Utz Brands Q1 Earnings: Strong Organic Growth and Margin Expansion Set Tone for 2025
- Hardik Shah
- May 1
- 3 min read
Updated: May 3
TLDR
Solid Organic Growth: Organic Net Sales increased 2.9%, with Branded Salty Snacks up 4.9% despite softer category trends.
Margin Expansion Continues: Adjusted Gross Profit Margin expanded 100bps, and Adjusted EBITDA rose 3.9%, marking the 9th straight quarter of margin growth.
Strong Guidance and Resilience: Utz reaffirmed full-year 2025 guidance and expects minimal impact from tariff volatility, supported by its U.S.-centric supply chain.
Business Overview
Utz Brands, Inc. (NYSE: UTZ), a leading U.S. manufacturer of branded salty snacks, produces and markets household names such as Utz®, On The Border®, Zapp’s®, and Boulder Canyon®. The company serves national markets across grocery, mass merchandisers, club stores, convenience, and drug channels. Its operations are deeply rooted in the U.S., with all manufacturing facilities and the bulk of sourcing located domestically, enhancing supply chain resilience.
Utz Earnings - Q1 2025
Net Sales: $352.1 million (+1.6% YoY)
Organic Net Sales: +2.9%, with Branded Salty Snacks up 4.9%
Gross Margin: Reported declined by 90bps to 33.6%; Adjusted expanded by 100bps to 38.2%
Net Income: $5.7 million (+137.5% YoY)
Adjusted Net Income: $22.3 million (+7.2% YoY)
Adjusted EBITDA: $45.1 million (+3.9% YoY, 12.8% of sales)
Adjusted EPS: $0.16 (+14.3% YoY)
Organic sales growth was driven by a favorable volume/mix (+6.3%), offset by pricing (-3.4%) mainly due to temporary bonus packs.
Operational Performance
Successes
Volume Share Gains: Utz outpaced the salty snacks category in volume, driven by strength in core and expansion geographies.
Bonus Pack Strategy: Helped drive trial and value perception, particularly in new markets. Management confirmed the program is winding down in favor of regular promotional plans.
Boulder Canyon Momentum: Gained traction in both natural and mainstream channels, with new innovations like Canyon Poppers and Tortilla Chips.
Challenges
Non-Branded Segment Weakness: Declined 8.8%, mainly due to Partner Brands and dips/salsa softness.
Higher SD&A Costs: Increased as a percentage of sales due to labor, delivery, and selling expenses.
"We’ve now shown our ability to grow despite category softness, due to our unique geographic expansion opportunity." — Howard Friedman, CEO
Market Insights
Consumer Behavior: Continued value-seeking across premium and mainstream segments. Bonus packs and innovation delivered positive consumer response.
Channel Dynamics: Growth in untracked channels (natural, discount, club) offset softness in conventional retail.
Expansion Markets: Key contributor to sales growth as Utz focuses on building household penetration and distribution.
"Our household penetration is at an all-time high at 49%, and we’re holding buy rates, which is critical when bringing in new users." — Howard Friedman, CEO
Strategic Initiatives
Innovation Pipeline: Ongoing with Boulder Canyon, On The Border flavored tortilla chips, and expanded offerings tailored to consumer trends.
Productivity Savings: Driving gross margin gains and reinvestment into brand building.
Geographic Expansion: Distribution white space remains in core and expansion markets, supporting growth ambitions.
"We’ve gotten distribution. Velocity is also growing quickly — the best combination you could hope for." — Howard Friedman, CEO, on Boulder Canyon's traction
Capital Allocation
Dividends: Paid $8.9 million in Q1.
Debt Management: Net leverage at 4.0x with plans to reduce to ~3x by year-end.
CapEx: $90–$100 million targeted for 2025 to boost supply chain capabilities.
Forward Guidance
Utz reaffirmed FY 2025 outlook:
Organic Net Sales Growth: Low-single digits
Adjusted EBITDA Growth: +6–10% with ~100bps margin expansion
Adjusted EPS Growth: +10–15%
Tariffs are expected to have limited impact due to domestic sourcing and manufacturing.
The Bottom Line
Utz Brands delivered a resilient Q1 with organic sales and margin growth outpacing salty snack peers, while executing geographic and product expansion. Strategic bonus pack promotions and productivity initiatives fueled volume gains, although non-branded softness remains a watch area. Management reaffirmed strong full-year guidance, citing confidence in U.S.-based supply chains and ongoing consumer momentum in core and expansion markets.
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