Utz Brands(UTZ)2025-02-20 18:27Financial 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 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]