UTZ - Earnings call transcript Q2 2024

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Operator

Hello, and welcome to the Utz Second Quarter 2024 Earnings Call. This call is being recorded and [indiscernible] only mode, shortly we will move into a question-and-answer session. [Operator Instructions] I will now turn the call over to Kevin Powers, Senior Vice President of Investor Relations.

Kevin Powers

Thank you, Jeremy. Good morning, everyone. us quarter our results. joining for Q&A for second our you today live for session Thank Transformation With Ajay Cary Chief Kataria, today CFO; me are and Devore, Howard COO Freeman, CEO; Officer. and chance to hope remarks we our that this posted Investor had presentation I and a available listen that also everybody morning is read our or Relations prepared a on website.

our financial session, detail our non-GAAP current are risks in our affect measures, future items. could which are up today's Please statements some of performance. the with comments Before that and will we associated results housekeeping line based of and earnings call, actual we are recent the that to materials note that, may Please view in few open operator, Reconciliation posted filings, of morning's on are begin questions. non-GAAP our business more earnings financial differ materials. principal measures On just in our for disclosures a other on which will discuss contained identify uncertainties today's see adjusted forward-looking today Q&A ready SEC And contain future this described and that website. our we materially. certain

Operator

just And All right. Instructions]. [Operator to Perfect. as reminder

of question comes from Lazar Our first Please the Andrew ahead. Barclays. line go from

Andrew Lazar

about, to the a competitive drives reporting in or It's helpful know, your the half of outlook? white in distribution And X% a in locked you would this on and in space that What the sort of of the quite full really sort second is is of much. of Great. from bit guess, morning. it, the less average enabling are more a sustainable? as on year, more or around in underlying be in, your step-up I Thanks healthy if all for promo bit certainly step-up And control morning business? us organic Good category. sales a confidence sort guess, you why sales everybody. percent schedule. growth requires, salty that -- will, growth so maybe sort I a raise actions Thanks the category shifting X% coming again of of much the versus what for the the Howard, volume-driven than busy call how context

Howard Friedman

the Yes. I appreciate question.

going And XX, to bring in brands some have distribution continue is that as expect continued think channels, in of I think you being what able retailers to core had for us predicated and our unmeasured geographic saw we forward existing white is what I quarter we gains we results would X into case. for already to on markets, our go that against you space continuing execute only first the of And Day. to thing our I know, are this ones largely not Investor bigger Certainly, we be forward. but is our really to us the our as good the Power opportunities strategies that expansion seeing also markets. as the one we the you apply, offer that at then XX in We're the any one understand have, and secured where we've building innovation It's particularly I the XX%, it is to had, AMC. would still -- focus out standard historically in consumers last in meaningful address distribution is well. and better of have step-up kind has been by of think shopping, to XX% I'm sort environment from into came it to thing approach. are but we of availability those as capability channels to that which the and breaking build our quarter, months. check into shifting second went promotional our we in expect I And the modest that move and our a proud on than would -- starting almost over do momentum accommodating that have we the Certainly

marketing and And really as us and it. flexible capabilities to allow environment Our shifts, shift be shifts. disciplined the revenue growth as the can capabilities we management our with environment

life So environment with the to flexible evolve. That's is will continue certainly, it we remain and our evolve intend industry, and just it. in to

Operator

of Bank comes from go question Peter next Our from ahead. America. the Please Galbo of line

Peter Galbo

pick potato back unflavored morning. areas subcategories kind the competitive taking portion as Andrew's activity, Thanks the chips large question, for -- of particularly largest maybe is And pretty up and of guys a competitor Howard, your to has environment. promotional more I of good the just question. tortilla could called I -- obviously really Hey potentially out your wanted around on chips see and the portfolio. then two we where that think

on So maybe can about us the portfolio. bit thinking give you're how you a more within of just X broader large detail -- subcategories kind those

Howard Friedman

question. the appreciate I Peter. Thanks, Yes.

a business kind and about house flavor sometimes positive certainly we that little consumer of our like second are continue I to we've Day. less unflavored you little of to our But Canyon a geographic gives brands. Boulder business a and flavors a suspect white bit that a feels further our have And we bit a we penetrate to brands our we we'll portfolio spaces those us and with some Zaps, about to and are a the to are across if these confidence of Obviously, and you and industry, right? couple we for lot an for we brands geography I at or the choices being looking building unique talk we that. who's our us for compete of is kind able think themes if brand consumer Zap. are talked chip, And in also opportunities And that of are space consumer Investor opportunity there about things some talk looking of obviously continue again, -- be, are in business. hit have the potato

portfolio consumer an that for into a can as So brands absolute broad opt work ladder price we of there fairly point, and looking consumers a do up well. have as the we items who's down that more price for well have value-conscious

So portfolio feel that I into. good opt the we can consumers think, overall, about really

and we the I groceries in across continue or that the availability where traditional we're revenue making able and focus to consumers it think we the e-commerce on across Our stores or that to last is, channels. we're to now every is skills -- quarter, sure probably price sharper club be need is are again, we're on ladder clarity show across shop, whether and and side, management thing we thing getting available around have And mass. the much gaps where price in

And so we assortment. sure we are in have all of those places right right the now, making

potato tortia chip chip broader a us. on. And playing so just it's unflavored compete far environment field that I It's can not or for think an we

Peter Galbo

questions quick And the on on couple Great. given just on kind EBITDA, morning but of this a very of maybe follow-up. kind XQ the over raise delivery. of particularly A that. Thanks for just EPS guidance, not

much. you price just or upside you're about up in kind how to you the very think that Thank setting half? of the curious about of second how either Flex So in And for XX. just you thinking reinvested, -- SG&A any be or leaving sort

Howard Friedman

Yes.

being of in our year-over-year. that a driven I marketing growth think SG&A investments lot core, was just by you a first, reminder, really the saw

our executing well. strategy I again, think So we're

think, competitive environment as of back in we what We're remain we've that may paying flexible. make sure like want to I environment half, the look attention well. the look, but aware been can to that we

we we the to to it's have but And tools if that where need important so those way have we competition invest. the using us places we And resources, wind plenty targeted don't of still up can in a as required. we great, address

Ajay. turn EPS, it to the as far it, As I'll

Ajay Kataria

Yes.

a guide what because tax really expected transactions. from little step you core assumption on D&A, of on So saw is which also EPS raised slightly higher than the the revised down rate we that a the effective was

Operator

Our next Michael ahead. Please from of the question comes Sandler. from go Lavery Piper line

Michael Lavery

Thank morning. good you

Day more not of that. tracking that it opportunity of are is, sight how line -- quickly? only Investor be change give know bigger But any given I seems now don't you've since of laid have. you much have to guess, even in kind than we're you part you to us and just it's that if you probably faster out, from but or want so all a and you how helping a ahead also would Can sense And that savings on what's recognized targets seeing few to is assessed is just I ago? first a you it had savings schedule. just there come and there not Just more months of

Howard Friedman

and secure other operators we and -- while perspective, dispositions, down maintaining we supply it integrated went is our point, optimization that that retailers Yes, has were a business expect. us our coming the the plants service in Day to execute consumers can continue those X quicker Mike. to no really to our X XX chain independent I to we appreciate the and for systems question and us at Obviously, to obviously, the way narrow this But did also base places. and upside work at some from being question, where you're Investor able we would plants, from our allowed planned There's focus supply

sets then as for as confidence we expect talked a expand to remarks, how decide the us where that We've in I deploy as the year. in So distribution the ahead nicely for well. and always we us is through in about coming building. XXXX And well have marketing of productivity capability gains we as up prepared in mentioned margins think And expected. opportunity bit would to them gross little Ajay

Michael Lavery

just just And line of on great. gave. top color that a That's the you some follow-up

just brands that differentiated sense has course, How that comp is we on driven? should slowed. Zaps, been touched there? You now. fire What much what's the going has forward? of Canyon, Canyon of a is Can right just brand give plays But how out for on Boulder you ahead it and -- of expect like Boulder certainly

Howard Friedman

Canyon those of nicely. oil in are Avocado a the driven for the great cities. It's a little non-seat both books. Yes. as position I by tale got agree growing definitely and X perceived marketplace retailers, quite really businesses value a X and the of as bit that high for Boulder well oil is consumer

you if about kind -- is a we also launching We cheese is overall, older bring of that that able of have just kind about, company do poppers proud very ball and with we forward. our lot that what know think a we being is now under can as that go we're of brand something subcategory of into to just shows elasticity and the another and Canyon brand

about about gains a velocity. lot So that is distribution high a and lot

consumers in getting more of buying it. we're are and So

a So great story there.

of area new architecture an our new bank X is we pretzel we we and continued or this Zaps, we emphasis have Brown the items now specifically about item think sure now I opportunities Cstore are areas apsis ago, and slower coming making at point, we and move for last have and the our down price those chips little in would year that from Spicy bit a expected. out in And we which Potato of address this market Cage and as then us on the up. talked than we quarter, have forward. which lap in Sugar the a picking are

normalize So need we continue that chips potato area to to we the work. would trend to expect is

Operator

question Please go next of line Dickerson Rob from Jefferies. the comes ahead. from Our

Robert Dickerson

of seems last is definitely are FOX as in -- a west. there of better? the well that you because of Thank curious, have any expand -- much. have kind just it a products, respect doing of your I incremental are to brands also maybe well just I'm which to expansion but asked been can I in I push on definitely so you there learnings as Great. Canyon, can very kind kind bit traveling there any as think with you geographies, a just question. kind heels which you move previously know idea bit Maybe started of push the like

just question. So that's the first

Howard Friedman

Yes.

right? well of point. four our reasonably at we travel I think X good all this brands, feel overall, Power really all think I they about

had deal brand I the what to a we are we incremental brands as think to showing -- which of right into we learned across great into our But formula think as to So we Florida, and of that there's things opt case. interest a and theory I is well. of continue products seems continuing the support items the a the a grow the had well down to be, as think of repeatable and there. how our We number we two model success I is as have great subcategories retailer model make strides consumers business we're expanding go great and significantly of our our to from have right?

drive to that power think being consumer and advertising and I is consumer and giving as pull that go. rewarded portfolio, of then the are again, our the different us assortment as sure support So reflects to investing our some we're our the retailers consumers the making that, sales catering we for us, working it's and organization and for the incremental category, working with space of

Robert Dickerson

right, conviction super. I half. potential there's year what's back category guide have the of the All for acceleration acceleration. expect one? secondly, that baked the guess, high It on then into in And And like seems fairly just on two, that updated then kind you growth thought your clearly, you

of comment just that's why the Maybe distribution is there, I'm gains. on of So conviction all too. of assuming kind kind

Howard Friedman

Yes. beginning a and X%, growth been of to call than any led. we it, be. category had bit but from thought it that always the year our And softer to price. Look, category the has I even going we expected think to the weren't see it going maintained would be obviously, a we volume We call was have little around

say right I we as we go would it's think of kind flat assume we now, forward. would relatively

apologize. your question. I I Sorry, second lost

Robert Dickerson

is a gives the share question on does second The you that acceleration just back gain. clearly, conviction what half farmer imply

Howard Friedman

a plans, we of are you. our that on. as Look, at there think thank going are back Yes, I things look half couple

to that the half. support top aware to basis that are as of gains distribution continue we our forward that, speak, as on executing secured we have we we are we'll we all, expect of that and first a go First relative will line

an think steps in half I I we comps although up don't year. as our have -- marketing do answer, year easier love our as the this always we the innovation. does prior then of third, the have second, versus back And

can execute we the are actually of and significant. kind we more the year will So percentage growth -- similarly as be

are everybody. to high So good well think, known But have do executing we conviction, we way we're the I that need pretty right wildcards, the we now. feel to

Operator

question Please from go of Robert Cowen. next the line from Moskow TD ahead. comes Our

Robert Moskow

a of flattish in is next ask given But X%. your where outlook pricing thanks. Hi of years, to growth context all this the volume-driven X% year. I of you sales just backdrops. could years, a to wanted the for Clearly, is couple see longer-term the scenario is X kind for

enough does 'XX X% zero and long-term Thanks. in algo So out distribution the 'XX going? still up to hold gains in a keep that pricing environment? to X% Is there there

Howard Friedman

Yes.

I think is yes. the short answer

over-indexes a couple years. geographic over the white we're XX% moving to category still we U.S., space the Soffe perspective about total of -- still the go have amount we're of significant of that where a Remember, next is from We areas have toward. are

can -- grow is to I volumes. So can absolutely the short confidence we answer we continue have we our that think

confidence what for be had that be advertising them a to we in still as that learn share go our as we supportive in would forward. because us, Day, been, should other continue think growth the given it volume the the of it's are brands And also growing I more, X stages they is core to program, drive has next we sort to back our said investments, years. really earliest think those consumer I of we have and are able and we penetrated that we're thing into over we volume also think the Investor geographies to always less you bring that volume-based If and mix was

Robert Moskow

it. Got

much. very you thank Okay

Operator

Our from Needham. line McGinley question go Please ahead. of Matt from the comes next

Matthew McGinley

back that year step-up drive in have the EBITDA full sales Or expect a at marketing? up ramp more operating to look half. in to the the rate have To need to margin you gains guide, expect offset in Do you. you will in leverage more you back Thank the growth increase that productivity do half? and

Ajay Kataria

Yes. say I both. would

from throughout helps. growth has leverage half. productivity volume been distribution definitely the strong or sales And our program the led first growth So pretty gains

that delivery see that strength should continue. in You

great team to programs well accelerating is a job get chain network doing as where in XXXX as need as Our ready investing our to for we well. supply

Matthew McGinley

key versus of and core. is so Are not been pretty pretty issues consistent markets, consistently make you've your part maybe core your market any but in plan share to how out core Or share in need long-term And sustain core markets, expansion? a there or in to those in in the the gaining market changes playing you performance markets? you the with happy are it's expansion

Howard Friedman

a that think statement about our I was Well, general core.

-- look to we're of core Boulder a around across our if we've happy market the markets. where specifically expansion you our things think, very do And is border. been similar part look, strategy Canyon on I with Zapp's some

results capabilities. investment the are to go continue near and four that's reflect going to to term. become small, will I -- in marketing disproportionately very things those and I good sort in having disproportionately. longer some category confidence which think, core why We increasing We're and normalize of forward. have we are sort doing our portfolio. -- as tend but specifically brands clearly think more foundation have are a a we business, been our from impact those brands, evolving around we things, dynamics where shifting core innovation, the doing term, we is the tail away trends, But continue it of to think have should as there we're going we more benefit normal drive have we're areas there. -- of trends we're tail our and we of really, geography those we the that our a our We're long

and driving there, then sales that We our about. talked to it strengthen continuing teams route distribution have and as we're infrastructure we're DSD we our it building improve -- are

I have we our we feel needed a in So for feel just we to of good sure, metric our our about there, progress share. -- core do come bit work a think and but I through to to little by very holding continue

Operator

Oppenheimer. Our Rupesh next Parikh the from of comes line ahead. go from question Please

Rupesh Parikh

my thanks question. taking Good for morning and

So I had on X promotional just the questions backdrop.

your of So as at front the in half And for initiatives I value your how look of promotional versus on of was responding we efforts? to what consumers back the is some promotion curious then some QX. team you saw are assuming the the year far, so what

Howard Friedman

Yes.

disciplined So we I gaps think we look and remain price forward. go at we'll as our -- maintain our

we good price we'll be market where pretty the them. feel and and think our I to are shifts, about then address gaps targeted if flexible

I think even and one untracked a little competing pressure our from better things is overall us perspective, actually channels, to of an perform. promotional of geographies because of just that continue the bit on a calendar. that expansion Obviously, off makes takes feel

a have growth We we forward. of for drivers lot as us go

our And versus in feel than so more and we we difference the flexible. good. there compete category you promotional think I planned We to it we category be showed do if expect changes that promotional prepared our Obviously, year-over-year. will pretty the be more spending we're will

Rupesh Parikh

one question. And maybe then follow-up Great. just

on and this cost side. point? the seeing at Just backdrop What are inflation the cost front guys in the on you

Ajay Kataria

Yes.

deflationary, transportation So we labor inflation flat. to track expecting bucket and that's overall be have bucket. we are inflation slightly the that -- that are still into inflation but baked we Commodities

Operator

from from Sturdivant. Mitchell line question of next Panera Our the comes

Mitchell Pinheiro

your margin holding in continue gross important curious and Is see your how if somewhat sort above of foundation brands? expansion. foundation you achieving I'm a them sort to risk leakage that at brands the morning. is steady average Good of to all about

Howard Friedman

and and to think geographies question. important certainly some able brands, for route a play the are general, that appreciate very available. in us, role I to where I Look, out shopper our in sure are making they the Yes, consumer build some they that infrastructure specific being of foundation

the a contemplated maintain them We higher original deemphasize offset make as actually of will is our it that those and our to power they're we ultimately, our value and to deemphasize we'll we continue businesses opportunities brands, we suspect foundation But margin consumer available. our will forward for the growth that them in be those go overall and thesis meaningful have and products for assumptions love and sort declines. don't P&L, But our higher targeted as impact given sure grounds. power I that

Mitchell Pinheiro

there just to with levels? -- Okay. right now? doing -- another? one one And tracking efficiencies or can are from than they last And of promotions speak type the Are is, better historical you your normal effectiveness effectiveness question then of and they is

Howard Friedman

wouldn't with obviously things Look, building that necessarily can growing year, that I category. be management to which understand and first making optimal been that we I that's in obviously, doing. One the think things tactics price some better growth think been is across lifts there it others. last is that consumer kind shopping consumers' able clearly, that the the that few I our of gaps out We as shopping a our we've know we see of and that are sure half through been the responsibly been -- in promotionally. so and making all category and course you experimenting having effect ladder with year, channels, capabilities, there's continue than one is and do drive, everybody revenue are say lower. we've the obviously, the the the to choices, healthy what promotional we've And the affordability have compete a we the are that. But and working can but desire would unit we -- that like of volume one different of promotional of

positive to us, for distribution effects where business. in we price, and to gains having we marketing generate a our is that to support way the also are think I on compete able targeted will the very while need we

we flexible which really always there and the to, be be is so we'll would good working expect the marketing we way entire trade-offs, some that will feel about. mix it And

Mitchell Pinheiro

me. Thank Very for all helpful. That's you.

Operator

go the from And from ahead. right. question All our as James just reminder line a Salera comes Please of Stephens. [Operator next Instructions]

James Salera

question. at Howard, going I you to wanted the in retaining the the drill all What penetration, repeat there buyers and trends, if you're And can for it if Can then incremental my to obviously, taking household does more have just direction, the take down, repeat driven the in maybe guys the right you talk morning. through would look the territories. bringing I what's the the Hi good imagine Thanks to expansion customers? these be and them may moving households ideally Utz obviously, to brand forward such repeat seems them new rate. that brand? with rate it higher like, stable retain we from new a

Howard Friedman

Yes, some Look, I enter a I for one point, across vary we're very repeat able to us, them product then that It's consumer of buy elsewhere. once But trade, you and core has right? of our is the to those the appreciate we're portfolio able to think we're very get question. metrics, thing want brands bring into the new the the to is new be progress the enter to again, of it underlying consumer reality which, geographies, into great all your I the or in happy which think, that store, power to of with a and to class into geography seeing the things.

there's meaningfully that one, product like different have a do well. -- we we of think why. great we Number couple I reasons are a have a product eats

a expectations, plane of across you meets it a all or chip or whether want the consumer Wavy think chip our Tortilla I sub-cats.

the put that of products first we I we're very out. the So thing think proud just

both actually able marketing terms items, and third, but to IO second have And to great and able those of the in of also then distribution, we our we are being drive awareness is thing using get think being consumer I point-of-sale drive that support. up. to awareness retailer tactics the in now displays

the are our and giving giving retailers the the to the and on consumers opt be consumer opportunity allows stock perimeter, space then which there keeping to shelves in. out stores are So the us IOs

So is business reasonably you see for are what pretty right across perfect. I to entire now, our working well executing. is now But clear about from far right an we feel do, us. and Obviously, good plenty we think how we're we have system

James Salera

would sales down my and X guys That's $XXX retail notes some is me it Investor great. sales said change If in million I on drill And if the are then in X can later, correctly, now. served targeting $XXX we Day, approaching million months you it's And years. Boulder. retail in be

ahead availability a take see I to as you'll well shelf anticipate traditional would time at So horizon. feel but does that really I area, I appeal that really get it brought well. traditional I in increased and in natural retail? it club X-year of it in to my a probably be mainstay has enough Boulder mean be What retail in like

So what does in it really take on-shelf world? Albertsons to the Krogers the expand and your presence in

Howard Friedman

Yes.

more brand, frankly, very it Canyon both terms -- are our has months, as to pleased, over We really, as continues last and started quickly, XX a obviously, Canyon probably as availability grow first of Boulder we performance velocity. business talking with the about of power Boulder the started when I in well got we here,

repeating. on it and retailers in the -- getting we're consumers to and consumers but getting to then are then coming and So are point, it your opt buying we're putting shelves,

positioning great. product great. is its is So The

stopping continuing point there's availability the from from think us retailers where nothing and of I want consumers our really drive view, it. to

be manufacturing to within by right, certainly X a well probably of was We ahead that you're have pretty to We'll the $XXX million years, business we firepower and that that we time XXXX. what expectation that well set be -- the the will we're of statement bold thought out. at ahead -- we and exceeding capabilities of continue build and

drive So to we'll continue availability.

will We innovate.

that You've seen Canyon Poppers brand. do showing up. And to we lot think there's left with a

James Salera

question. just last maybe one Great. Okay. And

constraints get that for have are anticipate? Just capacity anybody you a to to -- off is train tie able any period big you ramp-up that like retailers, away? if right orders would Or of do thought from there you Boulder meet

Howard Friedman

No.

much Obviously, feel supply business as -- in are visibility better now. capital capacity are around that increase well the chain and optimization have we our as our that the given work are all right the item. supply of capabilities planning, really demand investing We about both the that integrated we good we for we doing and

And good support we really ability the we feel we are, are where and to we feel so go runway about as about forward. that we -- good

Operator

next line the question of from comes Please And our ahead. go from Mizuho John Baumgartner Health.

John Baumgartner

within of how that for Hey first prove you all, consumer about you? are question. potato any net chips? fair mix of any favorable salty expect from the could weakening shifting, in good to shifts Or for in environment? it for category there occur a Thanks could thinking morning. broader top Is cord example, sort snacks Howard, are Maybe that

Howard Friedman

interesting question. an It's

there opt who within think they do would -- jump price if more pretzels. ladder brand they I at up category first. so potato and and consumers subcategories into consumers we the than to look the then move do, are from say, chips that of tree, And consumer decision expect to tend kind down you because

is do are one there I live that while sub-cats the where across items people and people into eat. So for think kind -- they to family consumers subcategory tend are there obviously there the to are -- to opt -- do buying shop tend will And then of entire there.

speculation think into X. of see in that, bags X just don't a my absolute, that buy you pure might on But You part. pressure little terms is maybe opt I bit more you

portfolio benefit of efforts I years mix you more it businesses we've call the XX shift and profitable it, seeing we've as are our over be optimize the in think to the last a X.X our strategy some portfolio and that to deemphasized have undertaken to is of months, results able what lot we others. the

John Baumgartner

began tailgating with follow-up, discuss my can of I Okay. merchandising And year, plans? think the you activity some back to for last half you some ramp season. products then

you point Halloween think a focal well. for has been as I

last in season you this improvements of does supply manufacturing year the and set that chain, to in relative up So and made you've display in the for future? how year terms

Howard Friedman

Yes.

think So look, I -- things. we see has a certainly couple thing merchandising get to our continues that quality of is One stronger.

feature be display fortunate been have and we So activity. driving to more

I in is our about merchandising the displays We're we are the our expect that Untracked and And Pretzel to a where the of a go we we we we'll One while been year. expectation of year on have justifying good that for are the feel to actually we're we channels, where last, think, really optimistic the things job as in and do that space think are perimeter is we of Halloween thing call the space, about months. that Our continue. our holiday perimeter higher good about and certainly back -- are. doing compete -- will have great IOs back couple our feel of we're course I Halloween bringing XX we repeating very kind rotation, a to well, prior be what which of continuing incremental the distribution we across, through half it, forward. rotation SaaS as normal on and that

in gains are all well So support some business, us will we think think things distribution in the consumer also be have already I as of we those to as achieved of more that expansion support our opportunities well. geographies we obviously introduce our and will have support going for merchandising the

good where flexible. about So pretty here and do All compete right. responsibly we we're and to remain it and feel are, we

Operator

Foods conclude pleasant XXXX a Second Have Call. Quarter That everyone. you, Earnings does day. today's Thank

Utz Brands (UTZ) 1 Aug 242024 Q2 Earnings call transcript