Utz Brands Net Sales Rose 17.9% to USD354.7m in the Fiscal Fourth Quarter of 2022

Utz Brands, Inc. recently announced financial data for its fiscal fourth quarter and full year that ended January 1, 2023. Net sales rose 17.9% to USD354.7m in the quarter of 2022, compared to USD300.9m in the fourth quarter of 2021.

The company's ongoing transition to independent operators and the consequent rise in sales discounts, which harmed net sales growth of (1.0%), partly offset the increase in net sales, which was driven by organic net sales growth of 15.9% and acquisitions of 3.0%.

A favorable price/mix of 17.9%, which was partly offset by volume declines of 2.0%, drove organic net sales growth. The volume drop was mainly caused by SKU rationalization (a process that allows merchants to measure the profitability of the products they're stocking) that was concentrated on lowering private label and some partner brands, as well as lapping stronger activity in the Mass channel in the previous year.

Retail sales for the Company, as determined by IRI MULO-C, increased by 14.3% for the 13 weeks that concluded on January 1, 2023, while retail sales for the Company's Power Brands increased by 15.1%. Utz, On The Border, Zapp's, Hawaiian, Boulder Canyon, and TGI Fridays were the chains with the highest sales growth for Power Brands compared to the same time last year. The Company’s Foundation Brands retail sales for the company grew by 9.4%.

Compared to last year, gross profit increased by 27.5% to USD115.4m, or 32.5% of net sales, from USD90.5m, or 30.1% of net sales. In comparison to the same time last year, when Adjusted Gross Profit was USD103.5m or 34.4% of Net Sales, it increased by 25.3% to USD129.7m or 36.6% of Net Sales.

Higher net price realization, a better mix, and continuing benefits from the company's productivity initiatives were the main drivers of the increase in adjusted gross profit as a percentage of net sales. Higher inflation in transportation, labor, and commodities, which is a result of supply chain issues affecting the entire industry, partly offset these advantages. Furthermore, according to the Company, the continued transition to Independent Operators hurt Adjusted Gross Margins by about 100 basis points, but there were benefits in Selling, Distribution, and Administrative ("SD&A") expenses that more than offset this impact.

The company recorded a net income of USD13.8m versus a loss of USD16.2m in the same period the previous year. Compared to the same quarter last year, adjusted net income rose 34.4% to USD21.5m from USD16.0m.

In comparison to the same time last year, when Adjusted EBITDA was USD37.7m or 12.5% of net sales, it increased by 17.0% to USD44.1m or 12.4% of net sales. The improvement in Adjusted EBITDA margin over the prior year was brought on by higher Adjusted Gross Profit, which was partially offset by higher Adjusted SD&A cost. As anticipated by the company, higher accruals for incentive pay and increased investments in our people, brands, selling infrastructure, and supply chain capabilities to support growth were the main drivers of the SD&A cost increase in the quarter.