A) Expenses to support growth led to a 60.2% decrease in Net Income to $10.1 million and a 2.0% decline in Adjusted EBITDA to $48.7 million * Net Sales growth of 2.9% was driven by a 3.9% positive volume/mix contribution, partially offset by a (1.0%) decline in net price realization. Branded Salty Snacks Organic Net Sales, representing 88% of total sales, increased 5.4%[6] * The company's Branded Salty Snacks retail sales grew 3.3% while the overall Salty Snack category declined 1.5%. Retail volumes increased 4.3% versus a 1.5% category decline, leading to volume share gains[6] * Adjusted Gross Profit Margin expanded by 220bps to 39.8% due to productivity savings. However, Adjusted SD&A Expenses increased to 26.5% of Net Sales from 23.7% in the prior year, driven by investments in geographic expansion and growth initiatives[6][7] * The decline in profitability, with Net Income down 60.2% and Adjusted EBITDA down 2.0%, was primarily caused by the increase in SD&A Expenses, higher depreciation and amortization, and higher interest expense, which more than offset the gross margin expansion[8][9] Balance Sheet and Cash Flow Highlights As of June 29, 2025, Utz maintained Total Liquidity of $170.9 million, with Net Debt at $826.3 million, resulting in a Net Leverage Ratio of 4.1x. For the first half of the year, Cash Flow from Operations was ($3.9 million), reflecting seasonal working capital needs. The company invested $65.7 million in Capital Expenditures and paid $20.1 million in Dividends & Distributions Paid Financial Position and Cash Flow (as of June 29, 2025) | Metric | Value | | :--- | :--- | | Balance Sheet | | | Total Liquidity | $170.9 million | | Cash on Hand | $54.6 million | | Revolver Availability | $116.3 million | | Net Debt | $826.3 million | | Net Leverage Ratio | 4.1x | | Cash Flow (YTD) | | | Cash Flow from Operations | ($3.9 million) | | Capital Expenditures | $65.7 million | | Dividends & Distributions Paid | $20.1 million | Business and Strategic Updates Supply Chain Transformation Plan Update Utz is advancing its supply chain transformation by consolidating its manufacturing footprint from eight to seven primary plants with the planned closure of its Grand Rapids, Michigan facility. This strategic move, expected to be completed by early 2026, aims to enhance operational efficiency, leverage fixed costs through higher volume at larger facilities, and support continued geographic expansion. The company anticipates cost savings from this initiative in the second half of 2025 * The company is closing its Grand Rapids, Michigan manufacturing facility, consolidating its primary plant footprint from eight to seven[12] * This action is expected to generate cost savings in H2 2025, contributing to the previously stated goal of approximately 6% productivity savings for the fiscal year[13] * The consolidation is designed to shift volume to larger, more efficient facilities, improve fixed cost leverage, and enhance automation capabilities to support long-term growth[14] Fiscal Year 2025 Outlook Utz updated its fiscal 2025 outlook, raising expectations for top-line growth while lowering the forecast for earnings per share. The company now anticipates Organic Net Sales growth of 2.5% or better and Adjusted EBITDA growth of 7% to 10%. However, Adjusted EPS growth is now projected at 7% to 10%, down from 10% to 15%, due to higher interest expense and depreciation from accelerated capital investments Updated Fiscal Year 2025 Guidance | Metric | Previous Outlook | Updated Outlook | | :--- | :--- | :--- | | Organic Net Sales Growth | Low-single digits | 2.5% or better | | Adjusted EBITDA Growth | 6% to 10% | 7% to 10% | | Adjusted EPS Growth | 10% to 15% | 7% to 10% | Updated FY 2025 Key Assumptions | Metric | Previous Expectation | Updated Expectation | | :--- | :--- | :--- | | Interest Expense | ~$43 million | ~$46 million | | Capital Expenditures | $90 - $100 million | ~$100 million | | Net Leverage Ratio | - | Approaching 3x at year-end | Consolidated Financial Statements Consolidated Statements of Operations For the second quarter ended June 29, 2025, Utz reported Net Sales of $366.7 million, an increase from $356.2 million in the prior-year period. However, higher operating expenses led to a significant drop in Income from Operations to $6.4 million from $22.5 million. Net Income for the quarter was $10.1 million, down from $25.4 million year-over-year. For the 26-week period, Net Sales grew to $718.8 million, while Net Income decreased to $15.8 million from $27.8 million Consolidated Statements of Operations (Q2) | (In millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net sales | $366.7 | $356.2 | | Gross profit | $126.8 | $124.7 | | Income from operations | $6.4 | $22.5 | | Net income | $10.1 | $25.4 | | Diluted EPS | $0.12 | $0.23 | Consolidated Statements of Operations (YTD) | (In millions) | 26 Weeks 2025 | 26 Weeks 2024 | | :--- | :--- | :--- | | Net sales | $718.8 | $702.7 | | Gross profit | $245.0 | $244.3 | | Income from operations | $12.1 | $32.2 | | Net income | $15.8 | $27.8 | | Diluted EPS | $0.21 | $0.19 | Consolidated Balance Sheets As of June 29, 2025, Utz's Total Assets stood at $2.84 billion, an increase from $2.73 billion at the end of fiscal 2024. The growth was primarily in current assets like accounts receivable and inventories, and non-current assets like property, plant, and equipment. Total Liabilities rose to $1.46 billion from $1.34 billion, mainly due to an increase in non-current debt. Total Equity remained relatively stable at $1.38 billion Consolidated Balance Sheet Highlights | (In millions) | June 29, 2025 | Dec 29, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $54.6 | $56.1 | | Total current assets | $390.5 | $317.3 | | Total assets | $2,837.3 | $2,728.4 | | Liabilities & Equity | | | | Total current liabilities | $303.3 | $285.3 | | Total liabilities | $1,459.4 | $1,340.7 | | Total equity | $1,377.9 | $1,387.7 | Consolidated Statements of Cash Flows For the 26 weeks ended June 29, 2025, the company experienced a net cash usage of $3.9 million in Operating Activities, driven by increases in accounts receivable and inventory. Net Cash Used in Investing Activities was $71.3 million, primarily due to $65.7 million in property and equipment purchases. Net Cash Provided by Financing Activities was $73.7 million, resulting from net borrowings on credit facilities. Overall, cash and cash equivalents decreased by $1.5 million to $54.6 million Consolidated Statement of Cash Flows (YTD) | (In millions) | 26 Weeks 2025 | 26 Weeks 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($3.9) | ($0.2) | | Net cash (used in) provided by investing activities | ($71.3) | $141.0 | | Net cash provided by (used in) financing activities | $73.7 | ($126.2) | | Net (decrease) increase in cash | ($1.5) | $14.6 | | Cash and cash equivalents at end of period | $54.6 | $66.6 | Reconciliation of Non-GAAP Financial Measures Net Sales and Organic Net Sales For Q2 2025, reported Net Sales and Organic Net Sales both grew by 2.9% year-over-year. This growth was entirely driven by the Branded Salty Snacks segment, which increased 5.4%, while the Non-Branded & Non-Salty Snacks segment declined by 11.8%. The growth in Branded Salty Snacks was primarily due to a 6.9% increase in volume/mix, partially offset by a 1.5% decrease in pricing Q2 2025 Net Sales Growth Drivers | (% change vs. prior year) | Branded Salty Snacks | Non-Branded & Non-Salty Snacks | Total | | :--- | :--- | :--- | :--- | | Volume/mix | 6.9% | (13.4)% | 3.9% | | Pricing | (1.5)% | 1.6% | (1.0)% | | Organic Net Sales Growth | 5.4% | (11.8)% | 2.9% | Gross Profit and Adjusted Gross Profit In Q2 2025, GAAP Gross Profit was $126.8 million (34.6% margin), a slight decrease in margin from the prior year. However, after adjusting for depreciation, amortization, and other items, Adjusted Gross Profit increased to $146.1 million. This resulted in an Adjusted Gross Profit Margin of 39.8%, a significant expansion of 220bps compared to 37.6% in Q2 2024 Gross Profit Reconciliation (Q2) | (In millions) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Gross Profit | $126.8 | $124.7 | | as a % of Net Sales | 34.6% | 35.0% | | Adjustments | $19.3 | $9.3 | | Adjusted Gross Profit | $146.1 | $134.0 | | as a % of Net Sales | 39.8% | 37.6% | Adjusted Net Income and Adjusted EPS For Q2 2025, after excluding items such as acquisition-related amortization, business transformation costs, and the gain on remeasurement of warrant liability, Adjusted Net Income was $23.6 million, a 14.2% decrease from $27.5 million in the prior year. Consequently, Adjusted Earnings Per Share (EPS) fell 10.5% to $0.17 from $0.19 in Q2 2024 Adjusted Net Income & EPS Reconciliation (Q2) | (In millions, except per share) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Income | $10.1 | $25.4 | (60.2)% | | Total Adjustments | $13.5 | $2.1 | - | | Adjusted Net Income | $23.6 | $27.5 | (14.2)% | | Adjusted EPS | $0.17 | $0.19 | (10.5)% | EBITDA and Adjusted EBITDA In Q2 2025, Net Income of $10.1 million reconciled to an Adjusted EBITDA of $48.7 million. This represented a 2.0% decrease from the $49.7 million Adjusted EBITDA in Q2 2024. The Adjusted EBITDA Margin contracted by 70 bps to 13.3% of Net Sales, down from 14.0% in the prior-year period Adjusted EBITDA Reconciliation (Q2) | (In millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Income | $10.1 | $25.4 | (60.2)% | | D&A, Interest, Taxes & Other | $29.0 | $26.4 | - | | EBITDA | $39.1 | $51.8 | (24.5)% | | Other Adjustments | $9.6 | ($2.1) | - | | Adjusted EBITDA | $48.7 | $49.7 | (2.0)% | | Adjusted EBITDA Margin | 13.3% | 14.0% | (70) bps | Net Debt and Leverage Ratio As of June 29, 2025, the company's Gross Debt was $880.9 million. After subtracting $54.6 million in cash and cash equivalents, total Net Debt stood at $826.3 million. Based on a trailing twelve-month Normalized Adjusted EBITDA of $200.9 million, the Net Leverage Ratio was calculated to be 4.1x Net Debt and Leverage Calculation (as of June 29, 2025) | (In millions) | Value | | :--- | :--- | | Gross Debt | $880.9 | | Less: Cash and Cash Equivalents | $54.6 | | Total Net Debt | $826.3 | | Last 52-Weeks Normalized Adjusted EBITDA | $200.9 | | Net Leverage Ratio | 4.1x | Appendix Non-GAAP Financial Measures Definitions This section defines the non-GAAP financial measures used by Utz, such as Organic Net Sales, Adjusted Gross Profit, Adjusted EBITDA, and Adjusted EPS. Management believes these metrics provide useful supplemental information to investors by facilitating historical comparisons and offering insight into underlying operational trends, though they should not be considered replacements for GAAP measures * The company uses non-GAAP financial measures to budget, make strategic decisions, and evaluate performance, believing they provide additional transparency for investors[29] * Key defined measures include Organic Net Sales (excluding acquisitions/divestitures), Adjusted Gross Profit (excluding D&A and other items), Adjusted Net Income (excluding D&A, financing costs, and other adjustments), and Adjusted EBITDA (EBITDA adjusted for non-cash and other specific items)[31][33][35][37] Other Defined Terms This section provides definitions for key product categories to clarify sales performance discussions. "Branded Salty Snacks" includes the company's core owned brands, while "Non-Branded & Non-Salty Snacks" encompasses partner brands, private label, and items like dips and salsas * Defines "Branded Salty Snacks" as comprising the "Power Four Brands" (Utz®, On The Border®, Zapp's®, Boulder Canyon®) and other owned brands like Golden Flake® and TORTIYAHS!®[39] * Defines "Non-Branded & Non-Salty Snacks" to include partner brands, private label, co-manufacturing, and Utz-branded non-salty products[40] Forward-Looking Statements This section contains the standard "safe harbor" disclosure, cautioning investors that the press release includes forward-looking statements concerning future plans, financial outlooks, and operational strategies. It clarifies that these statements are based on current management expectations and are subject to numerous risks and uncertainties that could cause actual results to differ materially * The report's statements regarding the fiscal 2025 outlook, supply chain transformation, and future growth are identified as forward-looking[23] * A comprehensive list of potential risks is provided, including industry competition, consumer preferences, supply chain disruptions, inflation, and regulatory changes, among others[25] * The company states it does not undertake any obligation to publicly update or revise any forward-looking statements[26]