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Jul 04, 2021
Utz Q2 2021 Earnings Report
Utz's financial performance declined due to higher than planned inflation across key input costs, partially offset by net sales increase.
Key Takeaways
Utz Brands reported a 23.1% increase in net sales to $297.9 million, driven by acquisitions and favorable price/mix, though pro forma net sales decreased by 4.0%. Net income increased to $16.2 million, while adjusted EBITDA rose by 9.5% to $35.7 million. The company is experiencing higher commodity, transportation, and labor costs impacting margins, with benefits from pricing actions and productivity initiatives expected in the back half of the year.
Net sales increased by 23.1% to $297.9 million, driven by acquisitions and favorable price/mix.
Pro forma net sales decreased by 4.0% to $299.2 million compared to the previous year.
Net income improved to $16.2 million, primarily due to a gain from remeasurement of warrant liabilities.
Adjusted EBITDA increased by 9.5% to $35.7 million but was impacted by higher commodity, transportation, and labor costs.
Forward Guidance
The Company believes that consumer demand for its products will remain strong in the second half of fiscal 2021 and continues to believe that sales growth will accelerate. However, given the challenging industry-wide supply chain dynamics, the Company is experiencing higher commodity, transportation, and labor costs. These costs began to rise in the first quarter of fiscal 2021, continued to rise in the second quarter, and impacted the Company’s profitability more than anticipated.
Positive Outlook
- Consumer demand for products will remain strong in the second half of fiscal 2021.
- Sales growth will accelerate.
- Taking appropriate actions to help offset the impact, including pricing, productivity, and cost savings actions
- The benefits are expected to be weighted towards the back half of the year.
- Actions to help offset inflationary pressures will have a meaningful carry-over benefit to fiscal 2022
Challenges Ahead
- Challenging industry-wide supply chain dynamics.
- Experiencing higher commodity, transportation, and labor costs.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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