top of page

Utz Earnings: Organic Sales Rise, Margins Expand, But EPS Outlook Trimmed

  • Writer: Hardik Shah
    Hardik Shah
  • Jul 31
  • 3 min read
Utz share gains vs. market

TLDR


  • Revenue Strength:Organic Net Sales grew 2.9%, with Branded Salty Snacks up 5.4%, outpacing the category and gaining share in both core and expansion markets.

  • Margin Trends:Adjusted Gross Profit Margin expanded 220 basis points, fueled by productivity gains, though higher SG&A pressured EBITDA.

  • Forward Outlook:Raised organic sales and EBITDA guidance, but lowered EPS growth due to higher interest and depreciation from accelerated capital expenditures.


Business Overview


Utz Brands, Inc. (NYSE: UTZ) is a leading U.S. manufacturer of branded salty snacks. The company’s portfolio includes household names like Utz®, On The Border®, Zapp’s®, and Boulder Canyon®. It sells primarily through grocery, mass merchandisers, club, convenience, and drugstore channels, using a hybrid direct-store-delivery (DSD) and direct-to-warehouse model. Approximately 88% of revenue comes from its branded salty snacks, with geographic expansion driving future growth.


Utz Earnings Q2'25


Revenue:

  • Total Net Sales: $366.7M (+2.9% YoY)

  • Organic Net Sales: +2.9%, driven by +3.9% volume/mix

  • Branded Salty Snacks: +5.4%, offsetting a -11.8% decline in non-branded/non-salty segments

Margins and Profitability:

  • Gross Margin: 34.6% (-40bps YoY); Adjusted Gross Margin: 39.8% (+220bps YoY)

  • Adjusted EBITDA: $48.7M (-2.0% YoY), or 13.3% of sales

  • Net Income: $10.1M (-60.2% YoY); Adjusted EPS: $0.17 (-10.5%)

Drivers:

  • Margin expansion was driven by productivity programs and product mix improvements.

  • Bonus pack promotions in Q1–Q2 had a neutral net impact on pricing.

  • EBITDA fell slightly due to higher SG&A to support geographic and infrastructure expansion.


Forward Guidance


Management Outlook:

  • Raised 2025 Organic Net Sales growth to ≥2.5% (prior: low single digits)

  • Tightened Adjusted EBITDA growth to 7–10% (prior: 6–10%)

  • Lowered Adjusted EPS growth to 7–10% (prior: 10–15%) due to:

    • Interest expense: $46M (vs. prior $43M)

    • CapEx: now expected at high end of $90–100M

    • Depreciation/amortization from accelerated CapEx


Risks & Opportunities:

  • Tailwinds: productivity savings, Boulder Canyon premium mix, geographic expansion

  • Headwinds: CapEx-related interest and D&A, inflationary SG&A, slower category growth



Operational Performance


  • Utz closed its Grand Rapids plant to streamline operations, consolidate volume, and enable automation—expected to contribute to H2 cost savings.

  • SG&A expenses rose due to investments in salesforce, infrastructure, and marketing to support westward expansion and summer peak season.

  • Hybrid delivery model (DSD + direct-to-warehouse) enables flexible servicing of both national and regional retailers.


Market Insights


  • Utz outperformed the salty snack category, which declined -1.5% YoY in volume.

  • Power Four Brands (+5.7% retail sales) are driving growth.

  • Potato chips saw strong performance; tortilla chips and pretzels were weaker, partly due to promo laps and portfolio mix softness.

“We gained value and volume shares in both our Core and Expansion Geographies,” said CEO Howard Friedman, reinforcing the company’s strength despite sluggish category trends.

Consumer Behavior & Sentiment


  • Consumers continue to seek value, but define it across different dimensions: price, flavor, clean ingredients, and oil base.

  • Utz’s innovation pipeline—including Boulder Canyon’s tortilla chips and Mike’s Hot Honey cheeseballs—is resonating with emerging flavor trends (spicy, bold, better-for-you).

  • Convenience channel recovering, aided by improved assortment and better in-store execution.


Strategic Initiatives


  • Supply Chain Transformation:Consolidating plants and investing in automation to drive long-term margin expansion and scalability.

  • Innovation:New SKUs like lemonade-flavored chips and cheese balls reinforce flavor-driven trial and category excitement.

  • Expansion Playbook:Distribution gains across 30 states; strong traction in Midwest and expansion markets, leveraging perimeter placement and club/dollar channels.

“Our strong performance illustrates our ability to deliver growth independent of the category in a rational competitive environment,” noted Friedman.

Capital Allocation


  • CapEx: $65.7M in H1; full-year now ~$100M focused on productivity and network optimization

  • Dividends: $20.1M paid YTD

  • Liquidity: $170.9M (cash + revolver)

  • Net Leverage Ratio: 4.1x (expected to improve to ~3x by year-end)

“These strategic investments... will position us for sustained Adjusted EBITDA margin expansion and continued geographic expansion in 2026 and beyond,” said CFO Bill Kelley.

The Bottom Line


Utz is executing well on its growth strategy, with standout performance in branded snacks, geographic expansion, and gross margin enhancement. While near-term EPS is pressured by CapEx-driven costs, management remains confident in delivering its long-term goals—especially the 100bps annual EBITDA margin expansion outlined at its 2023 Investor Day.


Forward-looking considerations for investors:

  1. Watch for continued distribution and market share gains in western U.S. states.

  2. Monitor CapEx execution and the margin payoff from plant consolidation.

  3. Keep an eye on the performance of premium and natural offerings like Boulder Canyon.



--

Stay informed. We break down earnings, trends, and policy shifts shaping consumer staples and adjacent industries — no paywalls, no newsletters, just actionable insights wherever you scroll. Follow us on LinkedIn and X for more.

Comments

bottom of page