Good afternoon, everyone, and thank you for joining us at Oppenheimer's 25th Annual Consumer Growth and E-commerce Conference. My name is Rupesh Parikh. I'm the Senior Food, Grocery, and Consumer Products Analyst here at Oppenheimer. I'm very happy to introduce our next presenting company, Utz Brands. Joining us today are CEO Howard Friedman, and EVP and CFO Bill Kelly. Thank you both for being here. The format of today's session will be a fireside chat, and then we'll move to audience Q&A. If you have questions, please enter them in the question panel below the video. Let's get started. I guess I wanted to kick it off with a question just on the salty snacks category. What do you believe has been contributing to category challenges in recent quarters? Yeah, first of all, Rupesh, I just want to say thank you for inviting us. It's great to be with you today. I think one of the things I'd love to start with is, as you think about our business, we have said and maintained since Investor Day that we are not exclusively reliant on the category for it to be able to drive our growth. While I would say that to date, we're pretty pleased with where we are, we're obviously not satisfied with where we believe that our business can eventually grow and take us. Lots of work to do still and lots of opportunities still in front of us. I think if you look at the category historically, we would say that it's kind of a 3%-4% category with, call it 0%-1% on the volume side and call it 3%-ish on the price side, which has been contributing to the growth. Recently, what we've seen is more of a slowdown on the price contribution to the category. I think not surprising when you think about the inflation over the last couple of years. P re-pandemic, you obviously saw a relatively benign environment. We saw a big step up. I kind of feel like the consumer may be taking a little bit of a break. We need to continue to do the things that have historically driven this category, which is really around marketing and innovation and communication, which is a lot of what, as you know, our playbook is. I think that will ultimately be the most important thing. The last thing I'll say before we move on is household penetration is growing in this category. If you look at the salty category overall, unlike some other categories in food, we are actually seeing more consumers year- over- year wanting the products in their pantries. To me, that is always a really great indicator of the long-term health and opportunity in front of us. As you guys look longer term, do you think that the category gets back to 3%-4%? Or how do you guys think the longer-term category growth? Yeah, I think definition of longer term is the question. I mean, we've obviously said this year flattish is kind of what we expected. We do expect that the category will progress through the course of the year. Last year, you saw accelerated pricing investments show up sort of around the summertime. Q3 and Q4 pricing increased. Promotional environment kind of normalizes, I think, as we get into the summer this year. Q1 was a little more promotional than prior year. Q2, but that's more of a lap question because the category and its participants remain pretty rational in what we're all doing. Okay, great. Outside of the ongoing value-seeking behavior, is there anything else to note from a consumer behavior perspective? Any new consumer trends of note in the category? Yeah, so look, it's actually, I do think that what you're seeing in value, just one comment on that is consumers are defining value as they choose, right? For some consumers, it's a different oil base, a non-seed oil. For some consumers, it's an absolute price point. Not surprisingly, you're seeing classes of trade catering to different consumers experiencing different growth. On the more high-end retailers, you're seeing growth there. We're certainly seeing that behind Boulder Canyon. On discount and dollar and mass merch, you're also seeing growth there as well as some of our more value-oriented offerings show up. Of course, food has always been in our home, and we continue to see good growth there. In terms of other trends we're seeing, certainly non-seed oil has been a tailwind on the Boulder Canyon business. We're certainly seeing flavor and spice heat continues to be very appealing to the consumer. You can see that behind our Mike's Hot Honey item. You can also see that with some of our Cheese Ball offerings. I think that that's a place where you continue to see flavor exploration. Really, Zapps is a great example. Probably the one I'm most excited about is actually our Lemonade Potato Chip this summer, which is a flavor experience for the shopper. Those trends, I think, are not necessarily new, but they endure, and they are places where we're choosing to compete. Okay, great. Now switching gears to competition, have you seen any changes lately on the competitive front? Is there anything new at private label just given the heightened uncertainty in the macro? Yeah, so we actually are seeing competition being pretty consistent with what they have historically done. We are not seeing any sort of outsized change. The environment, we tend to talk about being rational in terms of what is happening. You are seeing more innovation and communication coming back into the category, which I think is a good thing. Then with respect to private label, look, private label is up about 1% and fairly consistent with where you would see us in the cycle. There are some retailers who use their own brand as a statement in the marketplace of who they are, and they build that brand. There are some retailers who use private label [audio distortion] Howard, you may. Own brands to either drive profitability or to make sure that. No, you're good. You're good now. You're good again. Did I? Can you hear me? Okay, sorry. Sometimes you see private label manufacturers using it as a statement for themselves. In some cases, it's either a margin opportunity or it is trying to get to an overall price point on the price ladder. It is still relatively small in our category because, again, we've always been much more of a marketing and innovation-led category first, and I don't suspect that that will change. Okay. J ust on the promotional backdrop, do you expect it to, it sounds like it's stable now, but do you expect it to intensify or do you think it's just going to level off with the prior? How are you planning for the balance of the year? Yeah, so we certainly do have some expectation that the promotional environment will remain pretty consistent. Certainly, as we're going into the summer, we're not seeing the levels of price promotion, depth of discounting quite the way we did a year ago. I think we're prepared to compete and we'll maintain our price gaps accordingly, but I think we feel pretty good about where we are. B.K., I don't know if you have anything to add on price. No, I think when we think about kind of the Q1 print that we had in our bonus pack program, you saw some pricing come through there. What we said post that call was that balance of the year, we'll see pricing have about a one-point impact per quarter for the balance of the year. Some of that bonus pack will impact Q2 as it ended in April. We are very focused on having the right balance between price and volume and execution. We will stay very much focused and disciplined on our promotional spend to maintain those price gaps. Okay, great. Now I'd like to cover some more Utz-specific questions. There's a lot of focus on your Q1 call on bonus bags. Can you remind us of your playbook to improve your value proposition from here, particularly in light of ongoing consumer value-seeking behavior, significant macro uncertainty, and the potential inflation consumers might face with tariffs? Yeah, so let's start with the bonus pack to start. It was something we launched in December of 2024, offering 20% more product at the same price across six Utz and On The Border SKUs. It basically went from December until April of this year. It did not have an impact on our organic growth numbers for Q1 as volume and value effectively offset each other. What it was was an efficient way for us to be able to drive trial with consumers, especially in our expansion markets and in places where they maybe have not had as much experience with our items, and to deliver an opportunity for some consumers to experience value. It did finish up in April, and we're transitioning to sort of our normal commercial plans as we go forward. What I'd tell you is it is really just one tool in a marketer's tool chest to be able to offer value. Sometimes you see it in self-liquidating offers or in premiums. We continue to look at ways to be able to have consumers experience our brands and engage. We'll continue to do that through the course of the year of looking for new ways to engage, whether it, again, it's items, innovation, or if it's something else. We do not have plans, at least at this point, to bring anything like a bonus pack back in the near term because I think we have other tools to continue to drive our business as we go forward. You certainly see that in the Nielsen and Circana data both in Q1 and coming into Q2 so far. Depending on what you look at, you are seeing our business continuing to grow. Okay, great. We don't get the data if the trends are consistent. Is that how you describe Q1 to Q2 to date? Yeah, so I mean, so if you were to look at sort of where Nielsen or Circana are today, we are seeing similar performance in the market today. Okay, great. As these bonus packs go away, then it sounds like you guys are confident sustaining the momentum because it's already happening in the data. Okay. Yeah, look, I think what's going to drive our momentum this year is the distribution gains that you saw in the first quarter. You're going to see Boulder Canyon continue to perform. You're going to see our expansion playbook continue to do what it's supposed to do. You're going to see us remain focused on driving innovation and brand building as we go forward. Those things give us optimism that kind of where we're sitting right now is a pretty good place for us to be. Okay, great. Switching gears just to innovation. How are you feeling about the innovation pipeline from here and how have recent innovations performed versus your expectations? Yeah, so I feel actually really good about the innovation so far this year. We’ve launched Tortilla Chips with Boulder Canyon. Obviously, we’re continuing on our Cheese Ball program with Boulder Canyon. We launched a couple of items with On The Border, a lime and sea salt, and a Mexican urban spice. We launched, as we were talking about, the Lemonade Potato Chips. We’re bringing out a Mike's Hot Honey Cheese Pizza Cheese Ball as well. We continue to innovate on our core potato chip brand within Boulder Canyon and the natural channel. Overall, I would tell you that we probably are at the right level of innovation for us. I think what has been encouraging is that we’re able to get to fewer items launched, but bigger impacts to the overall business. While it's a little early to say what trial and repeat numbers look like, we feel like our innovation plan and program has really started to demonstrate some maturity. Okay. Have you guys ever, do you guys ever comment at what percent of sales come from innovation or anything like that? I'm not sure that we've given a targeted number yet. Okay, great. Probably one of my favorite brands, Boulder Canyon. We've seen an acceleration in demand in natural organic, particularly if you look at the specialty retailers like Sprouts and Natural Grocers. How are you thinking about further distribution opportunities from here for Boulder Canyon outside the natural channel and in more mainstream players as consumers seem to be increasingly gravitating towards better-for-you products lately? Yeah, the first thing I'd say is certainly as you look at somebody like the natural organic channel and some of the unmeasured channels that we compete in, they are very important to that brand and they continue to be and have been great partners for us as we've started to grow. What you see is distribution gains and velocity gains sustaining as we're going year over year, driven by a very strong relationship. We have actually introduced the brand into more conventional classes of trade and into the club channel as well. We obviously talked about 158% growth in last quarter on Boulder Canyon and conventional. What's encouraging is that it's actually been driven by distribution gains and velocity. It has not demonstrated any sort of overlap with our existing franchise. Look, we believe that that business is growing quickly, and we believe that it can continue to grow quickly. We promised $100 million in three years at Investor Day in 2023. We delivered the $100 million in retail sales this past year. We believe that we're just getting started on that brand. Okay, great. Outside of Boulder Canyon, do you see other better-for-you opportunities within your existing brands portfolio, perhaps your M&A? Yeah, look, I think we still continue to have an opportunity around our brand story and to continue to build that business with sort of traditional marketing tactics. We also are fortunate that the majority of our products are really very simple. You're talking about potatoes, oil, salt, or corn, oil, and salt. We have a pretty good portfolio of very simple ingredients. We also offer a gluten-free range, and we have a low-salt opportunity. We do feel like we are a permissible indulgence, but we do cater to better-for-you. That said, there are continuing trends, whether it's around non-seed oil or other opportunities that we will continue to evaluate if consumers want them, and we can do a good job. We're going to do our best to enter into those segments. With respect to M&A, I'm not sure that we need an inorganic opportunity to be able to address this trend. We obviously would look at it if we needed to, but we've got a pretty robust portfolio of brands and an organic opportunity in front of us that I think we can probably do a lot of this ourselves, but we'll always look, and we should. Okay, great. I guess going to your other power brands, so we've touched on Boulder Canyon. Is there anything else that you think is important to highlight today on whether it's Utz, On The Border, or Zapp's? Yeah, look, I think that I feel really good about our Power Four and sort of the rest of our branded portfolio. The two things I would tell you is as we're expanding, the question we always consider is as we're expanding into new markets with our Power Four brands, how does the assortment look and will consumers accept? What we've seen is consumer acceptance of On the Border, of Zapp's, of Utz as we've entered into new markets has been very strong. We feel really good about the portfolio as we go forward. We have a little bit of cleanup work to do in some pockets, but nothing significant. Okay, great. And then on the convenience channel, can you remind us of your exposure to the convenience channel and what you're seeing there, and then how you think about a return to growth in that channel? Yeah, so convenience channel has obviously been something we've talked a lot about. We had some opportunities that we needed to correct in terms of our assortment and some of our distribution. You're starting to see those benefits starting to come through, although it's not yet to growth. We probably have about 11% of our business in convenience store where traditional salty categories, more like 18%. So we have a fair bit of headspace that we can go to try and run our playbook, which is starting to show some fruit. If you look at some of the larger chains, you're seeing us back at growth. It's really a lot of the independents and some other work we need to do. It is really get the assortment right, make sure that our IOs are servicing the store and are excited to get there and bringing out innovation that appeals to the convenience store shopper, which is a little bit more spicy and a little bit more me, as opposed to we occasions. That is all on the docket. Okay, great. Now I'm going to switch gears to expansion markets. Can you talk about what you're seeing in your expansion markets and remind us of your playbook here? Where do you see the biggest white space opportunities geographically? Yeah, so we're feeling pretty good about where we are. We're now about 44% of our business is in our expansion markets. That's up from 41% two years ago. And our average market share is really around 3% in expansion versus 6.5% in our traditional core. Probably most encouraging is if you were to look at, there are 30 states that we would consider our expansion markets, and we can track and measure performance in 26 of them, and we're growing in 25. We are driving geographic performance in the geographies. We tend to either enter by pushing in. We'll look at a distributor that we have an opportunity to acquire, or we sometimes get pulled in where a retailer asks us to collaborate with them. That typically starts with some perimeter placement and something in the aisle, and we start to build out some scale. We obviously want, call it 18-20 SKUs to start so that we can actually have enough sense of brand portfolio bigness to know that we can perform and support the category. We back it up with some retailer media and traditional A&C socially and digitally. T hen we slowly but surely continue to bring our normal playbook, our LTOs, our seasonal offerings into the marketplace to then mature it. What I'm proud to say is generally when we go in, everybody wins. The consumer gets a product and portfolio that they love. The retailer gets some differentiation, and we tend to grow the category, a nd then we continue to be able to expand and execute our playbook, a nd it really turns out to be something that when we go in, we tend to stay. Okay, great. As you look at the opportunity expansion markets, have there been any positive or negative surprises you call out at this point? I think probably the big positive is, again, how our Power Four brands do travel and that we are seeing great consumer acceptance. They're driving trial, but what's interesting is that our repeat rates stay high as well. As you can imagine, if you get a whole bunch of new consumers to try the product, some people are not going to repeat. What we're seeing is that consumers come in and stay at a similar level as our existing portfolio, which is probably the most pleasant surprise. I think the other thing is how relevant our playbook and repeatable our playbook tends to be market to market, geography to geography, and the support that we're getting as we're executing. Okay, great. Howard, one of the things you were focused on when you stepped into the seat was increasing marketing spend. Can you talk a little bit about your marketing efforts and how you think about marketing from here? What types of returns are you seeking on your marketing investments? Yeah, so our philosophy is we want to obviously build our sales overnight and our brands over time. That means that as we're entering into these new geographies, we obviously want to drive consumer awareness quickly so that people can try it. That tends to be a little bit more arm's length, some retail media and that sort of thing. We bring in our digital and social programs as well. We've been focused on things like connected TV. If you watched the playoffs last year in football, you might have seen some of our advertising. A lot more digitally and social is more of our portfolio mix because it just makes sense for kind of given where we are. We are seeing tangible results. If you look at our household penetration, we actually are up 120 basis points to almost a little over 49%. We have almost 2 million more buyers, 1.9 million more buyers over the last 12 months. Our repeat rates are around 69%, all of which are giving us a great deal of encouragement that our message is resonating and that our product delivers. Okay. Just switching gears to another topic, we get a lot of questions on this, just GLP-1. If you can remind us what your team has seen to date in terms of GLP-1 impacts on your portfolio and then how you think that impacts going forward. Yeah, it's interesting. What I would tell you is at this point, we haven't seen a whole lot of impact of GLP-1s for a couple of reasons, I would imagine. One is usage is still relatively small here in the U.S. because it's both expensive and can be uncomfortable as consumers are using it. The question to me that we're still trying to think through is, is this a diet or is this a lifestyle? And what we've at least, we haven't been able to study it long enough, but what we do see is that people who go on the drug tend to use it like a diet and then rotate off. If that's the case, then we suspect that the impact may be less than has been debated, but we just don't know yet. Now, I think if it ever gets to an oral, becomes like a statin, then I think it will be a more interesting debate as to what that impact is, but that's still in front of us. The last thing I'll say is if the consumer adoption becomes significant, as a marketer and as a consumer goods company, our job is to find a new unmet need that we can deliver again. If that's more protein or smaller packs or more satiety, then that's what we're going to do. We're going to address the trend as it reveals itself, and we intend to fully compete and meet the needs of all consumers who want to buy our products. Okay. But bottom line at this point, you guys don't think you're seeing much of an impact? We haven't yet. Okay. Great. Okay. Now I'm going to switch over to a couple of financial questions. So, Bill, you've now been with Utz a little over a month. What attracted you to the company? Thank you for your question. Utz is an incredible company with a wonderful legacy. You think about the strong brands, the innovation, the great people. Really, I thought it was a great fit for my background, particularly as we want to continue to build and scale and grow this business. I've had a lot of experiences in that within CPG. I also see specifically for my skill set, an opportunity to leverage technology as well as continue to improve on the financial side and transform our systems and drive better support around insights to support the growth. Okay. Great. In terms of longer-term algorithm, in late 2023, your team introduced three-year targets for a 4%-5% organic sales growth CAGR and double-digit adjusted EPS growth CAGR. How should we think about potential return to these types of growth rates on the top line as the bottom line is still, you guys seem well- positioned to achieve the bottom line targets? Yeah, thank you for that. We reaffirmed our 2025 outlook, low single-digit organic sales, 6%-10% adjusted EBITDA growth, and 10%-15% adjusted EPS growth. We want to continue to approach the three-times leverage mark to get the balance sheet in order. Our revenue is an outcome of the expectation that we will hold core volume share and grow slightly better volume share in expansion markets as we continue to have distribution gains and continue to support the brands. We've shown that we are not solely reliant on the category to grow, and we remain confident in our long-term goals. The productivity program is the driver. That fuel for growth will continue to help us. We delivered $60 million of that in year one, and that was ahead of our plan. Okay. Great. From a productivity perspective, we've seen a clear step up in productivity in recent years from 3% across the goods sold to 6% last year, and you're targeting another 6% again this year. Remind us of the key buckets underlying the improvement. Yeah. So just a quick reminder, the original target was $135 million, $60 million, as I said, delivered in year one. We probably now track more toward the $150 million. Our execution delivery really builds our confidence as we meet and exceed those targets. In terms of recent milestones, the Rice Distribution Center consolidation, we put six warehouses into one, and we modernized our chip lines. Our average age improved on chip lines from 35 years to 14 years. That drives efficiency, quality, and really growth readiness. Our supply chain transformation really positions us to continue that productivity and have margin expansion. Okay. Great. Over, I guess, while you're all greedy, but you guys got to 6% of cost of goods sold What's your team's confidence in driving a larger percent of cost-of-goods time? We'll continue to deliver on the programs that are in flight, and there is even more opportunity around automation and procurement improvement and some logistics as well as network optimization. The idea that our footprint has now consolidated from 15 plants to 8, gives us a chance to really improve on that. We are very confident to drive that productivity, and we'll continue to use some of that fuel to invest and further our capabilities. Okay. Great. Just on the leverage front, just remind us of the latest, what your latest leverage is. I think you mentioned earlier, you guys are still on plan to get closer to three times. If you can just update us on the latest on the leverage front. Yeah. Our Q1 leverage is around four times. That reflects the normal seasonal working capital and front-loaded CapEx. You'll see that be a familiar number for us in the first half. We will continue to target the approach to three times as we unlock some of that working capital in the back half of the year. Our productivity savings kick in, and we continue the revenue growth. Okay. Great. I know we touched on M&A a bit in terms of the better-for-you category, but just overall, where does M&A rank for the company in terms of priorities at this point? I think Howard has said this many times. We look at everything, but we will remain very disciplined and selective. We continue to remain committed to the capital allocation priorities, which are unchanged. That is, organic growth is our number one priority, particularly with the significant geographic white space still to capture. We will continue to pay down our debt. From an M&A perspective, we are good buyers throughout our history, and we have proven that. We believe if there is an attractive asset that we would be good owners of, we are in a position to take a look at that as well. We will continue to protect our dividend, and obviously, buyback could be part of the allocation theory as we go forward. Okay. And then just from an opportunity perspective, right now, just overall, what are you guys seeing in the landscape? I was at Expo West, I guess, a few months ago. Obviously, a lot of snacky brands there, but just curious overall what you're just seeing from an opportunity perspective. Howard, you want to take that? Yeah. Look, I think there's always Expo West is always awesome because it's such a great forward-thinking event. It is always a good place for our marketers to also go and push their thinking. We are paying attention to any assets that come. We will take a look at and read. Again, to Bill's point, to B.K.'s point, making sure that we're good owners and making sure that if that asset came to market, that we would actually be able to help that business achieve its full potential is really kind of the first question that we look at. I'm not sure if there's anything out there at the moment where we would say we have to have it. We obviously will continue to be selective within our business and understand meat and popcorn continue to be played [audio distortion] Howard, may have froze for a second. We are just going to go back to the M&A question due to some audio difficulties. I guess, Howard, just from an M&A perspective, just overall, what are you seeing right now from an opportunity perspective? Yeah. Look, I would tell you, we tend to look at everything because we want to make sure we understand what's out there. Again, B.K. made the comment of, "Would we be a good owner?" Meat and popcorn continue to be two subcategories that we will continue to look at and try and see if there are opportunities for us. I don't necessarily feel like at the moment that there is a brand out there that we necessarily can't—that there's a brand out there that we have to have and that there are opportunities that we can't do ourselves within our existing brand portfolio. Okay. Great. We're out of time. Thanks, Howard, and thanks, Bill, for joining us today. Thanks, Rupesh. Good to see you.