Utz Brands, Inc. (NYSE:UTZ) Q1 2023 Results Conference Call May 11, 2023 8:30 AM ET

Company Participants

Kevin Powers - Head of Investor Relations

Howard Friedman - Chief Executive Officer

Ajay Kataria - Chief Financial Officer

Cary Devore - Chief Operating Officer

Conference Call Participants

Peter Galbo - Bank of America

Michael Lavery - Piper Sandler

Rupesh Parikh - Oppenheimer

Stephen Lengel - Truist Securities

Jim Salera - Stephens

Operator

Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Utz Brands First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session [Operator Instructions].

It’s now my pleasure to turn today’s call over to Mr. Kevin Powers, Head of Investor Relations. Please go ahead.

Kevin Powers

Good morning, and thank you for joining us today. On the call today are, Howard Friedman, Chief Executive Officer; Ajay Kataria, Chief Financial Officer; and Cary Devore, Chief Operating Officer. Howard and Ajay will make prepared comments this morning, and all three will be available to answer questions during our live Q&A session. Please note that some of our comments today will contain forward-looking statements based on our current view of our business and actual future results may differ materially. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. Before I turn the call over to Howard, I have just a few housekeeping items to review. Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials. Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our Web site. Finally, the company has also prepared presentation slides and additional supplemental financial information, which are posted on our Investor Relations Web site.

And now, I’d like to turn the call over to Howard.

Howard Friedman

Thank you, Kevin, and good morning, everyone. It's great to be talking to you today in my second earnings call as CEO of Utz. I've been in the role now for about six months and it's been a great experience with a lot of learnings that makes me increasingly confident about the future growth. In addition, I'd like to thank Dylan Lissette once again for his help during the transition. And I want to take a moment to congratulate Dylan on his official appointment to Chairman of the Board last week during our annual shareholder meeting. He did a phenomenal job building Utz into what it is today, and the transition couldn't have come at a better time as we position for our next leg of growth. Our first quarter results are a testament to this as our momentum is building as we execute against the long term strategies that have made this great company successful. Organic net sales increased 4% even as we lapsed 21% comparable growth in the prior year. We expanded adjusted gross margins and drove double digit adjusted EBITDA growth, all while continuing to make the necessary investments required to fuel sustainable above category long term growth. Our power brand consumption increased nearly 10% on top of 20% growth last year as we further penetrate our expansion geographies and intentionally rationalize other areas of portfolio. As expected, net sales volumes declined about 6% in the quarter as we lapsed a strong prior year and aggressively optimized our product mix and trimmed non-core private label and partner brands. These actions proactively reduced sales volumes by about 4% but we believe that over time these strategic actions will improve our margin mix and unlock key manufacturing, selling and distribution capacity to support higher growth of our power brands.