Vending

Utz Brands reports mixed Q2 2023 results, beats expectations

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August 10, 2023

Utz Brands Inc. lifted its Q2 2023 sales but suffered an earnings dip, according to an earnings release, but surpassed analyst expectations. Highlights include:

• Net sales in the quarter increased 3.6% from $350.1 million in Q2 2022 to $362.9 million in the quarter ending July 2, 2023, driven by organic sales growth of 4.3%, partially offset by the company's continued shift to independent operators and the resulting increase in sales discounts that impacted net sales growth by 0.7%.
• Income fell from $2.5 million to a $8.6 million loss in the comparative quarters, primarily attributable to an asset impairment charge of $7.6 million and severance expenses of $1.3 million related to the previously announced closure of the company's manufacturing operation at its Birmingham facility and recording a liability of $4.7 million for the termination of a supply contract with a co-manufacturer. In addition, interest expense increased $4.3 million.
• Organic net sales growth was driven by the flow through of pricing actions that were taken in fiscal 2022 in response to inflationary pressures which account for a 6% increase in net sales, partially offset by volume/mix declines of 1.7%. The volume decline was primarily due to the company's ongoing SKU rationalization program focused on reducing lower margin private label and certain partner brands.
• EPS per Class A common stock fell from 4 cents to a 5-cent loss on both a basic and diluted basis.
• Adjusted EPS remained level at 13 cents.

Shares traded today at $16.41 against a 52-week range of $13.85-$19.98.

The $362.9 million in quarterly revenue beat analyst expectations by $2.3 million and the non-GAAP EPS of 13 cents beat expectations by one cent, according to Seeking Alpha.

"Our second-quarter results were consistent with our expectations as our momentum continued led by sustained strong demand across our advantaged portfolio of Power Brands," CEO Howard Friedman said in the press release. "Looking ahead to the remainder of the year, we are raising our full-year adjusted EBITDA outlook as we execute against our key growth and operational strategies."

The company reaffirmed its net sales outlook with total net sales growth of 3% to 5% and organic net sales growth of 4% to 6%.