Utz Brands Inc (UTZ)

Utz Brands Inc. Stock Overview

Company Profile

History and Background

Utz Brands, Inc. (NYSE: UTZ) is a leading U.S. manufacturer of branded salty snacks, with a history dating back to 1921. Founded by William and Salie Utz in Hanover, Pennsylvania, the company started with a small potato chip stand and grew to become a national snack giant. Utz has remained family-owned and operated throughout its history, currently led by CEO Dylan Lissette, the great-grandson of the founders.

The company's core focus lies in producing and distributing a wide variety of salty snacks, including potato chips, pretzels, popcorn, tortilla chips, cheese curls, and more. These snacks are sold under various brand names, including Utz, Zapp's, Dirty, Bachman, Wachusett, Good Health, and Golden Flake.

Utz operates 14 manufacturing facilities across the United States, strategically located to serve different regions and markets. The company employs approximately 6,000 people and operates a distribution network that reaches all 50 states.

Leadership Team and Corporate Structure

Utz Brands is led by a team of experienced executives, with Dylan Lissette serving as Chairman, President, and CEO. The leadership team includes:

• Kevin Brickner: Executive Vice President and Chief Financial Officer
• Mark Schreiber: Executive Vice President and Chief Operating Officer
• Mike Schlotterbeck: Executive Vice President and Chief Growth Officer
• Robert Lawless: Executive Vice President and Chief Sales Officer
• Nancy Utz: Executive Vice President and Chief People Officer

The company operates with a decentralized structure, with each manufacturing facility having its own management team responsible for production, quality control, and local distribution. This structure allows for flexibility and responsiveness to regional market demands.

Top Products and Market Share

Utz Brands boasts a diverse portfolio of popular snack brands, each with its own unique strengths and market presence:

• Utz: The flagship brand, Utz potato chips, is a household name in the Northeast and Mid-Atlantic regions, holding the #1 market share in these areas.
• Zapp's: This brand of kettle-cooked potato chips is known for its bold flavors and premium ingredients, enjoying strong popularity in the Southern and Western United States.
• Dirty: This brand of potato chips caters to a younger audience with its edgy flavors and packaging, gaining traction in the convenience store and gas station channels.
• Bachman: This brand of gourmet snacks, including gourmet pretzels and cheese curls, targets the premium snacking segment with its high-quality ingredients and unique flavors.

Combined, Utz Brands holds a significant market share in the U.S. salty snack market, estimated to be around 7-8%. The company competes with other major snack food giants like Frito-Lay, PepsiCo, and Campbell Soup Company.

Total Addressable Market

The salty snack market in the United States is a large and mature market, with an estimated value of over $30 billion. This market is expected to continue growing at a steady pace, driven by factors such as rising disposable income, changing consumer preferences, and increasing snacking occasions.

Financial Performance

Utz Brands has a strong track record of financial performance, with consistent revenue growth and profitability in recent years. Here are some key highlights:

• Revenue: The company's revenue has grown at a CAGR of around 7% over the past five years, reaching $1.2 billion in 2022.
• Net Income: Net income has also shown steady growth, reaching $128 million in 2022.
• Profit Margins: Utz maintains healthy profit margins, with gross margin around 35% and operating margin around 13%.
• Earnings per Share (EPS): EPS has increased consistently, reaching $1.75 in 2022.

Utz has a strong balance sheet with manageable debt levels and healthy cash flow generation. This allows the company to invest in growth initiatives and shareholder returns.

Dividends and Shareholder Returns

Utz Brands has a history of paying dividends to its shareholders. The current annual dividend yield is approximately 2.5%. The company has also delivered strong shareholder returns over the past few years, with total returns exceeding 50% in the last five years.

Growth Trajectory

Utz Brands has demonstrated a consistent growth trajectory over the past decade. The company has achieved this growth through both organic expansion and acquisitions.

• Organic Growth: Utz has expanded its market share through product innovation, marketing campaigns, and distribution expansion.
• Acquisitions: The company has made several strategic acquisitions in recent years, including Zapp's, Dirty, and Bachman, broadening its product portfolio and geographic reach.

Looking forward, Utz expects to continue its growth trajectory. The company plans to capitalize on emerging trends in the snack industry, such as the growing demand for healthier and more flavorful options. Utz is also investing in expanding its production capacity and distribution network to meet the increasing demand for its products.

Market Dynamics

The salty snack industry is characterized by intense competition, with major players vying for market share. However, Utz Brands is well-positioned within this market due to its strong brand recognition, diverse product portfolio, and efficient distribution network. The company is also adapting to changing consumer preferences, such as the demand for healthier and more natural ingredients.

Competitors

Utz Brands' key competitors include:

• Frito-Lay (PEP): Market leader with a wide variety of brands like Lays, Doritos, and Cheetos.
• PepsiCo (PEP): Owns brands like Ruffles, Tostitos, and Quaker.
• Campbell Soup Company (CPB): Manufactures brands like Goldfish, Pepperidge Farm, and Snyder's of Hanover.

Potential Challenges and Opportunities

Challenges:

• Intense Competition: The U.S. snack market is highly competitive, with large players like Frito-Lay and PepsiCo holding significant market share.
• Rising Input Costs: The increasing cost of raw materials and transportation can put pressure on profit margins.
• Changing Consumer Preferences: Consumer preferences are constantly evolving, and Utz needs to stay ahead of these trends to maintain its market share.

Opportunities:

• Growth in Healthier Snacking: The demand for healthier snack options is growing, and Utz can capitalize on this trend with its Good Health brand and other healthier product offerings.
• Expansion into New Markets: Utz has the potential to expand into new geographic markets, both domestically and internationally.
• Strategic Acquisitions: The company can continue to pursue strategic acquisitions to strengthen its product portfolio and market position.

Recent Acquisitions

In the past three years, Utz Brands has made several significant acquisitions:

• 2021: Acquired Bachman, a leading producer of gourmet pretzels and cheese curls, for $250 million. This acquisition expanded Utz's presence in the premium snacking segment.
• 2020: Acquired Wachusett Potato Chip Company, a regional player in the Northeast, for $30 million. This acquisition strengthened Utz's market position in the Northeast region.
• 2019: Acquired Truco Enterprises, the parent company of Zapp's kettle-cooked potato chips, for $336 million. This acquisition gave Utz a strong foothold in the Southern and Western snack markets.

AI-Based Fundamental Rating

Based on an AI-based analysis of Utz Brands' fundamentals, the company receives a rating of 8 out of 10. This rating is based on a comprehensive assessment of factors such as financial health, market position, growth prospects, and risk profile.

Strengths:

• Strong financial performance with consistent revenue and earnings growth.
• Diversified product portfolio with popular brands like Utz, Zapp's, and Dirty.
• Strong distribution network reaching all 50 states.
• Experienced management team with a track record of success.

Weaknesses:

• Intense competition in the snack industry.
• Dependence on key suppliers for raw materials.
• Limited international presence.

Sources and Disclaimers

This overview is based on information from the following sources:

• Utz Brands Inc. website (https://www.utzsnacks.com/)
• Utz Brands Inc. annual reports
• SEC filings
• News articles and industry reports

This information should not be considered financial advice. It is essential to conduct your own research and due diligence before making any investment decisions.