On November 9, 2023, Utz Brands Inc (UTZ, Financial), a prominent U.S. manufacturer of branded salty snacks, announced its financial results for the third fiscal quarter ended October 1, 2023. The company reported a 2.5% increase in net sales to $371.9 million and a substantial improvement in net income to $16.2 million, up from $1.5 million in the year-ago period. Adjusted EBITDA also saw a healthy increase of 9.2% to $52.1 million.
Financial Performance Overview
Utz Brands Inc (UTZ, Financial) experienced organic net sales growth of 3.1%, driven by pricing actions taken in fiscal 2022 in response to inflationary pressures. The company's Power Brands, including Utz®, On The Border®, Zapp’s®, and Boulder Canyon®, showed robust growth, particularly in expansion geographies. However, the company noted a shift to independent operators and an increase in sales discounts, which slightly offset net sales growth.
Income Statement Highlights
The gross profit margin for Q3 2023 was 32.1%, a slight decrease from 32.6% in the prior year period. Adjusted gross profit margin also saw a minor decline to 36.3% from 36.5%. Selling, Distribution, and Administrative (SD&A) expenses increased by 3.0%, while Adjusted SD&A Expense decreased by 1.8% due to a reduction in selling costs and lower administrative expenses.
Balance Sheet and Cash Flow Insights
As of October 1, 2023, Utz Brands Inc (UTZ, Financial) reported total liquidity of approximately $209.4 million, with cash on hand of $60.1 million and $149.3 million available under the company’s revolving credit facility. Net debt stood at $875.9 million, resulting in a Net Leverage Ratio of 4.8x based on trailing twelve months Normalized Adjusted EBITDA of $181.8 million.
Operational Challenges and Adjustments
CEO Howard Friedman commented on the quarter's performance, stating,
We delivered solid results on both the top and bottom line in the third quarter, with strong growth of our Power Brands, particularly in our Expansion geographies."However, he acknowledged that supply chain and portfolio optimization actions had a greater impact on volume than anticipated, leading to a near-term impact on full-year net sales guidance. Despite this, the company has maintained its full-year Adjusted EBITDA guidance.
Outlook and Investor Relations
Utz Brands Inc (UTZ, Financial) has updated its full-year fiscal 2023 outlook, now expecting total net sales growth of 2% to 3% and Organic Net Sales growth of 3% to 4%. Adjusted EBITDA growth is anticipated to be between 8% to 11%, driven by stronger operating performance and productivity programs.
The company will be sharing more details on its accelerated value creation plans at its Investor Day in December. Investors and interested parties can access the conference call and webcast presentation details on Utz’s Investor Relations website.
For more detailed financial information and the full earnings report, visit Utz’s Investor Relations website.
Explore the complete 8-K earnings release (here) from Utz Brands Inc for further details.
