HANOVER, PA. — A period of “prolonged hyper growth” drove sales at Utz Brands Inc. in fiscal 2022, a year Howard A. Friedman, chief executive officer, described as one of “gradual recovery and one where we exceeded our original financial activities, while also building for the future.”
Net sales in fiscal 2022 ended Jan. 1 increased 19%, climbing to $1.41 billion from $1.18 billion.
Despite a strong fourth quarter, Utz sustained a loss in the full year of $14 million, which compared with income of $8 million, equal to 26¢ per share on the common stock, in fiscal 2021. Last year’s results included $36.68 million in gains on remeasurement of warrant liability. Adjusted net income in fiscal 2022, meanwhile, totaled $77.7 million, down 3.2% from $80.3 million in the same period a year ago.
In the fourth quarter, net income totaled $13.8 million, or 18¢ per share, which compared with a loss of $16.2 million in the same period a year ago. Adjusted net income in the quarter was $21.5 million, up 34% from $16 million.
Net sales in the fourth quarter rose 18% to $354.7 million from $300.9 million.
“In 2022, we drove market share gains across our largest channel, the grocery channel, and across our largest subcategory, potato chips,” Mr. Freidman said during a March 2 conference call with analysts. “(And we) implemented pricing initiatives and delivered on our productivity goal of 3% of cost of goods sold to enhance margins, manage costs and provide the required fuel for reinvestment, significantly increased our market penetration with our expansion into more than 1,300 Publix stores. … This is an exciting partnership that we will look to expand, implemented network optimization projects to unlock capacity and lower costs.”
During the call, Ajay Kataria, chief financial officer, said Utz expects continued strength in net sales growth with total net sales projected to grow 3% to 5% and organic net sales growth of 4% to 6%.
“Our sales volume will be supported by distribution gains in our expansion geographies to include continued benefits from our Publix expansion, along with additional opportunities led by national grocery customers,” Mr. Kataria said. “They will also be supported by higher levels of advertising and marketing spend, in particular, working media spend and new innovation like our Zapp's Sinfully-Seasoned Pretzel Stix.”
Mr. Friedman said Utz plans to scale Zapp’s Seasoned Pretzels and extend Utz peanut butter-filled pretzels into additional packs sizes, launch new seasonal offerings and increase multipack assortment. The company also intends to introduce new limited-time offers and line extensions like Mike’s Hot Honey chips and Red Hot Ripples.
Commenting on Utz’s stock-keeping unit (SKU) rationalization plan that so far has resulted in the elimination of more than 350 SKUs (primarily with a focus on private label and certain partner brands), Mr. Kataria said Utz will continue the rationalization program into 2023 as the company seeks to further optimize mix to improve portfolio margins.“This program began late into the first quarter of last year, and through a wraparound impact from last year's actions, combined with new actions this year, we expect approximately 400 basis point impact from SKU rationalization in the first quarter of 2023,” he said.