UTZ Q1 Earnings Call: Bonus Packs Drive Growth, Boulder Canyon Expands Distribution

Snack food company Utz Brands (NYSE: UTZ) announced better-than-expected revenue in Q1 CY2025, with sales up 1.6% year on year to $352.1 million. Its non-GAAP profit of $0.16 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

Utz’s first quarter results reflected the impact of targeted promotional strategies and channel expansion, as management focused on leveraging bonus pack promotions and expanding distribution in both core and new geographies. CEO Howard Friedman emphasized that strong performance in untracked channels, such as the natural and discount segments, was supported by improved operations at the new Rice distribution center, which consolidated several warehouses and enhanced shipment efficiency.

Looking ahead, Utz’s leadership pointed to innovation and further distribution gains as key elements of their forward strategy. Friedman acknowledged that the bonus pack program was a temporary value offering and will wind down as the company shifts focus toward innovation, marketing, and maintaining fair pricing. He noted, “We will continue to look at ways to address value as we go forward,” signaling flexibility in response to consumer and competitive trends.

Key Insights from Management’s Remarks

Utz’s management highlighted several business drivers and strategic moves affecting Q1 performance, while addressing the evolving consumer landscape and competitive environment.

• Untracked channel momentum: The company experienced substantial growth in natural, discount, and club channels, which are not fully captured in traditional retail data. This expansion was aided by streamlined operations at the Rice distribution center, improving shipment timing and throughput.
• Bonus pack promotions: Volume share gains in core geographies were driven by the limited-time bonus pack initiative, which provided added value to consumers while serving as a trial mechanism in new expansion markets. Management confirmed the program will wind down as summer approaches.
• Boulder Canyon brand expansion: Boulder Canyon continued to perform well, benefiting from increased distribution and new product launches such as Canyon Poppers and a wavy chip line. Management reported that both distribution and velocity (sales per point of distribution) increased, particularly in the natural channel.
• On The Border innovation: The On The Border brand saw further growth through expanded flavored tortilla chip offerings and additional distribution, with management identifying further white space for new products and formats.
• Channel diversification and consumer behavior: Utz observed resilient demand from value-seeking consumers across premium and value product lines. Management attributed this to a combination of targeted merchandising, product innovation, and adapting to shifting consumer preferences in both mainstream and value channels.

Drivers of Future Performance

Management’s outlook for the coming quarters centers on innovation, distribution expansion, and adapting to consumer value-seeking trends, while navigating increased competition and evolving category dynamics.

• Innovation and product launches: The company plans to emphasize new product development, particularly within Boulder Canyon and On The Border, aiming to capture incremental growth as consumer interest in natural and flavored snacks rises.
• Distribution gains in core and new markets: Continued expansion into underpenetrated markets and increased presence in conventional grocery and natural channels are expected to support revenue growth, with management citing significant remaining white space.
• Shift from promotional to marketing investment: As the bonus pack promotion winds down, Utz will refocus on marketing and innovation to drive volume and maintain pricing discipline, acknowledging potential risks if consumer value preferences or competitive dynamics shift unexpectedly.

Top Analyst Questions

• Andrew Lazar (Barclays): Asked about the discrepancy between flat retail sales and reported organic growth; management cited strong results in untracked channels and clarified revenue recognition timing, indicating there was no pull-forward.
• Peter Galbo (Bank of America): Inquired about the impact of bonus pack promotions on price and volume; CFO Ajay Kataria confirmed most price investment was linked to bonus packs, with limited ongoing price cap investments.
• Michael Lavery (Piper Sandler): Sought insight on growth expectations for non-branded and partner brands; management stated partner brands are expected to decline gradually as Utz-branded products increase their share on distribution routes.
• Jim Salera (Stephens Inc.): Asked about household overlap between premium Boulder Canyon and value-oriented Utz brands; CEO Howard Friedman explained Boulder Canyon skews toward affluent, health-oriented consumers while Utz targets mainstream households, with some expected overlap.
• Scott Marks (Jefferies): Questioned whether bonus pack-driven share gains could continue if consumer sentiment weakens; management reiterated willingness to revisit the program as needed but stressed innovation and marketing as primary drivers moving forward.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the impact of winding down bonus pack promotions on volume and pricing mix, (2) Boulder Canyon’s progress in gaining shelf space and consumer traction across new channels, and (3) the effectiveness of innovation and marketing initiatives as Utz shifts away from promotional-driven growth. Sustained gains in distribution and household penetration will be critical markers of execution.

Utz currently trades at a forward P/E ratio of 14.4×. At this valuation, is it a buy or sell post earnings? The answer lies in our free research report.

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