Q4 2024 Utz Brands Inc Earnings Call - Pre Recorded

February 20, 2025

CEO Jacob <unk> CFO.

Kevin Powers: Joining me on the call today are Howard Friedman, CEO, and Ajay Kataria, CFO. In addition, this morning at 7:15 AM Eastern Time, we will host a live question and answer session, which you can access via webcast on our investor relations website. Please note that some of our comments today will contain forward-looking statements based on our current view of our business, and actual future results may differ materially. Please see the forward-looking statement disclaimer in the earnings materials and our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials. Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our investor relations website.

Speaker Change: In addition, this morning at 715 am Eastern time, we will post a live question and answer session, which you can access via webcast on our Investor Relations website.

Speaker Change: Please note that some of our comments today will contain forward looking statements based on our current view of our business and actual future results may differ materially.

Speaker Change: Please see the forward looking statement disclaimer in the earnings materials.

Speaker Change: And our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance.

Speaker Change: Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials.

Speaker Change: Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our Investor Relations website.

Speaker Change: Finally, the company has also posted presentation slides and additional supplemental financial information on our Investor Relations website, and now I'd like to turn the call over to Howard.

Kevin Powers: Finally, the company has also posted presentation slides and additional supplemental financial information on our investor relations website. Now, I'd like to turn the call over to Howard.

Howard: Thank you, Kevin and good morning, everyone.

2024, it was a year of growth and strong performance for the full year, we drove share gains in the salty snack category led by our power for brands significantly enhanced our distribution efficiencies gained value and volume share in our expansion geographies and volume share in our core geographies.

Howard Friedman: Thank you, Kevin, and good morning, everyone. 2024 was a year of growth and strong performance. For the full year, we drove share gains in the salty snack category led by our Power Four brands, significantly enhanced our distribution efficiencies, gained value and volume share in our expansion geographies and volume share in our core geographies, delivered accelerated productivity cost savings, and were able to improve our balance sheet flexibility. I'd like to take a moment to discuss changes we are making to the strategic division of our portfolio that we reviewed at our Investor Day. We are shifting from a Power Brands versus Foundation Brands split to branded salty snacks with a breakout of our Power Four brands versus non-branded salty snacks and non-salty products like salsa.

Howard: Delivered accelerated productivity cost savings and we're able to improve our balance sheet flexibility.

Howard: I'd like to take a moment to discuss changes we are making to the strategic division of our portfolio that we reviewed at our Investor day.

Howard: We are shifting from our power brands versus foundation brands split to branded salty snacks with a breakout of our power core brands versus non branded salty snacks and non salt products like salsa.

We have reached a point in our focus on our portfolio strategy, where our branded foundation brands are better optimized to their appropriate sizes and margin structure.

Howard Friedman: We have reached a point in our Focus Our Portfolio strategy where our branded Foundation Brands are better optimized to their appropriate sizes and margin structure. All of our branded Foundation Brands now play a specific role in our portfolio. They are important to our IO partners, to our customers in key geographies, and to our value-seeking consumers more broadly. Branded salty snacks also more closely ties to the new Circana MULO+ with convenience data, making comparisons between our net sales performance and Circana end market results easier. Net, this change is more reflective of the business and the opportunity to unlock further profitable growth. Additionally, in our continuous effort to provide improved transparency and disclosures within our results, we are introducing our first net sales grouping as a public company, which will follow our portfolio division.

Howard: All of our branded foundation brands now play a specific role in our portfolio there.

Howard: They are important to our Io partners and to our customers in key geographies and to our value seeking consumers more broadly.

Howard: Branded salty snacks also more closely ties to the new <unk>, new low plus with convenience data, making comparisons between our net sales performance in Chicago end market results easier.

Howard: Net this change is more reflective of the business and the opportunity to unlock further profitable growth.

Howard: Additionally, in our continuous effort to provide improved transparency and disclosures within our results. We are introducing our first net sales grouping as a public company, which will follow our portfolio Division.

Howard: We will now provide a net sales breakdown between our branded salty snacks, and our non branded and non salty snacks.

Howard Friedman: We will now provide a net sales breakdown between our branded salty snacks and our non-branded and non-salty snacks. Given the very different growth and margin profiles of these products, we feel this will provide a better depiction of our business. In terms of our performance, specifically, we delivered organic net sales growth of 1.3%, led by our branded salty snacks growth of 3.7%. Increased marketing spend behind our brands by over 70%. Achieved productivity cost savings of approximately $60 million or approximately 6% of adjusted cost of goods sold. Expanded Adjusted gross margin by 260 basis points and Adjusted EBITDA margin by 120 basis points. Accelerated network optimization plans and reduced net leverage by approximately 1 turn, and drove Adjusted EPS growth of 35%. I'm pleased with our financial performance for the year.

Howard: Given the very different growth and margin profile of these products. We feel this will provide a better depiction of our business.

Howard: In terms of our performance specifically, we delivered organic net sales growth of one 3% led by our branded salty snacks growth of three 7%.

Howard: Increased marketing spend behind our brands by over 70%.

Howard: Achieve productivity cost savings of approximately $60 million or approximately 6% of adjusted cost of goods sold.

Howard: Expanded adjusted gross margin by 260 basis points, and adjusted EBITDA margin by 120 basis points.

Howard: Accelerated network optimization plans and reduced net leverage by approximately one turn and drove adjusted EPS growth of 35%.

Howard: I am pleased with our financial performance for the year, we executed well against our four fundamental strategies introduced a year ago that we believe will drive shareholder value.

Howard Friedman: We executed well against our four fundamental strategies introduced a year ago that we believe will drive shareholder value. We completed the first year of this journey, and we executed well against most things under our control, hitting, and in some instances, surpassing our targets for the year. That said, we did fall short of our organic net sales growth target, which was primarily driven by subdued category trends as value-seeking consumers attempted to offset the impacts of inflation and continued greater than expected declines in the convenience store channel. Our 2024 progress demonstrates that we are on schedule and in certain cases, ahead of schedule, to hit or exceed our three-year bottom line targets in 2026.

Howard: We completed the first year of this journey and we executed well against most things under our control hitting and in some instances, surpassing our targets for the year.

Howard: That said, we did fall short of our organic net sales growth target, which was primarily driven by subdued category trends as value seeking consumers attempted to offset the impacts of inflation and continued greater than expected declines in the convenience store channel.

Howard: Our 2024 progress demonstrates that we are on schedule and in certain cases ahead of schedule to hit or exceed our three year bottom line targets in 2026.

Howard: It is clear that our products are resonating with consumers and customers and we believe it the network optimization and efficiency enhancements, we made in 2024 or more effectively support our continued volume growth protecting shareholder value, while creating future value.

Howard Friedman: It's clear that our products are resonating with consumers and customers, and we believe that the network optimization and efficiency enhancements we made in 2024 will more effectively support our continued volume growth, protecting shareholder value while creating future value. Turning to our financial performance in the Q4, we delivered consistent bottom-line growth and margin expansion, fueled by our portfolio optimization actions and accelerating productivity cost savings. Our Q4 results continue to reflect strong execution against the clearly defined portfolio strategy introduced at our 2023 Investor Day, as we direct our investments to support our Power Four brands to fuel our distribution gains, geographic expansion, and volume growth. Adjusted EBITDA increased nearly 8%. Adjusted EBITDA margin expanded by 160 basis points, and adjusted earnings per share increased by nearly 38%.

Howard: Turning to our financial performance in the fourth quarter, we delivered consistent bottom line growth and margin expansion fueled by our portfolio optimization actions and accelerating productivity cost savings.

Howard: Our fourth quarter results continue to reflect strong execution against our clearly defined portfolio strategy introduced in our 2023 Investor day, as we direct our investments to support our power for brands to fuel our distribution gains geographic expansion and volume growth.

Howard: Adjusted EBITDA increased nearly 8%.

Howard: EBITDA margin expanded by 160 basis points and adjusted earnings per share increased by nearly 38% organic net.

Howard: Sales were softer than we expected, but importantly, our higher margin branded salty snacks increased organic net sales by two 9%.

Howard Friedman: Organic net sales were softer than we expected, but importantly, our higher margin branded salty snacks increased organic net sales by 2.9%, led by volume growth of 3.6%. Importantly, as consumers continue to shop for value outside of traditional channels, our solid momentum continued in our non-measured channels to include natural, bar discount, and dollar. We plan to continue to support this momentum with increased marketing investment and disciplined promotional spending adjustments. While consistent with our portfolio strategy, we plan to continue to carefully manage low-margin areas of our business, such as dips, salsas, and partner brands.

Howard: Led by volume growth of three 6%.

Howard: Importantly, as consumers continue to shop for value outside of traditional channels. Our solid momentum continued in our non measured channels to include natural or discount and dollar.

Howard: We plan to continue to support this momentum with increased marketing investment and disciplined promotional spending adjustments, while consistent with our portfolio strategy. We plan to continue to carefully manage low margin areas of our business, such as dips and sauces and partner brands.

Howard: Turning to our consumption results in the quarter for the 13 weeks ending December 29, we took share as our consumption in measured channels is defined by <unk> plus with convenience increased <unk>, 9% outpacing the salty snack category decline of <unk>, 1%.

Howard Friedman: Turning to our consumption results in the quarter, for the 13 weeks ending 29 December, we took share as our consumption in measured channels as defined by Circana, MULO+, with convenience increased 0.9%, outpacing the salty snack category decline of 0.1%. Growth was driven by our Power Four brands, which increased 2.6%, while the remainder of our brands declined 6.2%. Our retail volume increased 2.2% compared to a 0.3% decline for the salty snack category. Our volume growth was led by Power Four brands with strong volume growth of 3.9%. Our investments in marketing, innovation, and geographic expansion and our disciplined pricing strategy drove share gains as we continued to adjust to the dynamic consumer spending environment and more value-seeking behavior.

Howard: Growth was driven by our power core brands, which increased two 6% while the remainder of our brands declined six 2%.

Howard: Our retail volume increased two 2% compared to 0.3% decline in consulting snack category.

Howard: Our volume growth was led by power core brands with strong volume growth of three 9%.

Howard: Our investments in marketing innovation, and geographic expansion and our disciplined pricing strategy drove share gains as we continued to adjust to the dynamic consumer spending environment and more value seeking behavior.

Howard: We remain thoughtful about the areas, where we reinvest to drive demand and we will remain disciplined and targeted and evaluating the pricing environment and will adjust as necessary to continue to drive both value for our consumers and our retail customers.

Howard Friedman: We remain thoughtful about the areas where we reinvest to drive demand, and we will remain disciplined and targeted in evaluating the pricing environment and will adjust as necessary to continue to drive both value for our consumers and our retail customers. From a geography standpoint, in Q4, our retail consumption in our core geographies lagged the salty snack category while we gained volume share. Our consumption was primarily impacted by more competitive promotional pricing in potato chips across most tracked channels. In addition, consistent with the category, our convenience store trends have remained soft, but we are taking actions to be more competitive and continue to actively transition our assortment in potato chips to smaller bag sizes and lower price points. In our expansion geographies, we drove both value and volume share for the sixth consecutive quarter for the total company and our Power Four brands.

Howard: From a geography standpoint in the fourth quarter, our retail consumption in our core geographies lagged the salty snack category.

Howard: While we gain volume share.

Our consumption was primarily impacted by more competitive promotional pricing.

Howard: Keto chips across most tracked channels.

Howard: In addition, consistent with the category our convenience store trends have remained soft, but we are taking actions to be more competitive and continue to actively transition our assortment in potato chips to smaller bag sizes and lower price points.

Howard: In our expansion geographies, we drove both value and volume share for the sixth consecutive quarter for the total company and our powerful brands.

Howard: Our six 4% retail sales growth easily outpaced the salty snack category fueled by continued distribution gains and share gains led by us and Boulder Canyon.

Howard Friedman: Our 6.4% retail sales growth easily outpaced the salty snack category, fueled by continued distribution gains and share gains led by Utz and Boulder Canyon. Our consumer love portfolio continues to resonate as we drive space gains primarily across the mass and club channels and in large national grocers with regional banners. From a subcategory perspective, our measured channel growth for the total company was led by potato chips, pretzels, cheese snacks, and pork. Boulder Canyon gained share led by strong same-store velocities in both traditional channels and in the natural channel, with growth of 110% and 33.5% respectively. Going back to our Investor Day, our goal was to build Boulder Canyon into a $100 million retail sales brand by 2026.

Howard: Our consumer loan portfolio continues to resonate as we drive space gains primarily across the mass and club channels and enlarge national grocers with regional banners.

Howard: From a sub category perspective, our measured channel growth with total company was led by potato chips pretzels cheese snacks and port.

Howard: Boulder Canyon gained share led by strong same store velocities in both traditional channels and in the natural channel.

Howard: With growth of 110% and 33, 5% respectively.

Howard: Going back to our Investor day, our goal is to build Boulder canyon into a $100 million retail sales brand by 2026.

Howard: I am pleased to say, we surpassed $100 million in annual retail sales in 2024.

Howard Friedman: I'm pleased to say we surpassed $100 million in annual retail sales in 2024, and we are excited about the growth opportunities that lie ahead for this very on-trend brand. In the last 4-week period, Boulder Canyon was the number one potato chip brand in the natural channel, with our avocado oil chip ranked number one in terms of dollar sales, and we continue to expand additional subcategories over time. Finally, these collective efforts are leading to improvements in critical consumer panel metrics that reflect the power of our consumer love portfolio. For the 52-week period ended December 29 versus the comparable prior year period, our household penetration has increased 120 basis points to 48.5%.

Howard: We are excited about the growth opportunities that lie ahead for this very on trend brands.

In the last four week period Boulder Canyon was the number one potato chip brand in the natural channel with our avocado oil chip ranked number one in terms of dollar sales and we continue to expand additional subcategories overtime.

Finally, these collective efforts are leading to improvements in critical consumer panel metrics that reflect the power of our consumer loan portfolio.

Howard: For the 52 week period ended December 29 versus the comparable prior year period. Our household penetration has increased 120 basis points to 48, 5%.

Howard: Buyers have increased $1 9 million to $63 1 million and.

Howard Friedman: Buyers have increased 1.9 million to 63.1 million, and total buyer repeat rates increased 20 basis points to 69.6%, which we are particularly proud of given the number of new consumers that have purchased our brands. It's clear that our brands are resonating with consumers and retailers, and we are excited for continued growth as we kick off 2025. Now I'd like to turn the call over to Ajay.

Howard: In total buyer repeat rates increased 20 basis points to 69, 6%, which we are particularly proud of given the number of new consumers that have purchased our brands.

Howard: It is clear that our brands are resonating with consumers and retailers and we're excited for continued growth as we kick off 2025 now.

J: Now I'd like to turn the call over to a J.

J: Thank you Howard and good morning, everyone.

Ajay Kataria: Thank you, Howard, and good morning, everyone. I would like to begin with a thank you to all Utz associates for delivering another strong year of performance. The team's efforts are evident in our financial results. In 2024, we drove margin expansion and bottom-line growth fueled by our portfolio optimization and productivity programs that continue to gain momentum. For the full year, adjusted EBITDA increased 6.9% to $200.2 million. Adjusted EBITDA margin expanded 120 basis points to 14.2%, and adjusted earnings per share increased 35.1% to $0.77 per share.

J: I would like to begin with a thank you to all our associates for delivering another strong year of performance.

J: The team's efforts are evident in our financial results.

In 2024, we drove margin expansion and bottom line growth fueled by our portfolio optimization and productivity programs that continue to gain momentum.

J: For the full year adjusted EBITDA increased six 9% to $200 2 million.

J: Adjusted EBITDA margin expanded 120 basis points to 14, 2%.

J: And adjusted earnings per share increased 35, 1% to <unk> 77 per share.

J: While our organic net sales growth of one 3% was below our expectations I will note that we delivered strong branded salty snacks organic net sales growth of three 7% led by our powerful brands.

Ajay Kataria: While our organic net sales growth of 1.3% was below our expectations, I'll note that we delivered strong branded salty snacks organic net sales growth of 3.7%, led by our Power Four brands, supported by increased marketing investments, innovation, and distribution gains. Turning to Q4, our organic net sales were consistent with last year. Adjusted EBITDA increased 7.5% and adjusted earnings per share increased 37.5% as our productivity program and actions to optimize our network and portfolio delivered stronger profitability. Importantly, these actions resulted in our eighth consecutive quarter of Adjusted EBITDA margin expansion as we delivered 15.6% Adjusted EBITDA margin in the quarter.

Supported by increased marketing investments.

J: Asian and distribution gains.

J: Turning to the fourth quarter.

J: Our organic net sales were consistent with last year.

J: Adjusted EBITDA increased seven 5%.

J: And adjusted earnings per share increased 37, 5%.

J: As our productivity program and actions to optimize our network and portfolio delivered stronger profitability.

J: Importantly, these actions resulted in our eighth consecutive quarter of adjusted EBITDA margin expansion as we delivered 15, 6% adjusted EBITDA margin in the quarter.

J: During the quarter, our organic net sales performance was led by volume growth of <unk>, 2%.

Ajay Kataria: During the quarter, our organic net sales performance was led by volume growth of 0.2%, offset by lower pricing of 0.2% due to a disciplined pricing strategy in the face of a more promotional environment. As Howard mentioned earlier, we were very pleased to deliver branded salty snack organic net sales growth of 2.9%, led by volume mix growth of 3.6%. That said, our organic net sales performance was behind our expectations due to more subdued salty snack category trends, weaker convenience store channel trends as our actions to improve performance are taking longer than expected, and softer partner brand and private label trends as we continue to carefully manage these low margin components of our business. Finally, our total net sales performance was impacted, as expected, by the divestiture of the R.W. Garcia.

J: Offset by lower pricing of 0.2% due to a disciplined pricing strategy in the face of a more promotional environment.

Howard: As Howard mentioned.

J: Mentioned earlier.

J: We were very pleased to deliver branded salty snacks organic net sales growth of two 9% led by volume mix growth of three 6%.

J: That said.

J: Our organic net sales performance was behind our expectations due to more subdued salty snack category trends.

J: Weaker convenience store channel trends as our actions to improve performance are taking longer than expected.

J: And software partner brand and private label trends as we continued to carefully manage these low margin components of our business.

J: Finally, our total net sales performance was impacted as expected by the divestiture of the arguably this year.

J: Good health brands, which impacted net sales growth by three 2%.

Ajay Kataria: Garcia and Good Health brands, which impacted net sales growth by 3.2%. Moving down the P&L, Adjusted gross margin expanded 230 basis points in Q4. Our Q4 margin expansion reflects continued strength in our productivity programs this year as our manufacturing and procurement projects delivered strong results, which more than offset investments in our supply chain. Adjusted SD&A expense as a percent of net sales increased 80 basis points, primarily due to increased investments in marketing, selling, and distribution to support our growth, particularly in our expansion geographies. Bringing it together, Adjusted EBITDA increased by 7.5% to $53.1 million, and Adjusted EBITDA margin expanded by 160 basis points to 15.6% of net sales.

J: Moving down the P&L.

J: Adjusted gross margin expanded 230 basis points in the fourth quarter.

J: Our fourth quarter margin expansion reflects continued strength in our productivity programs this year as.

J: As our manufacturing and procurement projects delivered strong results, which more than offset investments in our supply chain.

J: Adjusted SG&A expense as a percent of net sales increase.

J: Increased 80 basis points, primarily due to increased investments in marketing selling and distribution to support our growth, particularly in our expansion of geography.

J: Bringing it together.

J: Adjusted EBITDA increased by seven 5% to $53 1 million.

J: And adjusted EBITDA margin expanded by 160 basis points to 15, 6% of net sales.

J: The margin expansion was driven by 410 basis points of productivity.

Ajay Kataria: The margin expansion was driven by 410 basis points of productivity, partially offset by 110 basis points of higher supply chain costs to include investments, 70 basis points of selling and administrative expenses, 50 basis points of higher marketing spend, and 20 basis points of price. In addition, adjusted net income increased 41.5% and adjusted EPS increased by 37.5% to $0.22 per share. Stronger operating earnings were aided by lower core depreciation and amortization expense and lower interest expense due to meaningful deleveraging this year. Turning to cash flow and the balance sheet. GAAP cash provided by operations for the full year 2024 was $106.2 million, aided by strong working capital performance in the second half of the year, which is in line with typical seasonality.

J: Actually offset by 110 basis points of higher supply chain costs to include investments.

J: 70 basis points of selling and administrative expenses.

J: 50 basis points of higher marketing spend and 20 basis points of price.

J: In addition.

J: Adjusted net income increased 41, 5% and adjusted EPS increased by 37, 5% to <unk> 22 per share.

J: Stronger operating earnings were aided by lower core depreciation and amortization expense and lower interest expense due to meaningful deleveraging this year.

Turning to cash flow and the balance sheet GAAP cash provided by operations for the full year 2024 was $106 2 million aided by strong working capital performance in the second half of the year.

J: Which is in line with typical seasonality.

J: I will note that there are items related to our planned dispositions in 2024 that impacted our cash reserves.

Ajay Kataria: I'll note that there are items related to our plant dispositions in 2024 that impacted our cash results. These include approximately $10 million of working capital changes related to our transition services agreement with Our Home and approximately $20 million paid in taxes, which were related to the divestiture transactions. Capital expenditures in 2024 were $98.6 million and reflect spending primarily related to investments in our manufacturing plants to support our productivity and network optimization initiatives. Our expansion plans at our Kings Mountain facility remain on track, and we began kettle chip production just recently. Finishing up cash flow, we paid $40.1 million in dividends and distributions to shareholders. Turning to the balance sheet, cash on hand was $56.1 million, and our liquidity remains strong at nearly $215 million, giving us ample financial flexibility.

J: These include approximately $10 million of working capital changes related to our transition services agreement with at home.

J: And approximately $20 million paid in taxes, which were related to the divestiture transactions.

J: Capital expenditures in 2024 were $98 6 million and reflect spending primarily related to investments in our manufacturing plants to support our productivity and network optimization initiatives.

J: Our expansion plans at our Kingsport facility remain on track and we began FM chip production just recently.

J: Finishing up cash flow, we paid $40 1 million in dividends and distributions to shareholders.

J: Turning to the balance sheet cash on hand was $56 $1 million and our liquidity remains strong at nearly $215 million, giving us ample financial flexibility.

J: Net debt at quarter end improved to $727 3 million.

Ajay Kataria: Net debt at quarter end improved to $727.3 million, and our net leverage ratio improved to 3.6x trailing twelve months normalized Adjusted EBITDA of $200.2 million. Just to note, this represents a one-turn improvement versus the end of last year, primarily due to the use of net proceeds from our brand and plant dispositions early in the year, strong earnings growth, and working capital performance. Now turning to our full year outlook for fiscal 2025. We expect organic net sales growth of low single digits supported by volume growth, and led by our branded salty snacks as we accelerate our investments to drive faster growth in our expansion geographies.

J: And our net leverage ratio improved to three six times trailing 12 months normalized adjusted EBITDA of $200 2 million.

J: Just to note. This represents a one turn improvement versus the end of last year, primarily due to the use of net proceeds from our brand and planned dispositions earlier in the year.

J: <unk> earnings growth and working capital performance.

Now turning to our full year outlook for fiscal 2025.

J: We expect organic net sales growth of low single digits supported by volume growth and led by our branded salty snacks as we accelerated our investments to drive faster growth expansion geographies.

J: Year over year growth is expected to be balanced between the first and second half of the year.

Ajay Kataria: Year-over-year growth is expected to be balanced between the first and second half of the year, and we expect pricing to be a modest headwind to growth as we maintain our disciplined pricing strategy. Moving to Adjusted EBITDA, we expect growth of 6% to 10%, fueled by gross margin expansion from our productivity programs, partially offset by investments to drive growth. Our strong productivity delivery in 2024 gives us confidence in our ability to continue to deliver on our cost-saving commitments and significantly expand Adjusted gross margin compared to the prior year. Our 2025 Adjusted EBITDA outlook maintains a balance between productivity savings, investments in growth, and flexibility as conditions merit. Finally, we expect adjusted earnings per share growth of 10% to 15%.

J: And we expect pricing to be a modest headwind to growth as we maintain a disciplined pricing strategy.

J: Moving to adjusted EBITDA.

J: We expect growth of 6% to 10% fueled by gross margin expansion from our productivity programs.

J: Partially offset by investments to drive growth.

J: Our strong productivity delivery in 2024 gives us confidence in our ability to continue to deliver on our cost savings commitments.

J: And significantly expand adjusted gross margin compared to the prior year.

J: Our 2025, adjusted EBITDA outlook maintains our balance between productivity savings investments in growth and flexibility as conditions Merit.

J: Finally, we expect adjusted earnings per share growth of 10% to 15%.

J: Our key assumptions include increased operating earnings and effective normalized tax rate of between 17% and 19% in.

Ajay Kataria: Our key assumptions include increased operating earnings, an effective normalized tax rate of between 17% and 19%, and interest expense of approximately $43 million. Capital expenditures are expected to be between $90 million and $100 million, with the majority focused on building increased manufacturing network capacity and delivering accelerated productivity savings. Finally, we expect our net leverage ratio to approach 3x at fiscal year-end 2025, which is slightly higher than our previous expectations given stepped up investments in our supply chain to support stronger productivity and our branded salty snack growth. Our 2024 results and 2025 outlook reflect the progress we have made to deliver on our four fundamental strategies laid out at our Investor Day. An improved capital structure and continued momentum in our productivity programs are enabling investments in growth that are setting us up well for the future.

J: And interest expense of approximately $43 million.

J: Sure.

J: Capital expenditures are expected to be between $90 million at $100 million.

J: With the majority focused on building increase manufacturing network capacity and delivering accelerated productivity savings.

J: Finally, we expect our net leverage ratio to approach three times at fiscal year end 2025.

J: Which is slightly higher than our previous expectations given stepped up investments in our supply chain to support stronger productivity and our vantage salty snack growth.

J: Our 2024 results.

J: And 2020 outlook reflect the progress we have made to deliver on our four fundamental strategy laid out at our Investor day.

J: An improved capital structure at.

J: Continued momentum in our productivity programs at.

Enabling investments in growth that are setting us up well for the future.

Importantly, the entire ups team is working well together to improve our capabilities and to deliver our three year goals.

Ajay Kataria: Importantly, the entire Utz team is working well together to improve our capabilities and to deliver our three-year goals. Now I would like to turn the call over to Howard for some final remarks.

Howard: And now I would like to turn the call over to Howard for some final remarks.

Howard: Thank you Jay as we look ahead into 2025, our outlet begins a second year of our journey to deliver the three year targets that we set at our Investor day in December of 2023.

Howard Friedman: Thank you, Ajay. As we look ahead into 2025, our outlook begins the second year of our journey to deliver the three-year targets that we set at our Investor Day in December 2023, and our priorities this year will remain consistent with our fundamental strategies. Focus our portfolio to further penetrate our expansion geographies while holding the core, transform our supply chain to fund growth and improve margins, develop leading capabilities to build a best-in-class organization, and improve balance sheet flexibility and pursue opportunistic M&A. From a portfolio standpoint, we plan to continue to grow our higher margin branded business with an outsized investment in our Power Four brands of Utz, On The Border, Zapp's, and Boulder Canyon. This includes increased advertising and consumer spending, innovation, and accelerating the demonstration of our strong marketing capabilities.

Howard: Our priorities this year.

Howard: Consistent with our fundamental strategies.

Howard: Progress our portfolio to further penetrate our expansion geographies, while holding the core.

Howard: Transform our supply chain to fund growth and improve margins.

Howard: Develop leading capabilities to build a best in class organization.

Howard: An improved balance sheet flexibility and pursue opportunistic M&A.

Howard: From a portfolio standpoint.

Plan to continue to grow our higher margin branded business with an outsized investment in our power core brands have us on the border.

Howard: <unk> and Boulder Canyon.

Howard: This includes increased advertising and consumer spending innovation and accelerating the demonstration of our strong marketing capabilities.

Howard: These brands are the focal points as we plan to further penetrate expansion geographies with a focus on mass larger national grocers and the club channel.

Howard Friedman: These brands are the focal points as we plan to further penetrate expansion geographies with a focus on mass, larger national grocers, and the club channel. Our key drivers to hold share in our core this year will be gaining distribution, improving DSD execution, addressing value expectations, and increasing our advertising and consumer investments. As we execute, we are mindful of dynamic consumer environment. We recognize the rise in value-seeking behavior, be it moving up and down the price ladder, channel shifting, and promotion seeking. While these behaviors are not new, they are best addressed by focusing on how consumers define value, driving brand desirability, and agile response as consumers make their preferences clear. Today, consumers can find Utz across all classes of trade, and we are focused on how we can deliver more value and accessibility across our brands in partnerships with our retailers.

Howard: Our key drivers to hold share in our core this year will be gaining distribution improving DSD execution.

Howard: Addressing value expectations, and increasing our advertising and consumer investments.

Howard: As we execute we are mindful of the dynamic consumer environment.

Howard: We recognize Verizon value seeking behavior via moving up and down the price ladder channel shifting and promotion seeking.

Howard: While these behaviors are not new they are best addressed by focusing on how consumers to find value.

Howard: Driving brand desirability and agile response as consumers make their preferences clear.

Howard: Today consumers can find us across all classes of trade and we are focused on how we can deliver more value and accessibility across our brands and partnerships with our retailers.

Howard: This includes laser focus on our price pack architecture strategies.

Howard Friedman: This includes laser focus on our price pack architecture strategies, increasing availability of smaller pack sizes at key pricing thresholds, introducing more value options, and better leveraging the breadth of our product and brand assortment. Turning to supply chain, our focus is on driving our base productivity programs, network optimization, automation, and ramping up our new Rice Distribution Center. Last year, we exceeded our productivity target, and given the confidence we have in our 2025 plans, we believe that we will exceed our original three-year goal of $135 million, and now expect to achieve at least $150 million of cumulative cost savings. We plan to support these savings by continuing to increase network capacity and building out our future growth.

Howard: Increasing availability of smaller pack sizes at key pricing thresholds.

Howard: Introducing more value options and better leveraging the breadth of our product and brand assortment.

Howard: Turning to supply chain, our focus is on driving our base productivity programs network optimization automation and ramping up our new price distribution center.

Howard: Last year, we exceeded our productivity target and given the confidence we have in our 2025 plans. We believe that we will exceed our original three year goal of $135 million and now expect to achieve at least $150 million of cumulative cost savings.

Howard: We plan to support these savings by continuing to increase network capacity and building out our future growth.

Howard: Our plans are to unlock regionalized manufacturing with improved asset flexibility, enabling the lowest landed total delivered cost by product type and subcategory.

Howard Friedman: Our plans are to unlock regionalized manufacturing with improved asset flexibility, enabling the lowest landed total delivered cost by product type and subcategory. With these investments, we expect the average age of production assets in our potato chip portfolio to go from 35 years to 14 years over the next few years. In addition, our average pounds per hour per asset are expected to increase by over 30%. In short, in a few years' time, we plan to have completely transformed our supply chain and the opportunity to drive far more profitable growth. Our portfolio strategy and supply chain efforts will be underpinned by developing leading capabilities. In 2025, we plan to focus our technology adoption to unlock value across the organization.

Howard: With these investments we expect the average age of production assets and our potato chip portfolio to go from 35 years to 14 years over the next few years.

Howard: In addition, our average pounds per hour per asset are expected to increase by over 30%.

Howard: In short in a few years' time, we plan to have completely transformed our supply chain and the opportunity to drive far more profitable growth.

Howard: Our portfolio strategy and supply chain efforts will be underpinned by developing leading capabilities.

Howard: In 2025, we plan to focus our technology adoption to unlock value across the organization.

Howard: As we scale adoption to integrated ways of working as part of our integrated business planning implementation, we plan to accelerate analytics by adopting new tools and transforming how we store and consume data.

Howard Friedman: As we scale adoption to integrated ways of working as part of our integrated business planning implementation, we plan to accelerate analytics by adopting new tools and transforming how we store and consume data. The investments we made throughout 2024 and on deck in 2025 across portfolio optimization, supply chain transformation, new and enhanced capabilities, and productivity improvements are expected to allow us to expand our market penetration and seize scale's opportunities going forward. Our future is incredibly bright, and we believe that we have a long runway for growth. I could not be more excited to unlock the future potential of our people and our consumer love portfolio as we push towards more of a national footprint with a focus on our Power Four brands.

Howard: The investments we made throughout 2024 and on deck in 2025 across portfolio optimization supply chain transformation, new and enhanced capabilities and productivity improvements are expected to allow us to expand our market penetration and CS sales opportunities going forward.

Howard: Our future is incredibly bright and we believe that we have a long runway for growth.

Howard: I could not be more excited to unlock the future potential of our people and our consumer loan portfolio as we push towards more of a national footprint with a focus on our power core brands.

Speaker Change: On behalf of our over 3000 us associates across the country working to continue to create products consumers crave with unmatched flavor using quality ingredients. We thank you for your support and we look forward to sharing our progress with you.

Howard Friedman: On behalf of our over 3,000 Utz associates across the country working to continue to create products consumers crave with unmatched flavor using quality ingredients, we thank you for your support, and we look forward to sharing our progress with you.

Q4 2024 Utz Brands Inc Earnings Call - Pre Recorded

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