Vending

Utz Brands boosts Q2 2021 sales, earnings

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August 12, 2021

Utz Brands Inc. reported improved sales and earnings for the second quarter of 2021, according to a press release.

Net sales in the quarter increased 23.1% from $242 million in Q2, 2020 to $297.9 million for the quarter ending July 4, 2021, driven by acquisitions of 24.2% and favorable price/mix of +2.3%.

Partially offsetting these factors were volume declines of 3% primarily due to pantry loading at the onset of the COVID-19 pandemic in the prior year. In addition, the company's continued shift to independent operators and the resulting increase in sales discounts impacted net sales growth by 0.4%.

In the second quarter of 2021, the company reported net income of $16.2 million, compared to net income of $6.6 million in the prior year period. The improvement was primarily driven by a gain of $19.4 million due to the remeasurement of private placement warrant liabilities consistent with the accounting guidance recently announced by the U.S. Securities and Exchange Commission for warrants issued by special purpose acquisition companies.

Adjusted net income increased 39.7% from $13.6 million to $19 million in the comparative quarters.

Diluted earnings per share was 21 cents in Q2, 2021 while adjusted earnings per share was 13 cents.

The company's Power Brands' retail sales increased 8.1% on a two-year CAGR basis versus the salty snack category growth of 7.1% for the same period, increasing to nearly 87% of sales versus approximately 84% in the same period in 2019.

Power Brands' sales growth during the two-year period was led by Utz, On The Border, Zapp's, Tortiy Ahs! Golden Flake® Pork Skins, Hawaiian, TGI Fridays and Herdez. As expected, the two-year CAGR retail sales decline of 2.2% in foundation brands reflects the company's continued strategy to focus its resources on its Power Brands.

"In the second quarter, our two-year pro forma net sales growth trends continued to improve as our Power Brands' sales grew significantly faster than the salty snack category in our emerging and expansion geographies, and our channels most impacted by COVID-related softness are rebounding," CEO Dylan Lissette said in the release. "While consumer demand for our products remains strong, our second quarter margins were significantly impacted by higher than planned inflation across key input costs which include commodities, transportation and labor."

The quarterly revenue of $297.9 million beat analyst expectations by $8.33 million, while the non-GAAP EPS of 13 cents missed expectations by 1 cent and the GAAP EPS of 21 cents beat expectations by 15 cents, according to Seeking Alpha.

Shares traded at $20.01 today against a 52-week range of $13.35-$30.09.

The company continues to expect fiscal 2021 net sales consistent with fiscal 2020 pro forma net sales with modest organic sales growth year over year. The company's projected pro forma two-year CAGR for fiscal 2020 and 2021 of approximately 6% is above the company's long-term organic growth outlook of 3%-4%.

The company expects adjusted earnings per share for fiscal 2021 to be 55 cents to 60 cents.