Utz Brands, Inc.

Thank you for standing by. My name is Pam and I will be your conference operator today. At this time, I would like to welcome everyone to the Utz Brands first quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the conference over to Kevin Powers, Head of Investor Relations. You may begin.

Good morning, and thank you for joining us today. On the call today are Howard Friedman, CEO, Ajay Kataria, CFO, and Carrie DeVore, COO and Chief Transformation 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 just have 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 posted on our website. Finally, the company has also prepared presentation slides and additional supplemental financial information, which are posted on our investor relations website. And now, I'd like to turn the call over to Howard.

Thank you, Kevin, and good morning, everyone. Starting off with a few key takeaways, I'm pleased with our good start to the year, and for the second straight quarter, we gained dollar, pound, and unit share in the salty snacks category, led by several of our consumer-loved Power 4 brands to include Utz, On the Border, and Boulder Canyon. In addition, productivity programs across our organization continue to build momentum, and we delivered our fifth consecutive quarter of adjusted EBITDA margin expansion as well as 27% adjusted earnings per share growth. To continue building our momentum, in April, we opportunistically accelerated our network optimization strategy by disposing of two additional manufacturing plants to our home. These follow the three dispositions to our home announced back in February. Importantly, our former associates at those plants are being offered full employment, and we thank them for their hard work and dedication over the years and wish them the best moving ahead. Bringing it all together, given our first quarter results and confidence in the remainder of the year, this morning we reaffirmed our organic net sales and adjusted EBITDA outlook and raised our adjusted EPS outlook. We are on track to deliver a strong 2024, as well as the 2026 targets introduced at our investor day back in December. Our four fundamental strategies underpin our efforts, and we've made good progress across each of these strategies this year, positioning us well to hit our goals and build momentum for the next three years. To quickly review our progress, our first fundamental strategy is focusing our portfolio to further penetrate our expansion geographies while holding the core. In the quarter, we gained Circana retail sales market share for the 13-week period ended March 31st. That includes share gains in both our core and expansion geographies, led by continued distribution gains and increases in household penetration. While our salty snack measured channel performance was strong in the quarter, our sales trends in unmeasured areas of the portfolio did not keep the same pace. Part of this is intentional as we optimize our sales mix and investment to focus on our more profitable power brands, while other areas require better execution. These include improving the performance of dips and salsas and our small format channel, where we have the opportunity to strengthen our price pack architecture in a couple of key brands, as consumers remain value seeking in this environment. Moreover, we continue to do portfolio shaping in our foundation brands that impact these channels, and we expect that these areas will collectively improve throughout the year. Our second fundamental strategy is transforming our supply chain to fund growth and margin improvement. We are making good progress on our productivity programs, which is reflected in our adjusted gross margin expansion in the quarter of nearly 300 basis points. and our five plant dispositions are accelerating our network optimization strategy, which is enabling us to increase investment in our more scale plants. Our third fundamental strategy is developing leading capabilities to build a best in class organization. We are in the process of fully implementing our integrated business planning system and building out our consumer and sales analytics, as well as continuing to make progress on our marketing and innovation capabilities. I'm excited to see the impact we can make in market as we increase our investments behind both our new product lineup and two of our Power 4 brands in the second quarter. Our fourth fundamental strategy is improving balance sheet flexibility and pursuing opportunistic M&A. As I mentioned earlier, we have disposed of five manufacturing plants and two brands, with the proceeds going to reduce debt and accelerate our leverage reduction timeline. In addition, our transformation efforts across the company are collectively improving our cash conversion cycle. Before turning the call over to Ajay to discuss our financials in more detail, I'll take a few minutes to review our consumption trends in the quarter. Our retail consumption increased 4.1%, fueled by strong branded volume growth of 4.6%, which ranked first among our branded salty snack tiers. Our consumption growth was again led by power brand growth of 4.9%, and within our power brand portfolio, our power four brand increased 6%, which was nearly four times the category growth of 1.4%. From a salty snack subcategory perspective, our growth was led by significant outperformance in tortilla chips and cheese snacks. Tortilla chip growth was led by on the border consumption growth of 15%, resulting in a half a point share gain, fueled by strong growth in both traditional grocery and mass channels. Our rebound in cheese snacks continued in the quarter led by share gains for iconic Utz cheese balls with strong growth in mass and the club channels. Within potato chips, our consumption was basically in line with the subcategory, driven by share gains for Utz and Boulder Canyon brands, led by continued distribution gains. Our Zapps trends remain below the category given softness in the C-Store channel, but we are actively making price pack architecture improvements and regaining distribution. Finally, consistent with our expectations, our pretzels trend were below category given we are lapping our Zapp's flavored pretzels sell-in in the previous year. These trends will begin to normalize as we get into the latter part of the year. From a geography standpoint, we gained share in both our core and expansion geographies for our total portfolio, our power brands, and our power four brands. Growth was most pronounced in our expansion geographies with growth of 8% fueled by continued distribution gains, which easily exceeded category growth of 1.7%. Share gains across geographies were led by On the Border and Boulder Canyon, with continued share gains and expansion for our Utz brand as well. Moving to our Better For You portfolio of salty snacks, our consumption in the natural channel continues to grow, and dollar sales were up 21.9% compared to 3.9% for the salty snack category over the last 12 weeks ending March 24th. Our leading better-for-you brand in the natural channel continues to be Boulder Canyon, accounting for three-quarters of our sales in the channel and the largest driver of growth, up 31.3%, which is eight times the rate of total salty snacks growth. Boulder Canyon has now delivered 31 consecutive periods of double-digit growth in spins and is the number two potato chip brand in the natural channel, with our avocado oil chip now ranked number one in terms of dollar sales. Looking ahead to the rest of the year, From a portfolio standpoint, our focus will remain on driving outsized investment and focus on our Power 4 brands, Hutts, On the Border, Zapps, and Boulder Canyon. This will be seen in terms of advertising and consumer spend, innovation, and overall marketing capabilities. This year, we are amplifying our innovation to focus on bigger launches. We are focused on delivering craveable flavors, and we're introducing a new limited-time offering of Mike's Hot Honey Extra Hot Potato Chips this summer. Hot and Spicy is the number one flavor in salty snacks at $7.5 billion and growing nearly two times the category rate. In addition, we've launched our Utz Mixed Minis in three flavors in the strong flavored pretzel segment, which makes up half the pretzel subcategory and is posting 12% growth, which is four times the unflavored segment. In addition, our innovation this year will center around capturing occasions and expanding positive choices. As consumers continue to snack across occasions, we plan to be there with a proven strategy around seasonal and multi-pack innovation to include our new on-the-border red, white, and blue cafe-style tortilla chips and our new Zapp's Voodoo Halloween multi-pack. And as consumers continue to look for no-compromise snacks with bold flavors in our flagship Better For You brand Boulder Canyon, we are moving our spicy green chili from a limited-time offer to an everyday flavor. In addition, we have moved beyond potato chips and launched our Boulder Canyon Poppers, which is a better-for-you cheese and snacks made in avocado oil. We launched in white cheddar and jalapeno ranch flavors, and the early consumer feedback has been great. Finally, we have begun to invest behind marketing after a year of capability building. We started with increased investments behind e-commerce and retail media, and next quarter, we will be introducing campaigns for Zaps and Up. While it is still early in the year, the increased confidence we have in our gross margin delivery, our early marketing returns, both financially and from a consumer response, and our ample investment opportunities, we are now planning to increase investment behind our brands this year beyond the 40% that was originally assumed in our outlook. This is consistent with our belief that we make money before we spend money, and we build our businesses overnight and our brands over time. I'm very optimistic we will be able to do both. Now, I'd like to turn the call over to Ajay. Ajay.