Utz Brands Reports Q2 2025 Growth in Branded Snacks, Announces Facility Consolidation

Utz Brands, Inc. (NYSE: UTZ) ("Utz" or the "Company"), a leading U.S. manufacturer of branded Salty Snacks and a small-cap value Staples equity, has reported financial results for the Company’s second fiscal quarter ended June 29, 2025.

2Q’25 Summary

Net Sales increased 2.9% to USD 366.7 million

• Total Organic Net Sales increased 2.9%; Branded Salty Snacks increased 5.4%
• Gross Profit Margin decline of 40bps
• Adjusted Gross Profit Margin expansion of 220bps
• Net Income decreased 60.2% to USD 10.1 million
• Adjusted Net Income decreased 14.2% to USD 23.6 million
• Adjusted EBITDA decreased 2.0% to USD 48.7 million
• Diluted Earnings Per Share decreased 47.8% to USD 0.12. Adjusted Earnings Per Share decreased 10.5% to USD 0.17

Howard Friedman, Chief Executive Officer of Utz:

"I am pleased with our strong performance in the second quarter, with Organic Net Sales growth of nearly 3%. Our Branded Salty Snacks portfolio is accelerating, with 5.4% growth in the quarter. We gained value and volume shares in both our Core and Expansion Geographies. Our proactive approach to cost management and operational excellence has enabled us to achieve significant Adjusted Gross Profit Margin expansion."

"We’re encouraged by our summer sales performance thus far, as we successfully capitalize on seasonal demand and snacking occasions. Our strong performance illustrates our ability to deliver growth independent of the category in a rational competitive environment."

"Looking ahead to the remainder of 2025, we expect our strong productivity cost savings will continue to provide us with the flexibility to invest in our brands, while expanding profit margins. With geographic expansion driving much of our growth strategy, we remain on track to deliver solid results in 2025 and continue to create long-term shareholder value."

Bill Kelley, EVP and Chief Financial Officer of Utz:

"We are raising our 2025 Organic Net Sales outlook to reflect stronger revenue trends through the first half and our confidence in the growth drivers ahead."

"We now expect Organic Net Sales growth of 2.5% or better, driven by our advantaged portfolio of brands and expansion geographies. We are also tightening our Adjusted EBITDA range to 7% to 10% growth, reflecting our confidence in the significant productivity programs ramping in the second half."

"We are lowering our Adjusted Earnings Per Share guidance to 7 to 10% growth due to higher interest and depreciation & amortization linked to our accelerated capex investments. We believe these strategic investments in our manufacturing network and automation capabilities will position us for sustained Adjusted EBITDA margin expansion and continued geographic expansion in 2026 and beyond."

Second Quarter 2025 Results

Second quarter Net Sales increased 2.9% to USD 366.7 million compared to USD 356.2 million in the prior year period. Organic Net Sales also increased 2.9% year-over-year, driven by a favorable volume/mix contribution of 3.9%, or 3.1% excluding a 0.8 percentage point benefit from bonus packs in April. 

This was partially offset by lower net price realisation of (1.0)%, which included a (0.8) percentage point impact from bonus packs and other net price impacts of (0.2) percentage points. The net impact on second-quarter sales from bonus packs was neutral.

Branded Salty Snacks Organic Net Sales (representing 88% of total Net Sales) increased 5.4% led by our Power Four Brands, offset by an 11.8% decline in Non-Branded & Non-Salty Snacks Organic Net Sales(3), primarily due to Partner Brands and Dips & Salsas.

For the 13 weeks ended June 29, 2025, the Company’s Branded Salty Snacks Retail Sales increased 3.3% versus the prior year period compared to a 1.5% decline for the Salty Snack category overall. The Company’s Retail Volumes increased by 4.3% compared to a 1.5% decline for the Salty Snack category, and the Company drove volume share gains in both its Core and Expansion geographies.

The Company’s Power Four Brands of Utz®, On The Border®, Zapp’s® and Boulder Canyon® Retail Sales increased by 5.7%. 

Gross Profit Margin of 34.6% declined 40bps compared to 35.0% in the prior year period. Adjusted Gross Profit Margin of 39.8% expanded 220bps compared to 37.6% in the prior year period. The increase was driven by productivity savings, which more than offset increased investments to support capacity expansion and growth. 

Selling, Distribution, and Administrative Expenses ("SD&A Expenses") were USD 119.5 million, or 32.6% of Net Sales, compared to USD 104.6 million, or 29.4% of Net Sales, in the prior year period. Adjusted SD&A Expenses were USD 97.3 million, or 26.5% of Net Sales, compared to USD 84.5 million, or 23.7% of Net Sales, in the prior year period.

The increase as a percentage of Net Sales was primarily due to adding capabilities, selling, and delivery costs to support the Company’s geographic expansion and growth initiatives.

The Company reported a Net Income of USD 10.1 million, compared to USD 25.4 million in the prior year period. Adjusted Net Income in the quarter decreased 14.2% to USD 23.6 million compared to USD 27.5 million in the prior year period. Adjusted Earnings Per Share decreased 10.5% to USD 0.17 compared to USD 0.19 in the prior year period. The Adjusted Earnings Per Share decline in the second quarter was due to higher Selling, General, and Administrative (SG&A) expenses, higher depreciation and amortisation, and higher interest expense. 

Adjusted EBITDA decreased 2.0% to USD 48.7 million, or 13.3% as a percentage of Net Sales, compared to USD 49.7 million, or 14.0% as a percentage of Net Sales, in the prior year period. The decline in Adjusted EBITDA was driven by increased SD&A expenses, which more than offset the positive impact of Adjusted Gross Profit Margin expansion. 

Balance Sheet and Cash Flow Highlights

• As of June 29, 2025
  • Total liquidity of USD 170.9 million, consisting of cash on hand of USD 54.6 million and USD 116.3 million available under the Company's revolving credit facility.
  • Net debt of USD 826.3 million, resulting in a Net Leverage Ratio of 4.1x based on trailing twelve months Normalized Adjusted EBITDA of USD 200.9 million.
• For the twenty-six weeks ended June 29, 2025
  • Cash flow used in operations was USD 3.9 million, which reflects the seasonal use of working capital.
  • Capital expenditures totalled USD 65.7 million, and dividends and distributions paid amounted to USD 20.1 million.

Supply Chain Transformation Plan Update

As part of Utz's ongoing supply chain transformation, the Company is announcing the strategic decision to consolidate its manufacturing footprint from eight primary(1) plants to seven, with the closure of its Grand Rapids, Michigan, manufacturing facility. 

This decision is a key component of the Company’s long-term strategic roadmap, and is expected to generate cost savings during the second half of 2025. These savings are part of Utz’s previously communicated target of approximately 6% productivity savings as a percentage of Adjusted COGS in fiscal year 2025. 

This transition is planned to begin in August and be completed by early 2026. The consolidation should enable the Company to allocate more volume to its larger, more efficient facilities, while driving fixed cost leverage and enhanced automation capabilities across its remaining network. In addition to the expected cost savings, the Company expects the optimized footprint to support its ongoing geographic expansion.

Howard Friedman:

"The decision is a reflection of our commitment to operational excellence and ongoing transformation. While these types of decisions are never easy, they are necessary steps to streamline our operations and strengthen our supply chain for the long-term. We are deeply grateful for the contributions of our Grand Rapids team and are committed to supporting them through this transition."

All impacted associates will be encouraged to apply for opportunities at other Utz facilities, and provided transition assistance, including on-site job fairs and severance pay if they cannot relocate.

Fiscal Year 2025 Outlook

The Company is updating its 2025 fiscal year outlook to reflect stronger top-line trends and higher Adjusted EBITDA. The company is lowering expected Adjusted EPS growth due to higher capital expenditures, depreciation and amortization, and interest expense.

The Company now expects:

• Organic Net Sales growth of 2.5% or better, compared to the prior expectation of low-single digits. We expect Organic Net Sales growth will be led by Branded Salty Snacks growth, particularly the Power Four Brands, and less decline in Non-Branded & Non-Salty Snacks;
• Adjusted EBITDA growth of 7% to 10%, compared to the prior expectation of 6% to 10%. The Company expects Adjusted EBITDA Margin expansion of approximately 100bps, which is consistent with the Company’s previously provided guidance. We expect Adjusted EBITDA Margin expansion will be led by Adjusted Gross Profit Margin expansion, fueled by strong productivity cost savings and improved product mix; and
• Adjusted Earnings Per Share growth of 7% to 10%, compared to the prior expectation of 10% to 15%, due to higher interest expense and depreciation and amortization linked to accelerated capital expenditures related to the Company’s network optimization and facility consolidation efforts.

Key assumptions for the Company’s fiscal 2025 outlook include:

• An effective tax rate (normalized GAAP basis tax expense, which excludes one-time items) in the range of 17% to 19%, consistent with the Company’s previously provided expectation;
• Interest Expense of approximately USD 46 million, compared to the prior expectation of USD 43 million;
• Capital Expenditures are now expected to be approximately USD 100 million, the high end of the previously provided range of USD 90 to USD 100 million, with the majority focused on building increased supply chain network capabilities and delivering accelerated productivity savings; and
• Net Leverage Ratio approaching 3x at year-end fiscal 2025.

Quantitative reconciliations are not available for the forward-looking non-GAAP financial measures used herein without unreasonable efforts due to the high variability, complexity, and low visibility concerning certain items, which are excluded from Organic Net Sales, Adjusted EBITDA, Net Leverage Ratio, normalized GAAP basis tax expense, excluding one-time items, and Adjusted Earnings Per Share, respectively. We expect the variability of these items to have a potentially unpredictable, and potentially significant, impact on our future financial results.