10-K: Utz Brands Reports Fiscal Year 2024 Results: Strategic Divestitures Drive Profitability Amidst Competitive Landscape

• Utz Brands reported net sales of $1,409.3 million for fiscal year 2024, a 2.0% decrease compared to $1,438.2 million in fiscal year 2023.
• The decrease in net sales was partially attributed to the Good Health and R.W. Garcia Sale, which contributed a 3.3% decrease.
• Gross profit increased to $494.8 million in fiscal year 2024 from $456.5 million in fiscal year 2023, with gross profit margin rising to 35.1% from 31.7%.
• The increase in gross profit margin was driven by productivity improvements, favorable sales volume/mix, and ingredient cost deflation.
• Selling, distribution, and administrative expenses increased slightly by 0.6% to $435.8 million.
• The company experienced a gain on sale of business of $44.0 million related to the Good Health and R.W. Garcia Sale.
• Net income attributable to controlling interest was $15.974 million, compared to a net loss of $24.937 million in the previous year.
• Adjusted EBITDA increased to $200.2 million, representing 14.2% of net sales, compared to $187.2 million, or 13.0% of net sales, in the prior year.
• The company continues to focus on expanding its presence in Expansion Geographies and untapped channels.
• Utz is transforming its supply chain into a more cost-efficient and flexible system.

Score: 7

Explanation: The sentiment is cautiously positive. While net sales decreased, the company improved its profitability through strategic divestitures and cost management. The future outlook focuses on growth and efficiency improvements.

• Gross profit margin increased due to productivity improvements and cost deflation.
• Strategic divestitures generated a significant gain on sale of business.
• The company reduced its debt by $158.7 million.
• Boulder Canyon brand is experiencing strong growth in the BFY category.
• Expansion Geographies retail sales and retail volumes were up by 0.9% and 0.4%, respectively.
• The company is focused on expanding its presence in Expansion Geographies and untapped channels.

• Net sales decreased by 2.0% year-over-year.
• Core Geographies retail sales and retail volumes were down 1.6% and up 0.6%, respectively.
• Increased promotional activities impacted sales and net price realization.

• The company operates in a highly competitive and increasingly consolidated snack food industry.
• Changes in consumer preferences and tastes could adversely affect demand.
• Disruptions to manufacturing operations, supply chain, or distribution channels could negatively impact operating results.
• Inflation, including rising labor costs, could adversely affect profitability.
• The company may not be successful in implementing its growth strategy.
• Increasing focus on ESG issues could negatively impact the business.
• Debt instruments contain covenants that impose restrictions on operations.
• Changes in interest rates may adversely affect earnings and/or cash flows.
• Pandemics, epidemics or other disease outbreaks may change or disrupt consumption patterns, supply chains, and production processes.
• The company is subject to risks from changes to the trade policies and tariff and import/export regulations by the U.S. and/or other foreign governments.

The company plans to further penetrate Expansion Geographies and untapped channels, transform its supply chain, and improve balance sheet flexibility.

The company operates in the competitive $39 billion U.S. salty snacks category, which has experienced significant growth in recent years.

• The salty snacks category has grown retail sales at an approximate 7.8% compound annual growth rate (CAGR) during 2020 through 2024.
• Private label branded salty snacks represented only approximately 6.7% of U.S. category retail sales for the year ended December 29, 2024.
• Utz is the #2 brand platform in its Core Geographies, representing approximately 7% of total salty snacks category retail sales.
• Utz is the #4 salty snack brand platform in the U.S., representing 4.3% of total salty snacks category retail sales.

• Shareholders: Potential for increased value through improved profitability and strategic growth.
• Employees: Focus on health and safety, diversity, equity, and inclusion.
• Customers: Commitment to providing safe and quality products.
• Suppliers: Commitment to being a responsible customer.
• Communities: Commitment to being good neighbors and partners.

• Continue to expand distribution and sales of Branded Salty Snacks in Expansion Geographies.
• Transform the supply chain into a more cost-efficient and flexible system.
• Enhance the DSD system of IOs to further improve execution and generate higher returns.
• Improve balance sheet flexibility by accelerating cash generation and maintaining a disciplined capital allocation approach.

• 1921: Utz was founded in Hanover, Pennsylvania.
• June 5, 2020: Date of the Business Combination Agreement between Collier Creek Holdings and Utz Brands Holdings, LLC.
• August 28, 2020: Closing date of the business combination, Utz Brands, Inc. became a publicly traded company.
• February 5, 2024: Date of the Good Health and R.W. Garcia Sale to affiliates of Our Home.
• April 22, 2024: Date of the Manufacturing Facilities Sale to Our Home.
• December 29, 2024: End of fiscal year 2024.
• January 29, 2025: Amendment of Term Loan B to refinance and reduce interest rate.
• February 18, 2025: Date of share information and closing price of Class A Common Stock.