Utz Brands earnings: Organic growth up, California push ahead
- Hardik Shah
- Oct 30
- 3 min read
TLDR
Revenue Strength: Net sales +3.4% to $377.8M; Branded Salty Snacks +5.8%.
Margin Trends: Adjusted gross margin +210 bps to 41.1%; adjusted EBITDA +11.7% to $60.3M (16.0% margin).
Forward Outlook: FY25 organic growth guided to ~3% (up from ≥2.5%); EBITDA/EPS growth 7–10% reiterated.
Business Overview
Utz Brands is a U.S. salty-snacks manufacturer with a portfolio led by its “Power Four” brands—Utz, On The Border, Zapp’s, and Boulder Canyon—distributed nationally across grocery, mass, club, convenience, drug, and other channels.
Channel/footprint context: The company is expanding west, with fresh emphasis on California, the nation’s largest salty-snack market.
Utz Brands Earnings (Q3 FY2025)
Revenue: Net sales $377.8M (+3.4% YoY). Organic net sales also +3.4% (no M&A impact). Branded Salty Snacks +5.8%; Non-Branded & Non-Salty −13.1% as partner brands were right-sized.
Mix & Pricing: Volume/mix +4.5% offset by net pricing −1.1%.
Margins: GAAP gross margin 33.6% (−220 bps) as capacity and inflation weighed; Adjusted gross margin 41.1% (+210 bps) on productivity savings.
Operating Expenses: Adjusted SD&A $93.8M (24.8% of sales) vs. 24.3% LY, reflecting capability, selling, and delivery investments for expansion.
Profitability: GAAP net loss $(20.2)M (−$0.17/share); Adjusted net income $33.5M (+13.2%); Adjusted EPS $0.23 (+9.5%). Adjusted EBITDA $60.3M (+11.7%; margin 16.0%).
Category Outperformance: Retail dollar sales +4.8% vs. salty-snacks category −0.2%; nine straight quarters of volume-share gains; Power Four retail sales +7.1%.
CEO Howard Friedman: “We… gained both dollar and volume share… marking our ninth consecutive quarter of volume share growth.”
Forward Guidance
FY2025 organic net sales ~+3% (raised).
Adjusted EBITDA growth 7–10% and Adjusted EPS growth 7–10% reaffirmed.
Assumptions include a 17–19% normalized tax rate, ~$46M interest expense, ~$100M capex, and net leverage approaching 3x by year-end.
CFO BK Kelley: “We now expect Organic Net Sales growth of approximately 3%… and free cash flow will be a key priority as we move past our multi-year capex investments.”
2026 early color: Focus on free cash flow, capex preliminarily $60–70M, and productivity normalizing to 3–4% of adjusted costs after the supply-chain program winds down.
Risks & Opportunities: Potato-crop/weather and tariff-related input cost noise easing; continued productivity, mix, and distribution gains targeted.
Operational Performance
Productivity & Supply Chain: Adjusted gross-margin gains were driven by productivity; central palletizing automation and network consolidation continue, with the Grand Rapids (MI) closure slated for early 2026 and the Kings Mountain (NC) build-out progressing. Target ~6% of adjusted COGS productivity in 2025.
California Expansion: Utz acquired Insignia International’s DSD routes across California and parts of the Midwest; current CA retail sales are ~$79M (1.9% share) vs. CA’s $4.1B salty-snacks market—material white space. Rollout begins early 2026.
Marketing & Brand Health: Increased retail-media investment; sustained momentum in Boulder Canyon and Power Four, with household penetration up and repeat rates improving (per management commentary).
CEO Howard Friedman on California: “We… acquired select distribution assets… to accelerate our market penetration,” complementing the Westward expansion strategy.
Segment/Category Snapshot:
Potato chips: outsized growth; pork rinds strong via Golden Flake.
On The Border (tortilla chips): softness being addressed.(Management prepared-remarks summary.)
Market Insights
Retailers are navigating a cooler category backdrop, but Utz is outgrowing the category on both dollars and volume through distribution gains, higher velocities, and mix toward branded salty snacks (now ~89% of net sales).
Consumer Behavior & Sentiment
Household penetration and repeat rates continue to improve, supported by higher retail-media spend and brand investments; initiatives include eliminating artificial colors across the portfolio by 2027, aligning with “cleaner label” preferences.
Strategic Initiatives
Geographic Expansion: Accelerate West (California), applying Expansion-market playbook.
Portfolio & Innovation: Power Four emphasis; continued brand building and retail-media scaling.
Operations/Tech: Automation, ERP/systems upgrades, and network optimization to fuel productivity.
Capital Allocation
Dividends/Distributions: $28.8M YTD.
Capex: ~$100M in FY25, moderating in 2026.
Liquidity & Leverage: $197.7M liquidity (cash $57.7M + revolver availability), net debt $807.9M, leverage 3.9x TTM Normalized Adjusted EBITDA; path to ~3x by YE25 via working capital, EBITDA growth, and real-estate divestitures.
The Bottom Line
Utz is executing on category outperformance, margin rebuild via productivity, and footprint expansion into California.
Investors should watch for:
(1) Q4 margin carry-through and FY25 deleveraging toward ~3x,
(2) Boulder Canyon and Power Four velocity gains vs. category, and
(3) 2026 free-cash-flow inflection as capex moderates. Management reaffirmed EBITDA/EPS growth targets while lifting organic-sales guidance—signals of resilience amid input-cost and category variability.
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