Utz Brands Second Fiscal Quarter’s Net Sales Climbed

Utz Brands recently disclosed financial statistics for the company's second fiscal quarter, which ended on July 2, 2023. Net sales climbed 3.6% to USD362.9m in Q2 2022, compared to USD350.1m in Q2 2022.

Organic Net Sales growth of 4.3% drove the increase in net sales, which was slightly offset by the company's continuous move to Independent Operators (IOs) and the resulting increase in sales discounts, which reduced net sales growth by (0.7%).

“Our second quarter results were consistent with our expectations as our momentum continued led by sustained strong demand across our advantaged portfolio of Power Brands. Looking ahead to the remainder of the year, we are raising our full-year Adjusted EBITDA outlook as we execute against our key growth and operational strategies,” Howard Friedman, Chief Executive Officer of Utz, mentioned.

The flow-through of price changes implemented in fiscal 2022 in response to inflationary pressures, which account for a 6.0% increase in net sales, was what drove Organic Net Sales growth. This was somewhat offset by volume/mix decreases of (1.7%). The company's continuing SKU rationalization (inventory optimization) effort, which is aimed at eliminating lower-profit partner brands and private-label products, was the main cause of the volume reduction. According to Utz Brands, this program will influence volumes by about 3.5% in the second quarter of 2023. The company calculates that volume/mix would have climbed 1.8% in the second quarter of 2023 compared to the same time last year if the impact of SKU optimization were to be excluded.

The company's retail sales, as determined by Circana, grew 8.8% over the prior-year period for the 13 weeks that ended on July 2, 2023, and the retail sales of the Company's Power Brands increased 9.9% over that same time. Utz, On The Border, Zapp's, Hawaiian, and Boulder Canyon were the brands that Power Brands saw the greatest increase in retail sales over the prior-year period. Retail sales for the Company's Foundation Brands climbed 1.5% in comparison to the same time last year.

Adjusted Earnings per Share of USD0.13 were similar to the same time the previous year, while Adjusted Net Income for the quarter climbed 2.2% to USD18.8m from USD18.4m in the second quarter of 2022. Compared to the same time last year, when Adjusted EBITDA was USD42.2m, or 12.1% of net sales, Adjusted EBITDA climbed 7.1% to USD45.2m or 12.5% of net sales.

Based on the Fiscal Year 2023 outlook, the company's inventory optimization initiative is expected to have an impact of about (3%), which will be largely offset by the expected net price realization, greater marketing and innovation, and sustained distribution gains of the company's Power Brands. Utz Brands anticipates volume and mix consistent with fiscal 2022 based on these hypotheses.