HANOVER, PA - Utz Brands, Inc. (NYSE: UTZ), a prominent U.S. manufacturer of branded salty snacks, today announced its financial results for the first quarter ended March 31, 2024.
The company reported a significant increase in adjusted earnings per share (EPS), which rose 27.3% to $0.14, surpassing the analyst estimate of $0.13. Meanwhile, revenue for the quarter was in line with expectations at $346.5 million, virtually unchanged from the consensus estimate of $346.56 million.
The first quarter results marked a substantial improvement over the previous year, with net sales experiencing a slight organic growth of 1.5%. This growth was driven by a 1.1% increase in volume/mix from the company's Power Brands and a 0.4% net price realization.
Despite the divestiture of the R.W. Garcia® and Good Health® brands, which negatively impacted net sales growth by 2.5%, and a shift to independent operators affecting sales by an estimated 0.4%, the company's retail sales measured by Circana MULO-C increased by 4.1% YoY.
Gross profit margin expanded to 34.5% from 29.7% YoY, with adjusted gross margin also seeing a rise from 34.4% to 37.2%. The improvement in margins was attributed to productivity initiatives, favorable sales mix, and pricing strategies that more than offset supply chain cost inflation. Adjusted EBITDA grew by 7.4% to $43.4 million, representing 12.5% of net sales, compared to 11.5% in the prior year.
CEO Howard Friedman expressed satisfaction with the company's strong start to the year, highlighting the fifth consecutive quarter of YoY adjusted EBITDA margin expansion and the 27% growth in adjusted EPS. He also noted the strategic dispositions that will enable Utz to focus on optimizing its remaining facilities and continuing its value creation initiatives.
Looking ahead, Utz is reaffirming its outlook for organic net sales and adjusted EBITDA growth, while raising its adjusted EPS growth outlook from 16-21% to 23-28% for the fiscal year 2024. This improved growth expectation is attributed to a more favorable effective tax rate, lower interest expense from debt paydowns, and the positive impact of the recent Term Loan repricing.
The company's balance sheet remains solid, with a total liquidity of $198.9 million and a net leverage ratio of 3.8x. Following the quarter's end, Utz used approximately $9.0 million from recent dispositions to reduce long-term debt, contributing to a $14.0 million reduction in net debt and an estimated annual savings of approximately $3.0 million in cash interest expense.
As Utz continues to execute its supply chain transformation strategy and invest in its core brands, investors can anticipate the company's commitment to delivering on its 2024 outlook and remaining confident in achieving its 2026 targets.
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