Perfect. Welcome back, day three. Good morning, everybody. Excited to have you back for our fireside chat with Utz Brands. Today with us, we are excited to start off the day with CEO Howard Friedman, CFO Ajay Kataria. Welcome to you both. Good morning. Thank you, Andrew. Thanks. A lot to get through today. Maybe one where to start, though, Howard, is I think the new growth algorithm that you laid out at your capital markets day this past December. Utz laid out its expectation for organic sales to grow at a 4%-5% CAGR for the next three years, company to reach an EBITDA margin of 16% by 2026 versus 13% last year. Just to sort of level set us all, can you briefly remind us of the key drivers of this outlook? T hen we can dig into each of the components a bit more over the course of the session. Yeah, happy to do so. I'll take you through the top line, then I think Ajay will help kind of illustrate where we are on the bottom line as well. You know, I think the first thing, when you think about our company, is that we are a distribution and margin story. You know, we have a lot of opportunities across the business to be able to continue to grow and improve, starting, frankly, with the category, right? The category continues to be a vibrant category, largely driven by marketing and innovation, and, you know, has been historically growing, you know, call it 2%-3%. And now, as we think about going forward, you know, we still assume that the category will grow, and I'm sure we'll talk about a little bit of the near term, in a little bit. So we expect the category to grow, call it 0 to 1 on in volume and two-ish in price over the next couple of years. That's after about 4.7%, call it 2016-2019. The second thing is, over the last two years, we've taken some time to clearly define our portfolio, and we talk about our Power Four brands, Utz, On The Border, Zapp's and Boulder Canyon, as being the primary focus for those businesses going forward. As we expand the availability nationwide and continue to also bring some of those businesses into our core geographies as well, you know, we both have a, an opportunity to expand nationally and, and get to a, a larger footprint, as well as be able to bring those three power brands, On The Border, Zapp's and Boulder Canyon, into our core geographies and expand their availability. Obviously, you can get the availability, but then you need to drive consumer awareness, and it is our expectation that we'll drive our advertising and consumer spending up over the next three years, about 40% year- on- year. We're ahead of that this year, but continue to expect that to be a big part of it. Then the last thing is we've been working on driving our innovation engine, so really looking at where are the consumer today and where are they going in the future, and trying to bring out bigger innovations to more consumers, really around flavor, occasions, and presence of positives. Got it. Great. From a bottom-line standpoint, we're targeting 16% EBITDA margin by 2026. That is about 100 basis points of margin expansion every year, on average. That is coming from productivity. We have laid out a plan to deliver $135 million of productivity in the next three years, of which, you know, the $90 million is coming from base productivity, continuous improvement work that we are doing in our facilities, and $45 million is coming from network optimization, which is reducing the number of plants, consolidating warehouses, et cetera. So that $45 million a year, or $135 million over three years, is about 300 basis points of margin expansion. We invest 200 basis points of that back into the business to drive top line and growth, as Howard described, and net about 100 basis points every year. Great. Okay, thank you for that. So it may make sense just to pivot a little bit. You put out a release this morning, reiterating adjusted EBITDA, adjusted EPS and leverage targets. The shift was looking for full-year organic sales growth in a 2%-2.5% range versus about 3% previously. T he discussion in the release talked about, you know, the more promotional salty snack category environment. We've certainly all seen that in the data of late, but perhaps you can give us a little bit more detail on what drove that shift. Sort of where you expect the category maybe to be this year, from a growth perspective, and if that's changed at all? And then initially, I think in the 3% expectation, you were looking for flattest sort of pricing for the full year. How does that change in the sort of context of this morning's release? Yeah, so I'll start. You know, I think a couple of things that we should probably remember about the business and where we've been through the course of the year to date. If you were to go back to January, through really the end of the second quarter, we had been consistently growing our volumes and units, and we're taking share across the category. So coming into the summer, we were feeling pretty good about about where we were and kind of our investment profile overall, that it was delivering the results that we expected. We also had obviously experienced a more promotional environment in that period of time. We sort of saw the category moving in that direction. Some of our and a lot of that for us was driven by the fact that we had not taken price. Our last major price advance was really in 2023, and we did have some competitors who obviously had continued to price into the year. And what we saw in July, although we anticipated some of it, was a much more promotional environment than I think even we had expected in terms of breadth of competition, the depth of the pricing that they went into, and sort of the channels, you know, the C-store, which is an area where we continue to need to do work on our own, as well as mass became significantly more promotional. And you can see that in the data over, call it, that six-week period. We had a very solid July 4th, and we felt really good about our internal data through our earnings release in at toward the end of July, early August. But what we then started to see was the consumption trends over that period of time as well. And so we do anticipate that the environment will be more promotional as we go forward. And, you know, as we've said consistently, you know, it is my opinion from past experience in commodity-based businesses, that deflation is something that we need to be, you know, you need to make sense of and make sure that, as you invest in price, that you're driving some of the returns. And so we've taken a disciplined and focused view of the world, and we will respond where we need to in that same manner. But overall, we believe that, you know, this category remains an innovation and marketing-driven category, and I think it is going to continue to overall be a relatively healthy category. And the last thing I would say is, if you look at household penetration in the category continues to be good. So this is not, something- t his is something that we're watching, and that's kind of what reflected in our thinking. Are some of the price points that you're seeing, do they strike you as maybe unsustainably low by some competitors, where, you know, it's hard to see that being sort of a sustainable place or not yet? Yeah, what I would say, I obviously don't want to speak for my competitors. What I would say is that, the price ladder should be healthy, right? And as you think about kind of where the entry point in the marketplace is to where the premium point in the price ladder, at the moment, it's a little bit more compressed than we would normally expect it to be. And I would expect that over time, it will normalize back to a healthier place. Just a follow-up on that. Have you started to see the return even from a category perspective, as some of these price points have sort of nudged the consumer along a little bit? Are you seeing the category volume respond in kind, or is the category still not seeing the type of lift that you might expect with these types of deeper price points? Yeah, I think what we have certainly seen is the category has gotten a little bit better, but I still think it would be early to say that it is responding to the level of price investment that we've seen. You know, the category is getting better through the month of August, as are our trends, which gives us, you know, obviously, a lot of confidence in kind of where we're going. But I think it's still a little bit early, especially given the breadth of the amount of pricing that occurred, because I think, obviously, the lift really comes when, you know, both elasticity and cross-elasticity all work together. Right. Okay. Even with the revised top-line outlook for the year, I think it still reflects, you know, an acceleration and an inflection, particularly I think, as you go into the fourth quarter around organic top-line growth. Maybe you can get into a little bit, what drives that and where the visibility is to the type of sort of pivot that you need moving into the fourth quarter? Yeah. I think one of the things I would say is the our original assumptions on the year and our assumptions still are the things that we have been executing against are working for us. You know, we have secure distribution. Our unmeasured channels continue to grow. Our distribution is coming through the way we expected, and the retailer and consumer response has been positive in those areas. So, you know, I think that we expect that to continue through the rest of the year, and it really started to become more obvious in the third quarter and building through the rest of the year. So distribution obviously continues to be a significant driver for us. Our A&C year- on- year is up. We had originally planned 40%. A lot of the advertising and consumer will now really, we expect to be more like 60% before the end of the year, and you know, our innovation and the investment that we are making in innovation also continues to build through the end of the year, so the original premise of our growth was, I think, intact. I think the biggest opportunity for us is to continue to make sure that we are executing on our plans and controlling what we can control, and then responding where we need to in a focused and targeted manner. And just one more on the category. You know, salty snacks is, y ou know, it's funny, I hear the word among investors, it's typically been this kind of like bulletproof category, right? One that's been rational. You've got a sort of a dominant sort of industry leader that's typically been rational. Elasticities are typically very modest. And I think I'm getting questions are: Has something maybe changed in this category structurally, or is it just that price points probably across the board, perhaps got a little bit out of whack with where consumers' sort of value perception was? That needs to be adjusted. That takes a little bit of time. Once that happens, no reason to think this category is not the advantage category that it's been historically. I don't want to lead the witness here, but- Yeah. -that's the question I'm getting a lot. I was gonna say that I think the end of your question is well stated. Look, I w e believe, and I think the history would show that this category continues to grow year- on- year, volume and price, and really being driven by the innovation in marketing and execution of its participants. As we go forward, there's no reason to believe that won't be the case, and I think as you see the household penetration trends continuing to grow, it would suggest that consumers still are interested in participating in the category. And, you know, I think at times the rest of the environment does affect your choices a little bit. So I do think that pricing is something that consumers are being more thoughtful about. We definitely see value-seeking behavior and channel shopping and deal shopping over which I think is a response to, you know, their total basket, and you've heard people say a better job than I will on some of why that is, but I think the future is bright in this category long term, and I think that it, you know, when you see somebody like our company, we are incremental to that category and add something a bit more to it, and that's why retailers and consumers like us. Yeah. It's been a few years since Utz launched in the Southeast with a key retail partner, which is really the largest step yet in the strategy to sort of, you know, access expansion markets. Now that you've lapped the sort of initial distribution, how have you been performing in this region, and what does that suggest as to the speed and magnitude of other potential expansion market efforts? And where do you see the biggest opportunity next in terms of expansion markets? Yeah, I think so we continue to feel great about, about the Southeast and, and the participation, not only of, of the retail that we started with, but actually the development of that entire market. I mean, the experience, I think, was very positive and formative for our company. And the first thing is that we, if you look at where we are, if you went back to Q4 of 2022 to today, we're up about 58% for as a total company in terms of our business, and our and that's really being led by our Power Four brands, which are up about 72%. And ultimately, the major driver of that was actually expanding availability. So we talk about, you know, the ideal retailer being about 18... retail footprint to be about 18-24 SKUs to start, and what we've found is we've actually expanded our distribution breadth. We've gained about six in average items carried in that geography, and our share has grown about 120 basis points. So Florida, for us, has been a great place to start and actually allowed us to understand how to enter with a anchor retailer. It also sort of shows us the relative power of a push-and-pull model, so we can drive availability and get shoppers to encounter our product, but also being able to invest in A&C and making sure that we, we're driving consumer interest. And that's kind of where we continue to be in that phase. We still have room to grow before it actually hits what we would consider a core market for us. A couple of- t here's about another two share points for us to go, but we feel really good there. I think as you look at our expansion, you know, we talked about our distribution gains this year coming in line with what we expected. You know, I'll point again to Michigan, where we have bought a master distributor and converting it into our independent operator system. Texas, where we bought back rights to On The Border, which we're also building out. And so, you know, sort of think about the West- the center of the country and the West is kind of the next two geographies, anchored by national retailers, as well as some of the regional powerhouses that are there. I should have mentioned this at the outset. Also, thank you for all the wonderful Utz products out in the resource room there. Yeah, well, we hope to see it chopped down by the end. Yeah. That's usually the best. If you can't feed a bunch of hungry investors, you have a different set of problems. Your sort of power brands in your core markets, right, have continued to do really well. Where there's been some share weakness, partly by design, is just the drag on core market share from some of the foundation brands. Maybe you talk a bit about the role those play and sort of, you know, when do we get to a point where the decline in, or the managed decline in foundation brands, stops being sort of this drag on core, you know, core market share? Yes. So a couple of things. I think you're right, the foundation brands have historically been a little bit more of a drag on our business, and but they're important to us, and they're, because they're important, to both retailers, consumers, and our independent operators in certain geographies. So as we think about those businesses, they are things that actually drive consumer interest for a certain subset of consumers, and we'll continue to carry them in the future. The trick was to be able to right-size them relative to our power brands as our power brands grow. So, you know, what I'd tell you is in the current period, part of our core issue has been really in C-store with some of our businesses, where we're just not getting the turn that we need. We haven't executed as well as I think we can, and so it's happening a little bit slower than we anticipated in the near term. But I think our foundation brand, our brands are getting to the point where they are now not going to be the thing that really dwarf the growth of our power brands because, you know, they are just that much smaller than they used to be. And even in your core markets, you've talked about there's still a lot of distribution in white space, even in the core. For sure. Maybe specifically, where are those opportunities most pronounced as you see it? Yeah, so you know, we talked a lot about On The Border, Zapp's, and Boulder Canyon, and obviously, Utz. The opportunity is really. You know, we feel very good about what we've done with On The Border over time. When we bought that business and have scaled it up, we brought it into our core. But I think we continue to view all three of those brands as having significant headspace going forward, as we grow. And so, you know, our portfolio, we are focused on making sure that we're expanding. I mean, I mean, if you look at Boulder Canyon in the near term, distribution gains have been growing, and unmeasured channels is a business that is growing quickly, driven by the opportunity around avocado oil and non-seed. Great. Productivity obviously plays a key role in both margin expansion target, as well as creating the fuel for reinvestment. Recently, it looks like productivity as a percent of cost of goods has been greater than 5% versus maybe 1% historically. Much of that is driven by some of the recent asset optimization moves you've made. Maybe can you take us through that journey a bit? Give us a sense of how much room is left to go, where your system utilization is currently, and where you think it can kind of get to. And obviously, you've reaffirmed, right, the profitability piece of the year, even with, right, a less robust top line. So is that gap being made up by the, you know, better-than-expected productivity? Yeah, so we are very pleased with the productivity program that's been running so far this year. At Investor Day, we called for 4.5% of cost of goods or $45 million of productivity. We are pacing ahead, to your point, above 5% this year, and that strength should continue. To give you a little bit of context, we started out this journey with 17 manufacturing plants a couple of years ago. At the end of last year, we had 13 manufacturing plants, with a couple of actions that we took. For example, we closed the Birmingham facility, and we sold the Bluffton, Indiana, facility as well last year. At the end of last year, with 13 facilities, we were at about 70% plant utilization. First half of this year, we did two transactions with the same party and divested five manufacturing plants and two brands as well. And now we are at eight facilities. In these eight facilities, today, we are in mid-80s, mid-80% utilization, because some of our product is still being produced by our former, which now owns those five plants. Our goal is to invest in these eight facilities, which is ongoing right now, build capacity, in-source some of that volume, and stabilize at about 80% utilization. Overall, we want to be able to produce about average $200 million of revenue in each of these facilities that we own now. I think the network is in a good place. We are building out a warehouse, a Northeast logistics center, as we call it, in Hanover, which will consolidate six warehouses in the area, so that work is continuing as well. That's the journey, and that journey is pacing faster than we thought it would. We are delivering higher than 5% of COGS in productivity, and we should continue that pace through the year, which then provides us the flexibility that we have been talking about all year to invest back in the business and flow through to the margins, and we are using some of that flexibility now to hold our EBITDA guide for the year, even though we have stepped down top line slightly. All right. Have the three-year targets for productivity changed, or could they change, or is it just that some of the savings are coming through sooner or faster than you would have anticipated? We have not revised the targets, but, you know, it certainly is pacing ahead of those targets. This isn't pull forward. This is actually, you know, productivity coming in higher than what we thought, which gives us a lot of confidence for us to deliver 2026 goals. What I will say is, you want to maintain that flexibility, that balance, that how much of that goes back into the business to drive top line. So, you know, we'll talk about targets when it's time. You know, Utz historically, in its sort of hundred-year history, has been more of a push sort of model, DSD distribution. Right. You know, great at that. And the shift here with Howard and you coming on board is to be a little bit more of a hybrid, right? Push-pull model, a little more consumer pull. Productivity can fund a lot of that. Innovation starts to build, and A&C is a big part of this. And as you talk about, I think you expect A&C to be up some 60% this year, year- over- year, albeit from a small base. Where are you now on A&C as a percent of sales? Where do you anticipate that should be, maybe over some period of time, to really sort of get this push-pull model, this hybrid model, to materialize in a bigger way? Yep. So we are still about 1% of sales. We are expanding 60% as you called out this year. The goal is to be industry standard, you know, 2%-4% of sales in terms of investments. But you know, at Investor Day, we laid out a path that we will expand on average 40% more year- over- year, every year, for the next three years. I think that's where we are pacing. The program is building very nicely. We are kind of developing that muscle. We hired Jen Benz who is building out that program for us, and she has done a nice job, you know, setting up the analytics, setting up the infrastructure. So the dollar that we put out in the market now is returning more, for us, from a marketing standpoint. Nothing makes me happier than hearing Ajay talk about marketing. And look, I think that the add to that is, part of the money that we are spending in productivity is also around building our capabilities. And so, I think when I got here, we always, I think, had an aspiration, even if you went back to the de-SPAC, of kind of having a share of voice that's in line with our closer competitors. But really, it was a question of: Can we build? We needed to build the capability of doing it, the brand insight, and making sure that when we execute, we can feel good about the dollars that we're spending, which took us a little bit of time. The optic lesson I would offer you is, as we are building our e-commerce capability, that piece of our business is growing really quickly, and that is the first use case for us in making sure that we know how to do it, where to do it, and how to deploy it, and becoming more aggressive against those targets as we go. I know unmeasured channels sales flipped from material headwind to reported sales in the first quarter to a pretty significant tailwind in the second quarter. What changed? And what do you anticipate from your unmeasured sort of channels sales in the second half? Yeah, so to the point, you know, in Q2, we went from a headwind to unmeasured channels growing about 10% in the quarter. And, you know, part of what we are now seeing is continued growth in those channels. Really, a lot of the places where consumers are shopping right now, as they value seek, they are going to, obviously, the mass channel, but also into discount as well as club, kind of both ends of that barbell. And so we are, I think, doing a pretty good job at this point of being able to play the entire channel mix. Food and grocery continues to be very positive for us. But as you think about unmeasured channels, those at both discount as well as club continue to be places where we're seeing strength behind our portfolio, and we would expect that to continue through the end of the year. How do you ensure that you're sort of properly distributed in the more value-oriented channels, given what we're seeing around consumer purchasing habits as well? Yeah, look, I think the benefit of a portfolio of brands that we can play with, that allows the retailer to customize and not just compete against, you know, the big brand or, or a specific assortment in every geography, allows us a level of customization, that I think some retailers find very positive. You know, we generally are incremental, and that's true no matter what channel that we go into, is that we tend to add something to the category, both for the customer as well as for the shopper. So part of this is about sitting and collaborating with those retailers to make sure that the assortment, the price pack, is right for what they want to offer, to their shopper as they walk in. And then, you know, the power of our independent operator model is, once that distribution is there, we do a pretty good job of showing up and servicing the shelves and making sure that we remain in stock and available. Leverage has been a little bit of a concern for its investors since the company IPO'd four years ago, with leverage now anticipated to be about three point six times by the end of this year. - three times by the end of 2025. Finally, certainly trending in the right direction. At normalized leverage levels, what are the company's capital allocation priorities? Yep, our capital allocation priorities remain the same. We want to invest in growth, followed by paying down debt, followed by, you know, paying a dividend or growing a dividend. Those will remain the same, and then, you know, as our leverage levels come down, we'll maintain the flexibility to look at M&A. Okay. Utz historically, right, has been quite active, right, in the M&A market. Took a pause the last couple of years. Obviously, leverage levels were part of that. What are you seeing in sort of the pipeline, you know, at this stage? We hear a lot about, you know, this sort of backup of, you know, sponsor-owned assets that haven't been marked down yet, but to raise new funds. At some point, some of those are gonna have to come out. Like, where is Utz in that sort of period of time where you can start maybe to look at adding some brands or some capabilities, whether it be distribution-related or what have you, to the mix? Yep, so I'll start with two things. One, we are laser focused on delivering our strategic priorities that we laid out at Investor Day. You know, there is plenty to do in the business, and, you know, that's where our focus is. Also, the last couple of years, you know, the M&A environment, it was more of an availability of assets question, you know, less leverage. We are prepared to use our capital structure to access M&A. From an M&A standpoint, you know, M&A happens when it happens. We are pretty full in terms of looking at distribution, et cetera, priorities that, you know, we acted on, in the last five years. At this point, transformative M&A is what we are looking for. You know, the right asset, if it comes along, we will look at that, with our full capital structure, equity and debt, to go after it. Yep. Howard, in your more recent sort of top-to-tops with key customers, you know, putting the near-term, you know, sort of category issues aside, how do those conversations proceed? What are they most interested in talking to you about? How are they looking at Utz as an expanded partner, particularly in some of these expansion markets where you may not be new to a particular retail customer. but you might be new to them in a certain region? Yeah, well, I mean, not surprisingly, the conversations tend to be about what does the data and shopper patterns suggest happens if you actually allocate space to our portfolio, and so there's a fair bit of conversation of what happens to the category, and as consumers and shoppers are coming in and shopping the category, overall, our incrementality story continues to be, I think, the thing that is most resonant. You know, we attract shoppers in, and actually, we are additive to their existing portfolio looks like, number one. And I think that is really attributed to the breadth of our portfolio, but also the investment that we're willing to make, to make sure that once we show up and we can get on the perimeter, or we can be in an end cap, and we can get into the run, what are we doing to invest to make sure that we are, you know, sort of carrying our own weight? It's not just a show up and exist story. And so we've also talked to them about how do we launch into their markets and make sure that consumers and shoppers know that we're available, and how do we do things that make sure that we're focused on long-term demand creation? You know, sometimes I think, when you see new entrants into a market, what you want to make sure is that they are additive and that they are going to be growth accretive, not just moving peas around the plate, and I think that's the story that we tell retailers, and that is, I think, the story that the data would show. You mentioned earlier that you started to see some gradual improvement in the data for you in August. I guess, what, what metrics were we talking about there specifically? Was it volume? Was it promotional lift? I'm just trying to get a sense of what that was, and how does that play into how you see the cadence, right, of the top line sort of recovery through the back half of the year play out? Yeah. So what we look at, so we obviously use Circana, and obviously, Nielsen, which showed similar trends, right? Which is really around dollar share or dollar revenue sales, as well as relative to the category. Got it. What we saw was obviously a dip in the latter half of July and sort of that six-week period. Then we've seen steady improvement, and we're improving relative to the category a little bit better than the category is. We certainly lost a little bit of share in the lagging period, but now we're starting to show improvement again. I think really the question for us, we feel very good about the things that we control, the distribution gains that we have, the demand that we'll be able to generate, and unmeasured channels, which obviously would not be in that data. But obviously, we would expect the Q3 to be a little bit more muted relative to Q4. Got it. There's been obviously some large transactions, right, transpiring in the broader global snacking space. I'm curious, your take on that, and maybe more importantly, would you anticipate that to sort of usher in a new era of broader consolidation in the space, do you think? Just growth is tougher to come by. Balance sheets are in a better place for the group as a whole historically, right? That's tended to bring about, you know, some additional consolidation, even if it's not for growth purposes, but more for leveraging overheads and, you know, less sexy, but, you know, the group's gone down that path before. I'm just curious from your longer history in the space. Not to date you. Yeah, well, yeah. It happens as the hair turns gray, I suppose. I had an afro at one point, so. Fair enough. I have an obvious joke as a kid growing up on Long Island, which I'll tell you on the broadcast. Look, I would not speculate as to what people will do. We obviously watch the transactions that have occurred, most recently, and I certainly think that as an industry and these things tend to happen in this period of time, and in our category specifically, you know, there's obviously a very significant market leader, and then there is a sort of a longer tail of competitors that also exist, all kind of. That I think over time we are a natural place to continue to be able to acquire and grow inorganically, which obviously Ajay talked to. But I think it remains to be seen. You know, I think the category will be dynamic. I think the opportunities are certainly going to be there in the next couple of periods, but we're kind of focused on our knitting at the moment about driving long term for our shareholders. Maybe, maybe lastly, in your three-year sort of growth algorithm and outlook, you've planned for a somewhat more conservative take on category growth than what's been the case historically? Maybe you can just remind investors on what's built into the plan and where the category's been historically. Yeah, so the category historically had call it a 3%-4% business. It was really around 1% volume and 1-2 volume and basically 2-3 price. And so over time, it's been in that period. We had assumed really call it a flattish volume environment, 0-1, and then 2% price. I think at the time that felt like a pretty conservative view, and that without getting into trying to project what the near term means for the long term, we do think that the category will eventually shake itself out and kinda go back to that period of time. The question is, how quickly? What I would tell you is that the one thing that we remain focused on is our algorithm was not predicated on category as much as it was predicated on the distribution growth and the building of the capabilities that we've talked about. And so, you know, our expectation is that we can grow basically 2/10ths of a volume share in our expansion markets and hold our core. If those things happen, then the algorithm kinda stands for itself. And I think there's no reason to believe that we can't continue to grow that distribution, and it will really be a translation of volume to value that will be, you know, the real wild card, but I think we still feel very good about four to five over time. Got it. Good. That's a good place to leave it here in the main session. We're gonna head over to the breakout, so please join us there, and thank you very much, Howard and Ajay, for being here.