Utz Brands Inc (UTZ) Q3 2024 Earnings Call Highlights: Strong Brand Performance Amid ...

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Release Date: October 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Utz Brands Inc (NYSE:UTZ) reaffirmed its full-year organic growth outlook of 2% to 2.5%, indicating confidence in achieving sequential acceleration in Q4.

  • The company is experiencing distribution gains, particularly in expansion geographies, which are contributing to its growth strategy.

  • Utz Brands Inc (NYSE:UTZ) reported strong performance in its Boulder Canyon brand, which is growing faster than the market and approaching $100 million in sales.

  • The company has seen a 180 basis point increase in household penetration, driven by brands like On the Border and Boulder Canyon.

  • Utz Brands Inc (NYSE:UTZ) has delivered about 270 basis points of margin expansion year-to-date, supported by strong productivity programs and cost management.

Negative Points

  • The company faces a heightened competitive environment, particularly in the potato chips segment, impacting its market share.

  • There is a challenge in translating volume gains into value due to competitive pricing pressures.

  • Utz Brands Inc (NYSE:UTZ) has experienced a contraction in distribution for its On the Border dips and salsa products, affecting sales in that category.

  • The convenience channel remains a challenge for the company, with ongoing pressures impacting performance.

  • The promotional environment has become more competitive, with increased promotional activities affecting pricing dynamics.

Q & A Highlights

Q: You reaffirmed your full-year organic growth outlook of 2% to 2.5%, suggesting a significant acceleration in Q4. How much visibility do you have to this acceleration, especially with consumption data appearing flat? A: Howard Friedman, CEO: We anticipated momentum building throughout the year, driven by increased marketing, innovation, and distribution gains, particularly in expansion geographies. Seasonal shipments and easier laps in Q4 also contribute to our confidence. We expect a similar gap between measured and unmeasured channels as seen in previous quarters.

Q: A competitor mentioned stepping up competitive activity on tortilla chips. How are you considering this in your outlook? A: Howard Friedman, CEO: We have historically maintained a wider price gap with competitors, which we believe positions us well. Our distribution gains and merchandising support for On The Border are strong, and we will adjust pricing if necessary to remain competitive.

Q: Can you discuss the promotional environment and how you balance price and volume, especially for foundation brands? A: Howard Friedman, CEO: The promotional environment has become more competitive, similar to 2019 levels. We have adjusted our promotions based on customer mix and are seeing improved promotional lifts. For foundation brands, we've focused on price pack architecture to improve price points and have shifted some promotions to align with retailer strategies.

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