Vending

Utz Brands posts loss on 24% Q3 sales gain

Logo provided.

November 6, 2020

Utz Brands Inc. net sales increased 24.2% to $248.0 million in the third quarter of 2020 compared to $199.6 million for the third quarter of 2019, according to an earnings release.

Net loss was $7.3 million for the third quarter ending Sept. 27, 2020, compared to net income of $10.3 million for the prior year period, driven by transaction expenses related to the business combination with Collier Creek Holdings. Utz Quality Foods Llc became Utz Brands after announcing plans to go public in June and combining with Collier Creek Holdings, an acquisition company.

There were no reported third quarter earnings per Class A common stock.

Shares traded at $17.75 Thursday against a 52-week range of $9.84-$19.16.

The sales gain was driven by acquisitions of 15.9%, a 9.7% volume gain and price/mix +1.2%, which were partially offset by continued shift to independent operators and the resulting increase in sales discounts of 2.5%.

Pro forma net sales increased 7.2% to $248.0 million compared to $231.3 million for the third quarter of 2019.

Excluding the impact of higher IO discounts and brands acquired through the Kennedy Endeavors (Conagra DSD Snacks), and Kitchen Cooked acquisitions, power brand sales increased by approximately 10%, while foundation brand sales were down approximately 2% against the prior year period.

Growth in power brands was led by Utz, Zapp's, Tortiyahs! and Golden Flake Pork Skins brands. The decline in foundation brands reflected a strategy to focus on power brands and continued softness in foodservice and the convenience channel due to COVID-19.

For the 13-week period ended Sept. 27, 2020, retail sales grew 12.9%, well above the total salty snack category growth of 8.7%.

Adjusted net income was $17.9 million for the third quarter of 2020 compared to $8.5 million for the prior year period. The increase in adjusted net income was due primarily to higher net sales and higher margins.

For the 53-week fiscal year ending Jan. 3, 2021, the company is expecting net sales growth of 10%-11% versus 2019 pro forma net sales of $865.5 million, with the 53rd week representing approximately two percentage points.

For an update on how the coronavirus pandemic is affecting convenience services,click here.