Utz Brands, Inc. Q3 FY2025 earnings call

• At Investor Day, Utz had a 3-year financial plan with progress on top line, bottom line, and gross margin objectives, outperforming the category.
• Acquired a route network in California, which is a large market opportunity (1.9% current share), with plans to introduce products using a hybrid distribution model.
• A potato crop issue affected gross margins in the quarter; they source chipping potatoes from Midwest and East Coast and expect to recover as cheaper potatoes become available.
• On The Border faced short-term softness due to regional consumer value-seeking behavior, but expected to correct in Q4 and next year. Boulder Canyon had strong momentum with shelf space awarded for 2026, driven by better-for-you credentials and innovation.
• Continued productivity initiatives in supply chain and operations, with opportunities for top-line growth. Innovation in products like protein chips and ingredient simplification to drive category growth.

No detailed segment performance with absolute revenue and contribution percentages provided in the transcript.

• Expect EBITDA margins around 16% in '26 with incremental investments, particularly for California expansion.
• Entering California in 2026 should help achieve 200-300 basis points ahead of the category, likely at the higher end.
• Continued best-in-class productivity activity, with supply chain transformation CapEx stepping down, enabling free cash flow growth.

• Weather-related potato crop issues affected gross margins in the quarter, though they expect to recover as cheaper potatoes become available.
• On The Border faced short-term softness due to regional consumer value-seeking trends, though correction expected.
• Competition and consumer response to competitors' innovations could impact market share and distribution.

Q: Andrew Lazar on EBITDA margins and California expansion A: Howard Friedman discussed progress since Investor Day, California acquisition details, and EBITDA margin expectations. BK Kelly talked about productivity and free cash flow.

Q: Michael Lavery on California network and gross margins A: Howard Friedman explained California network entry and product introduction plans. William Kelley discussed potato crop impact on gross margins and recovery.

Q: Peter Galbo on margin commentary and potato crop A: Howard Friedman and William Kelley addressed margin expectations and potato crop recovery.

Q: Scott Marks on On The Border and Boulder Canyon A: Howard Friedman discussed On The Border's short-term issues and Boulder Canyon's growth and shelf space gains.

Q: Robert Moskow on competition and protein chips A: Howard Friedman talked about competition's impact being net positive and protein chips as a consumer trend area.

Q: John Baumgartner on next-generation productivity A: Howard Friedman and William Kelley discussed productivity initiatives and their top-line enabler role.

Q: James Salera on market share dynamics A: Howard Friedman talked about core market share gains from portfolio shifts and innovation.

Q: Rupesh Parikh on retail media marketing A: Howard Friedman discussed marketing investment flexibility and retail media investments.

Q: Peter Grom on innovation and category growth A: Howard Friedman talked about innovation's potential to move category growth and preliminary views on '26