HANOVER, PA. — After three quarters of sustained losses, Utz Brands, Inc. posted net income in the second quarter ended July 3 of $2.5 million, down sharply from $16.2 million in the same period a year ago. The company attributed second-quarter results to higher pricing that began in 2021 and the fact that it gained market share in the salty snacks category during the period.
“As costs continue to rise, we are continuing to work closely with our retail partners to implement strategic and selective pricing actions that we’ve already announced in the second half of the year to help cover inflation and enable us to continue investing in our brands, our people and our supply chain,” Dylan B. Lissette, chief executive officer, said in a conference call with analysts on Aug. 11. “In addition, we continue to invest in critical supply chain and selling infrastructure to support geographic expansion nationally and to support our ongoing key customer wins. These include investment in the southeast of the United States to support our recently announced significant expansion with Publix, along with other large retailers.
“As noted previously, we recently completed resets that introduced our portfolio across nearly 1,300 Publix stores, and we are incredibly excited to expand this partnership with this important customer and we remain dedicated to making continued future investments to support our shared category growth.”
Adjusted net income of Utz Brands in the quarter totaled $18.4 million, equal to 13¢ per share on the common stock, down 3% from $19 million, or 13¢ per share, in the same period a year ago. Adjusted EBIDTA totaled $42.2 million, up 18% from $35.7 million a year ago.
Net sales were $350.1 million, up 18% from $297.9 million.
The company said it has invested in a “pipeline of initiatives” to increase production, from purchasing packaging equipment to acquiring new talent to enhance optimization at its plants.
“In addition, we will be ramping up production at our Kings Mountain facility, where our plans continue to remain on track,” Mr. Lissette said. “We expect to begin pork production there this fall, which should help to alleviate our bottlenecks at our Birmingham (Ala.) manufacturing plant around pork rinds, and we begin to plan for kettle chip production at this facility as well early next year.
“This will help us meet demand for our continued fast-growing Zapp’s kettle chips brand, especially in the mid-Atlantic and Northeast where we have been somewhat supply constrained.”
Mr. Lissette said Utz Brands delivered double-digit growth in retail sales in four of its five primary sales categories, representing 80% of the company’s retail sales. In potato chips and pretzels, which represent approximately 50% of its retail sales, Utz Brands drove share gains, he said.
“In the quarter, we also continued to make great progress driving geographic expansion, while also continuing to improve our execution in our core markets,” Mr. Lissette said. “We delivered double-digit retail sales growth across all geographies, and this was our second consecutive quarter of share gains in the core.
“In our core, which represents over 60% of our retail sales, we registered approximately 17.5% growth versus a category of 15% with our flagship Utz brand up nearly 23% and On the Border tortilla chips up over 30%.”
Based on year-to-date performance, the company said it now expects adjusted EBIDTA to grow 2% to 5%.“Importantly, we are maintaining our prudent approach to our full-year outlook given the environment, and we remain dedicated to investing in critical brand building programs across the country,” Mr. Lissette said.