Summary of UTZ Brands FY Conference Call (November 18, 2025) Company Overview - **Company**: UTZ Brands (NYSE:UTZ) - **Industry**: Packaged Food and Beverage, specifically focusing on salty snacks Key Points California Expansion - **Investment Impact**: The California expansion involves a modest upfront investment estimated at $4-$6 million in the first year, which is considered a startup cost rather than an ongoing expense [3][4][5] - **Market Size**: California represents 10% of the overall salty snack category, and the company aims to achieve a 16% margin target despite the initial investment [3][4] - **Sales Performance**: Current sales in California are $79 million, primarily through direct-to-warehouse channels, with expectations to grow as distribution expands [5][6] Metrics for Success - **Distribution Gains**: Key metrics include distribution gains, top-line growth, market share increases, and margin recovery over the next 12-24 months [8][9][10] - **Consumer Awareness**: Initial investments will focus on consumer awareness and execution in stores, with a lag expected between investment and return [8][9] Financial Performance - **Cash Flow and Leverage**: The minimal cash outlay for California will not affect the company's leverage targets, which aim to approach three times by year-end [11][12] - **CapEx Reduction**: Preliminary CapEx for 2026 is projected to be $60-$70 million, down from $100 million in previous years, with a focus on improving free cash flow [12][66] Market Share and Growth - **Outperformance**: UTZ has outperformed the salty snacks category for nine consecutive quarters, driven by maintaining market share in core areas and expanding into new markets [13][14] - **Brand Performance**: The company's "power four" brands (Utz, Boulder Canyon, Zapps, On the Border) are key drivers of growth, with successful distribution and marketing strategies [22][28] Pricing and Consumer Trends - **Pricing Strategy**: The company has experienced a modest pricing headwind of about 1%, attributed to targeted promotions and a rational pricing environment [17][18] - **Consumer Focus**: Affordability remains a key focus, with ongoing adjustments to pricing and product offerings to meet consumer demand [17][18][52][53] Innovation and Marketing - **Innovation Pipeline**: The company is focused on introducing new flavors and healthier options, leveraging existing brands to minimize investment while maximizing consumer appeal [29][30][31] - **Marketing Strategy**: Investment in marketing has increased, with a focus on both push and pull strategies to enhance brand awareness and consumer engagement [38][39][41] Operational Efficiency - **Productivity Initiatives**: The company has achieved significant productivity savings, with expectations to maintain a 3-4% improvement in COGS moving forward [54][55] - **Supply Chain Transformation**: Ongoing supply chain improvements are expected to enhance operational efficiency and support growth initiatives [62][64] Capital Allocation - **Debt Management**: The company prioritizes reducing leverage while considering share buybacks and maintaining a modest dividend [66][68] - **Growth Investments**: Future capital allocation will focus on growth opportunities, particularly in California and other expansion markets [66][70] Overall Outlook - **Future Prospects**: The company is optimistic about its growth trajectory, supported by a modernized supply chain, strong brand portfolio, and favorable market conditions [69][70] This summary encapsulates the key insights and strategic directions discussed during the UTZ Brands FY conference call, highlighting the company's focus on expansion, financial health, and market positioning within the salty snacks industry.

Financial Data and Key Metrics Changes - The company reported a net sales growth of 3.4%, with branded salty snacks organic net sales growth of 5.8% [6][19] - Adjusted EBITDA increased by 11.7%, and adjusted earnings per share rose by 9.5% [20] - Adjusted gross profit margin expanded by 20 basis points, with adjusted EBITDA margin expanding by 120 basis points to 16% [20][21] Business Line Data and Key Metrics Changes - Branded salty snacks now represent 89% of total net sales, marking the seventh consecutive quarter of growth in this category [6][19] - The Power4 brands achieved a retail sales increase of 7.1%, driven by 4.4% volume gains [7] - Non-branded and non-salty snacks experienced a decline in organic net sales of 13.1% due to a strategic decision to right-size the partner brand portfolio [19] Market Data and Key Metrics Changes - California, the largest salty snack market in the U.S., has a retail sales figure of $4.1 billion, with the company currently holding a 1.9% market share [5] - Expansion markets saw a total company retail sales growth of 9.2%, significantly outpacing the salty snack category decline of 0.3% [9] - The average market share in expansion markets is 3%, compared to 6.6% in core markets, indicating substantial growth opportunities [10] Company Strategy and Development Direction - The acquisition of Insignia International's direct store delivery assets is a key part of the company's westward expansion strategy, particularly in California [4][5] - The company is focused on enhancing its branded salty snacks business and expanding its geographic footprint [34] - Continued investment in marketing and productivity initiatives is expected to drive long-term growth and margin expansion [20][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform the category over the medium and long term, supported by strong brand performance and market share gains [17][34] - The company updated its 2025 outlook, now expecting organic net sales growth of approximately 3%, up from a previous expectation of 2.5% [27] - Management highlighted the importance of free cash flow generation and plans to optimize capital expenditures in 2026 [30][31] Other Important Information - The company plans to eliminate all artificial colors from its product portfolio by 2027, aligning with consumer preferences for cleaner ingredients [16] - Cash provided by operations for the year-to-date period was $47.3 million, with capital expenditures of $89.2 million [25][26] - The net leverage ratio at the end of the third quarter was 3.9 times trailing twelve months normalized adjusted EBITDA [26] Q&A Session Summary Question: What are the expectations for organic net sales growth in 2025? - The company now expects organic net sales growth of approximately 3%, reflecting year-to-date outperformance [27] Question: How is the company addressing supply chain challenges? - Management noted that supply chain inflation has largely normalized and that productivity initiatives are in place to offset costs [21][22] Question: What are the plans for capital expenditures in 2026? - Capital expenditures are expected to decrease significantly from $100 million in 2025 to a preliminary range of $60 to $70 million in 2026 [30][31]

Financial Data and Key Metrics Changes - The company spent $100 million on capital expenditures (CapEx) last year and expects to spend a similar amount this year, indicating a significant investment cycle [5][6] - The company is guiding for EBITDA to grow at a mid-teens level year-over-year in the second half, which would represent nearly 200 basis points of year-over-year EBITDA margin expansion [45][46] - Net leverage ticked up to 4.1 times this quarter, but the company maintains its expectation for net leverage to approach three times by fiscal year-end [52] Business Line Data and Key Metrics Changes - Boulder Canyon has been a significant contributor to top-line sales, surpassing the initial target of $100 million and expected to reach closer to $200 million by year-end [18][23] - The productivity program is expected to normalize around 3% to 4% in the future, with current savings at 6% of cost of goods sold (COGS) [8][12] Market Data and Key Metrics Changes - Distribution gains in core markets have been around 10%, while expansion geographies have seen gains of approximately 18% [20] - The company has experienced both value and volume market share gains in core markets for the first time in several quarters [31][32] Company Strategy and Development Direction - The company is focused on supply chain transformation and capital investments to drive productivity and efficiency [4][5] - There is a commitment to maintain a strong brand presence and invest in marketing and innovation, with a target of reaching 3% to 4% of sales in advertising and consumer spending over time [48][50] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the salty snack category, noting that household penetration continues to grow, indicating consumer demand [38] - The competitive environment has been rational, with no unusual activity from competitors, which is seen as a positive for the company [36] Other Important Information - The company has been active in the M&A market but has slowed down due to a focus on debt paydown, with a high hurdle for any potential acquisitions [58][60] - The company is seeing improvements in the convenience store channel, which had previously been slower than desired [65] Q&A Session Summary Question: What drove the organic sales growth outlook increase? - The company raised its outlook for organic sales growth due to strong distribution gains and the performance of Boulder Canyon, expecting a good year despite a dynamic competitive environment [42][43] Question: What are the key drivers for EBITDA margin expansion in the second half? - Key drivers include productivity gains from CapEx investments and a discrete item related to the Grand Rapids facility closure, contributing to a strong EBITDA close for the year [45][46] Question: How is the company addressing the slower performance in the convenience channel? - The company acknowledges past assortment management choices that affected performance but is now seeing distribution gains and expects to be around flattish before the end of the year [65]

Financial Data and Key Metrics Changes - EBITDA was roughly flat in the first half of the year, with a projected growth of 8.5% for the full year, implying high teens growth in the second half [6][19] - EPS guidance was revised from 10-15% growth to 7-10% growth, with a midpoint impact of about 3 cents due to increased interest expense and accelerated depreciation [19][20] Business Line Data and Key Metrics Changes - Significant growth was observed in potato chips, while tortilla chips and pretzels were below trend, with specific brands performing variably [23][26] - Boulder Canyon brand is expected to continue strong growth, with distribution gains across both core and expansion markets [71][72] Market Data and Key Metrics Changes - Distribution gains were noted across all 30 expansion geographies, with strong retailer support from national chains [33][34] - The convenience store channel is showing improvement, with expectations to reach flattish performance by year-end [65] Company Strategy and Development Direction - The company is focused on westward expansion and infrastructure investments to support distribution gains [11][35] - Marketing strategies include increased spending in retail media and social media to support geographic expansion and brand introduction [91][92] Management's Comments on Operating Environment and Future Outlook - Management remains confident in achieving productivity savings and margin expansion, with a positive outlook for the second half of the year [9][56] - The company believes the category will continue to grow, driven by household penetration and repeat purchases [107][109] Other Important Information - The company is nearing the end of its manufacturing optimization efforts, with significant productivity improvements already realized [85][87] - CapEx spending is expected to peak in 2025, with a focus on automation and efficiency improvements [21][88] Q&A Session Summary Question: What gives confidence in the EBITDA growth outlook despite flat performance in the first half? - Management cited investments in infrastructure and productivity savings as key drivers for expected growth in the second half [7][9] Question: Can you clarify the changes in EPS guidance? - EPS growth was revised down due to increased interest expenses and accelerated depreciation from higher CapEx spending [19][20] Question: What is driving the strong top-line results? - The company attributed growth to distribution gains, improved volume and value share in core markets, and investments in westward expansion [10][11] Question: How is the company addressing the performance of tortilla chips and pretzels? - Management noted that tortilla chips faced promotional overlaps, while pretzel performance varied by brand, with some brands performing well [26][27] Question: What is the outlook for the convenience store channel? - The company expects the convenience store channel to improve and reach flattish performance by year-end, supported by better product assortment [65] Question: How is the company managing supply chain and manufacturing efficiency? - The company has made significant strides in optimizing manufacturing and is now focusing on automation and efficiency improvements [85][87] Question: What is the long-term outlook for category growth? - Management remains bullish on long-term category growth, citing strong household penetration and repeat purchases as positive indicators [107][109] Question: How is the company addressing consumer interest in protein products? - The company is exploring opportunities in the protein segment while ensuring that products meet consumer taste preferences [111][112]

Financial Data and Key Metrics Changes - The company reported flat overall retail sales while achieving 3% organic sales growth in the quarter, attributed to strength in untracked channels and improved throughput from the new Rice Distribution Center [8][9] - The management indicated that there was no revenue pulled forward in the quarter, and they are pleased with the volume response [9] Business Line Data and Key Metrics Changes - The company experienced volume share gains in core markets, supported by bonus packs and incremental distribution in brands like Boulder Canyon and On the Border [10][11] - The bonus pack program contributed approximately 300 basis points to price impact, with 60 basis points attributed to true price cap investments [19][44] Market Data and Key Metrics Changes - Boulder Canyon has shown strong performance in untracked channels and is gaining retail distribution in traditional channels, with new product launches contributing to growth [22][25] - The company noted that the natural and organic segments are performing well, with Boulder Canyon being a significant growth driver [49][51] Company Strategy and Development Direction - The company aims to maintain share in core markets while expanding in new geographies, focusing on distribution gains and innovation [10][72] - Management emphasized the importance of balancing volume and value, particularly as bonus packs wind down [11][41] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about household penetration reaching an all-time high of 49%, indicating strong consumer resonance with the brand [83] - They acknowledged the need to adapt to consumer behavior and market conditions, particularly regarding value-seeking trends [75][76] Other Important Information - The company is transitioning its bonus pack program as it approaches summer, with plans to support innovation and marketing efforts [43][90] - There are ongoing efforts to improve performance in convenience stores, focusing on distribution, innovation, and collaboration with retailers [88] Q&A Session Summary Question: Difference between flat overall retail sales and 3% organic sales growth - Management explained that the difference is due to strength in untracked channels and improved distribution efficiency [8][9] Question: Impact of bonus packs on price and mix - Management confirmed that most price impacts were related to bonus packs, with a small portion from true price cap investments [19] Question: Early reception of new products in Boulder Canyon - Management reported positive consumer reception and ongoing distribution gains, with expectations for continued growth [22][25] Question: Outlook for non-branded partner brands - Management expects continued decline in partner brands but not as negative as before, focusing on growing their own brands [32][33] Question: Future of the bonus pack program - Management indicated that the program is winding down and will be evaluated based on market conditions [41][43] Question: Distribution gains in Boulder Canyon - Management confirmed significant distribution gains and ongoing opportunities in both natural and conventional channels [63] Question: Performance in convenience stores - Management highlighted the need for improved distribution and innovation in convenience stores to drive growth [88][89]

Financial Data and Key Metrics Changes - The company reported flat overall retail sales but achieved a 3% organic sales growth in the first quarter of 2025, indicating a positive trend in underlying demand despite overall sales stagnation [7][10] - The impact of bonus packs on pricing was noted to be approximately 300 basis points, with most price changes attributed to these promotions [17][19] Business Line Data and Key Metrics Changes - The Boulder Canyon brand has shown significant growth, particularly in untracked channels, and is gaining distribution in traditional retail, contributing positively to overall sales [22][25] - The company anticipates continued volume share gains in core markets, although some value share contraction is expected due to competitive pressures [11][12] Market Data and Key Metrics Changes - The company is experiencing strong momentum in the natural and organic segments, particularly with Boulder Canyon, which is expected to continue growing through innovation and increased distribution [49][52] - The performance in convenience stores is improving but has not yet returned to growth, indicating a need for strategic adjustments in that channel [85] Company Strategy and Development Direction - The company aims to balance volume and value in its core markets while expanding into new geographies, focusing on maintaining market share and driving distribution gains [11][73] - There is an emphasis on innovation and marketing to sustain consumer interest and brand loyalty, with plans to evaluate the bonus pack program based on market conditions [78][79] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about household penetration rates, which have reached an all-time high of 49%, indicating strong consumer engagement with the brand [83] - The company is closely monitoring consumer behavior and market dynamics to adapt its strategies accordingly, particularly in response to value-seeking trends among consumers [76][78] Other Important Information - The company is transitioning its bonus pack program as it moves into summer, with expectations of normalizing pricing strategies and focusing on innovation [43][44] - There are ongoing efforts to enhance brand equity and consumer awareness, particularly for Boulder Canyon, to capitalize on the growing natural and organic market [52][53] Q&A Session Summary Question: Difference between flat overall retail sales and 3% organic sales growth - Management explained that the difference is due to strength in untracked channels and improved distribution efficiency, with no revenue pulled forward [7][10] Question: Impact of bonus packs on volume and value share - Management acknowledged that bonus packs contributed to volume share gains but noted the need to balance this with long-term value sustainability [11][12] Question: Early reception of new products in Boulder Canyon - The reception has been positive, with strong growth in untracked channels and new product launches contributing to overall brand momentum [22][25] Question: Future outlook for partner brands - Management expects partner brands to continue declining but at a slower rate, as the company focuses on growing its own brand portfolio [32][33] Question: Evaluation of the bonus pack program - The program was intended as a limited-time offer, with management monitoring market conditions to determine its future [38][39] Question: Performance in convenience stores - Management indicated that improvements are being made, but growth is still dependent on overall traffic trends and strategic distribution efforts [85][88]