Utz Brands Inc ((UTZ)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Utz Brands, Inc. recently held its third-quarter earnings call, revealing a strong overall sentiment of growth and market expansion. The company showcased significant progress, particularly with its Boulder Canyon brand, while also acknowledging challenges with the On The Border brand and adverse weather conditions affecting potato crops. Despite these hurdles, Utz remains optimistic about overcoming these issues and sustaining its growth trajectory, although margin expansion may be tempered by strategic investments.
Strong Market Expansion
Utz Brands, Inc. has made notable strides in expanding its market share across several key regions, including Florida, Illinois, Colorado, and Missouri, where it has achieved over 4% market share. The company is particularly confident about scaling its operations in California, following recent route acquisitions, which are expected to bolster its market presence significantly.
Positive Volume Growth
The company reported robust volume gains, albeit with slight negative pricing, driven by its expansion into new markets and strategic promotional activities. This growth reflects Utz’s effective execution in increasing market penetration and encouraging consumer trials, underscoring its successful market strategies.
Boulder Canyon Brand Success
Boulder Canyon continues to perform exceptionally well, emerging as the #1 potato chip brand in the natural channel. The brand has achieved impressive velocity and distribution gains, with plans for further expansion slated for 2026, reinforcing its strong market position.
On The Border Brand Challenges
The On The Border brand encountered some difficulties due to regional competition and softness in performance. Utz has identified specific short-term issues and is actively working to stabilize the brand, demonstrating its commitment to addressing and overcoming these challenges.
Potato Crop Impact on Gross Margin
Adverse weather conditions have impacted the potato crops used by Utz, leading to increased costs and pressure on gross margins. This issue is considered isolated and is expected to be resolved in the upcoming quarters, minimizing long-term impacts on the company’s financials.
Slight Backing Off on 2026 Margin Expectations
While Utz maintains its target of achieving 16% EBITDA margins by 2026, the company has acknowledged potential incremental investments in California that might affect the extent of margin expansion. This strategic decision reflects Utz’s focus on long-term growth and market penetration.
Forward-Looking Guidance
During the earnings call, Utz reiterated its financial projections and strategic initiatives, aiming for EBITDA margins of approximately 16% by 2026 with an annual expansion of about 100 basis points. The company remains confident in outperforming the category, projecting growth 200 to 300 basis points ahead. The strategic acquisition for California expansion is expected to enhance market penetration, modeled after its success in Florida. Utz also highlighted the importance of innovation and retail media investments to drive future growth.
In summary, Utz Brands, Inc. conveyed a positive outlook during its earnings call, emphasizing strong market expansion and brand success, particularly with Boulder Canyon. While challenges such as the On The Border brand’s performance and potato crop issues were acknowledged, the company’s strategic initiatives and forward-looking guidance reflect a commitment to sustained growth and market leadership.