• Utz Brands announced its financial results for the second quarter of 2024, which ended on June 30, 2024.
• Net sales were $356.2 million, a slight decrease compared to $362.9 million in the same period last year, with a 3.3% negative impact from divestitures.
• Organic net sales increased by 1.6%, driven by a 2.3% increase in volume/mix, partially offset by a 0.7% decrease in net price realization.
• The company's retail sales, as measured by Circana MULO-C, increased by 1.1%, with volume growth of 3.2%.
• Gross profit margin expanded by 260 basis points to 35.0%, and adjusted gross profit margin also expanded by 260 basis points to 37.6%.
• Adjusted EBITDA increased by 10.0% to $49.7 million, representing 14.0% of net sales, compared to 12.5% in the prior year period.
• Net income was $25.4 million, a significant improvement from a net loss of $8.6 million in the prior year period.
• Adjusted earnings per share increased by 46.2% to $0.19.
• The company has revised its full-year organic net sales growth outlook to approximately 3%, down from a previous target of 3% or better.
• The company reaffirmed its adjusted EBITDA growth outlook of 5%-8% and raised its adjusted earnings per share growth outlook from 23%-28% to 28%-32%.

Score: 8

Explanation: The document conveys a positive sentiment due to strong earnings growth, margin expansion, and increased market share. The company is also taking steps to improve its financial position and is well-positioned for future growth. However, there is a slight revision to the organic net sales growth outlook, which tempers the overall sentiment.

• Utz Brands achieved a 1.6% increase in organic net sales in Q2 2024.
• The company experienced a 260 basis point expansion in both gross profit margin and adjusted gross profit margin.
• Adjusted EBITDA grew by 10.0% to $49.7 million.
• Adjusted earnings per share increased by 46.2% to $0.19.
• The company gained dollar, pound, and unit share in the Salty Snack category for the third consecutive quarter.
• Utz has seen six consecutive quarters of year-over-year Adjusted EBITDA Margin expansion.
• The company is raising its outlook for Adjusted Earnings per Share growth from 23%-28%, to 28%-32%.
• The company completed a repricing of its $630 million Term Loan, reducing the interest rate by approximately 36 bps.
• The company expects to save approximately $3.0 million annually due to debt paydown and the repricing of the Term Loan.

• The company achieved strong volume growth in its Power Brands, particularly Utz, On The Border, and Boulder Canyon.
• Utz is experiencing improved performance in non-measured channels, such as Club, Dollar, and E-commerce, with branded volume growth of approximately 10%.
• The company is increasing its marketing investments while managing promotional spending.
• Utz is seeing strong growth in Tortilla Chips and Cheese Snacks.
• The company is experiencing positive trends in household penetration, buyers, and buyer repeat rates.
• The company has a total liquidity of $196.9 million, including $66.6 million in cash and $130.3 million available under its revolving credit facility.
• The company reduced its net debt by approximately $14.0 million in April 2024.
• The company has a net leverage ratio of 3.8x based on trailing twelve months Normalized Adjusted EBITDA of $194.6 million.

• Net sales decreased by 1.8% year-over-year, primarily due to the divestiture of the R.W. Garcia and Good Health brands.
• The company's shift to independent operators (IOs) and the resulting increase in sales discounts impacted net sales growth by an estimated 0.1%.
• Foundation Brands volume was impacted by dips and salsa declines due to a large customer shelf reset.
• The company is experiencing lower net price realization due to disciplined promotional spending adjustments.
• Cash flow used in operations was $(0.2) million, reflecting seasonal use of working capital and the impact of the sale of Good Health and R.W. Garcia.
• The company is modestly revising its outlook for Organic Net Sales growth from ~3% or better to now ~3%.

• The company's gross profit margins may be adversely impacted by variations in raw materials pricing, retail customer requirements, and promotional support.
• Changes in consumer loyalty to the company's brands due to factors beyond the company's control, such as changes in consumer spending, could negatively impact sales.
• The company's inability to innovate or market its products effectively, particularly in expansion geographies, could affect demand.
• Consolidation of key suppliers could pose a risk to the company.
• The company's inability to adopt efficiencies into its manufacturing processes or logistics operations could impact profitability.
• Fluctuations in results of operations from quarter to quarter due to changes in promotional activities could occur.
• The company may be adversely affected by other economic, business, or competitive factors.
• The company may not recognize the anticipated benefits of recently completed business combinations or dispositions.
• Changes in applicable law or regulations could impact the company.
• The company's inability to maintain the listing of its Class A Common Stock on the New York Stock Exchange could occur.
• The company's inability to develop and maintain effective internal controls could occur.

The company is modestly revising its outlook for Organic Net Sales growth to approximately 3%, while reaffirming its Adjusted EBITDA growth outlook of 5%-8% and raising its Adjusted Earnings per Share growth outlook to 28%-32%.

• I'm pleased with our continued strong momentum in the second quarter, as we gained dollar, pound, and unit share in the Salty Snack category for the third consecutive quarter.
• We made necessary adjustments to our promotional activities during the quarter to address consumer value expectations.
• Our accelerated productivity cost savings provide us the flexibility to both continue to expand our margins and increase investments behind our brands to support our geographic expansion.
• We expect our growth opportunities will drive strong volume growth in the second half of the year.

The company's performance is being viewed in the context of the broader salty snack category, where Utz is aiming to gain market share through strategic brand investments and geographic expansion. The company is also navigating a more moderate growth outlook for the overall category.

• Utz's 1.6% organic net sales growth is a positive result in the context of a more moderate growth outlook for the overall salty snack category.
• The 260 basis point expansion in gross profit margin and adjusted gross profit margin indicates strong operational improvements and cost management.
• The 10% increase in adjusted EBITDA and 46.2% increase in adjusted earnings per share demonstrate significant profitability improvements.
• The company's focus on its Power Brands, such as Utz, On The Border, and Boulder Canyon, aligns with industry trends of focusing on core brands for growth.
• The company's performance in non-measured channels, with branded volume growth of approximately 10%, suggests a successful strategy in these areas.
• The company's ability to gain dollar, pound, and unit share in the Salty Snack category for the third consecutive quarter is a strong indicator of competitive success.
• The company's focus on productivity programs and cost savings is in line with industry best practices for margin expansion.
• The company's repricing of its term loan and debt paydown are positive steps towards improving its financial position.

• Shareholders will benefit from the increased earnings per share and improved profitability.
• Employees may benefit from the company's growth and expansion.
• Customers will benefit from the company's focus on product innovation and quality.
• Suppliers may benefit from the company's increased sales and production.
• Creditors will benefit from the company's improved financial position and debt reduction.

• The company will continue to focus on driving volume growth through increased marketing investments, product innovation, and distribution gains.
• The company will continue to execute its productivity programs to drive margin expansion.
• The company will continue to evaluate opportunistic M&A.

• August 1, 2024: Date of the earnings announcement and conference call.
• June 30, 2024: End of the second quarter of 2024.
• April 22, 2024: Date of completion of the disposition of two manufacturing facilities.
• April 17, 2024: Date of completion of the repricing of the $630 million Term Loan.