Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your operator for today's call. At this time, I would like to welcome everyone to the Utz Brands Q1 2025 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, again, press the star one. I would now like to turn the conference over to Kevin Powers, Head of Investor Relations. You may begin. Thank you, Operator, and good morning, everyone. Thank you for joining us today for our live Q&A session on our Q1 2025 results. With me on today's call are Howard Friedman, CEO, and Ajay Kataria, CFO. I hope everyone has had a chance to listen or read our prepared remarks and also view our presentation, all of which are available on our Investor Relations website. Before we begin our Q&A session, I just have a few housekeeping items to review. Please note that some of our comments today will contain forward-looking statements based on our current view of our business, and the actual future results may differ materially. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. 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 and posted on our website. Now, Operator, we are ready to open up the line for questions. Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, press star one again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. Our first question comes from the line of Andrew Lazar with Barclays. Your line is open. Great. Thanks so much. Good morning, everybody. Morning, Andrew. Good morning. I was hoping maybe to start off with, you could just explain the difference between sort of flat overall retail sales and the 3% organic sales growth that you reported this quarter. Just trying to get a sense of how much of that difference, if any, is sort of timing-related that may reverse in future quarters, or if it was simply unmeasured channels and the like. Yeah, I appreciate the question, Andrew. Look, I think broadly, I think what you see in our results is a lot of the benefits of some of the opportunities that we continue to have as you think about expansion in our expansion geographies, as well as obviously in our core. Specifically to the bridge between net sales and consumption, it's exactly what you said, which is we have had some significant strength in our untracked channels. Natural Channel is doing quite well for us, Discount and Club. We also have the benefit now of the RDC being open. We are seeing much better throughput through that facility as we consolidated six warehouses down to one. We are getting our shipments out a little bit earlier. There is a little bit of revenue recognition, which we'll expect to continue. There is nothing in these results that were pulled forward in the quarter. We're obviously quite pleased with how the volumes have responded. That's helpful. Thank you. I know you had anticipated some volume share gains, but some value share contraction in core markets in the near term. Is that simply the bonus pack efforts? If so, how do you balance the volume outcome with the return on such programs as we think about sort of the sustainability of the approach? Yeah. You'll recall when we met in December 2023 at our Investor Day, one of the things that we've said pretty consistently is that we want to be able to hold share in our core while we're growing in expansion geographies. This has largely held true as we've continued to grow our volume shares. The core obviously is a little bit more competitive naturally because we are in a lot of cases the number two player. We're a little bit more exposed to where the category looks. I think what you see right now is a couple of things. I think first, you do see the benefit of bonus packs. Second, you're seeing incremental distribution in Boulder Canyon and On the Border, which is also helping. I think a lot of it is things that we're trying to just get into balance as we go forward. Really, I think what you'll expect to see is sort of a little bit more normalized volume-to-value relationship as we go forward as bonus packs wind down. That's helpful. Thanks for that. I appreciate you putting the case study that you did in the slide deck. That was actually real helpful around what you're seeing in expansion markets. Ajay, thanks so much for all of your help and wish you all the best going forward. Thanks. Thank you, Andrew. Thanks, Andrew. Our next question comes from the line of Peter Galbo with Bank of America. Your line is open. Hey, guys. Good morning. Thanks for taking the questions. Howard, I had to do a double take on slide four. I thought you had snuck in a photo of Kev as a final send-off to the slide deck there, but unfortunately, it was not him. We'll have to get that in the future. I just wanted to follow up maybe on Andrew's question on the bonus pack impact. I think on slide 23 of the deck, you guys lay out that the impact to price was about 300 basis points. Is that kind of the similar offset in terms of all mix? I didn't see if there was a contribution number for what bonus packs actually contributed to all mix in the quarter. Just any additional help there would be appreciated. Yeah. The short answer is yes. I'll leave it at that. As you saw, most of our price was related to bonus pack. There was about 60 basis points that was not bonus pack related. That is the true price gap investment that we made in the quarter, and that flowed through down to the P&L. Okay. All right. Got it. Helpful. Howard, just on Boulder Canyon, look, it's obviously been a tremendous growth driver. I'm not even sure if some of the track channel data is picking up some of the new product yet. What's kind of been the early reception to some of the new category expansions with Boulder Canyon? How much of what we're seeing in the Nielsen or Circana data is just existing distribution being pushed out more? Should we kind of start to see that accelerate as the new products start to hit shelves as well? Thanks very much. Yeah. Look, we're very pleased with the performance of Boulder Canyon. It's a great product. For consumers who are looking for non-seed oil offerings, it's a product that delivers great taste, non-seed oil, in a lot of cases, non-GMO. We're very pleased with, obviously, the consumer and the customer reception to it. Obviously, it's a huge driver, as you saw in our untracked channels in the natural channel, as well as we're now gaining retail distribution in traditional channels as we move into food. A lot of that gain is still in front of us. We've gotten the distribution, and you'll continue to see that business continue to grow in more measured channels. Specifically to reception, we've launched Canyon Poppers last year, which is performing quite well in the cheese ball competitive set. We also launched incremental flavors. We have a wavy product that's out. Obviously, most recently in March, we launched our tortilla chip. Tortilla chips is still a little bit early to see in the read, but the rest of the business and the innovation is readable. The last thing I'll say is, while distribution is growing and we're quite pleased with it, what is giving us a lot of optimism on this brand is that velocity is also growing quickly. It's sort of the best combination that you could hope for: gaining distribution, growing velocity in an on-trend segment where consumers are headed. We're quite pleased with it, and we look forward to continuing to drive that business longer term. Great. Thanks very much. Thanks to Ajay as well for the partnership over the years. Appreciate it, guys. Thank you. Our next question comes from the line of Michael Lavery with Piper Sandler. Your line is open. Thank you. Good morning. Hey, Mike. Morning. W hen you pre-announced the nice sales dissection and just some of the non-branded or partner brands versus the rest and how they've been growing, can you just give us a sense of what you expect going forward? For partner brands, maybe how you can manage those or if and how much you control kind of how they flow through and what the growth outlook or declines might look like going forward? A couple of things. Obviously, on our non-branded, non-salty piece of the business, Dips and Salsa continues to be a business that we would expect will have some near-term pressure on it as we continue to lap prior year, and then we expect it to start to inflect and become more stable as we get into the end of Q2. With respect to partner brands, what partner brands are by their nature are brands that we carry on our IOs carry and deliver for route averages and to make sure that they're delivering what the retailer and what our customers ultimately want. We do not really control them. What we do try to do is make sure that over time that as our brand grows, that we actually get more of our products on every truck and that those businesses will naturally get a little bit smaller. We would expect them to continue to decline, although we do not expect them to be as negative as we go forward. Okay. That's helpful. You called out the new flavored On the Border tortilla chips. Maybe can you just give a sense of how far that brand could go or how big a flavored opportunity might be and what, if any, other white spaces you see as an opportunity? Yeah. Obviously, we're quite pleased with On the Border. It was an acquisition that we made a couple of years back, and it has continued to grow nicely as we continue to expand distribution. I still think that there's a distribution gain opportunity in our expansion markets, much like there is for the rest of our portfolio. With respect to innovation, look, we know that unflavored tortilla chips is a great place for On the Border. We would expect that we can also bring flavors in. It's a piece of the category that continues to grow, and it's a place where we think that there's a fair bit of white space. I think longer term, just like any other business, Boulder or On the Border, rather, has got opportunities in additional flavors. Potentially, there are other formats that we can introduce. As consumers indicate their interests in different product experiences, we think that brand has got a lot of legs to stretch. Okay. Great. Thanks. Next question comes from the line of Robert Moskow with TD Cowen. Your line is open. Hi, thanks. The bonus pack program, I think you're talking about it in terms of a limited-time offer. Is that right? How will you evaluate how long to keep it in the market? Does it depend on competitive dynamics or just the category kind of response to it? Thanks. Yep. A couple of things. You're correct. The intention was for this to be an opportunity for us to try and test different ways to deliver value to consumers, right? One thing that we have certainly seen on bonus packs, obviously, the consumer response was very positive, and we feel really good about how it kind of played different roles in different places, to be perfectly honest. In expansion geographies, it was also a great trial vehicle. We were able to, as we are getting product into new markets, it's given consumers an opportunity to opt in and try it. In our core, it was obviously a way to deliver a different way to deliver value. The one thing I would say, though, is we're doing that across the entire portfolio. Obviously, you can see Boulder Canyon in the natural channel as well as in club, and then also, obviously, with the rest of our portfolio in the discount channels. I think our expectation was that if we would do it for a brief period of time, it would flow in and flow out. We continue to expect that to be true as we transition into the merchandising plans that we have for the summertime. Okay. Does that mean as you transition, it might be pulled out in the summer and then a quick follow-up? Yes. Our expectation is that that program is winding down now. As we transition into the summertime, we have pretty normal commercial plans to go to support our innovation, increased marketing, and making sure that our pricing is correct in the market as we go through the peak selling seasons for us. Okay. Maybe broadly speaking, how should we think about price mix compared to volume for the rest of the year? Should we expect price mix to continue to be negative? Can you balance out those two in your sales forecast? Yeah. We should be normal course from here on out. You should expect about a point of price investment going forward. Okay. Great. All right. Thanks, Ajay. And best wishes. Thank you. Our next question comes from the line of Rupesh Parikh with Oppenheimer. Your line is open. Good morning. This is actually Erica Eyler on for Rupesh. Thanks for taking our questions. Erica. I guess first, I wanted to touch on natural organic. We've obviously seen tremendous momentum across the natural and organic space. You've seen great results in Boulder Canyon. Maybe you could just talk about the further opportunities that you see to capitalize on this trend, whether it's accelerating initiatives in Boulder Canyon or through M&A. We'd just love to get your thoughts there. Yeah. Agreed. We're quite happy with how Boulder Canyon has been doing in the natural and organic class of trade. What you're seeing right now is we are extending innovation. We're entering into new segments of the category. Talked a little bit about Canyon Poppers and some of our flavors, tortilla chips launching right now. I think the opportunity also more broadly for us, specifically to Boulder, is to actually start telling its story. We're working on ways to make investments in the brand equity and drive its overall awareness. I think in the near term, what you're going to continue to see is distribution gains supported by shopper and consumer support and innovation as we go forward. I think we got a lot of runway left. It's growing quite nicely right now. Consumer response has been excellent. We would continue to see opportunities to drive that momentum further. Okay. That's super helpful. Then just on the channels, I mean, you called out, I think, natural, hard discount, and dollar again in your scripted remarks. As we think about channels, I mean, particularly in light of the current backdrop that we're seeing, and those, obviously, a couple of those channels, hard discount, dollar, cater to that value-seeking behavior. Are there any other new shifts of note from a channel perspective lately? Look, I think so a couple of things. One, we use Circana, MULO, C- Plus with convenience as the read, which actually helps, we think, understand our business. Some of what you see in the bridge is really just a question of what's tracked versus what's not. Obviously, we continue to see good support and strong momentum in food. Our mass channel is also performing. What we see right now is consumers seek value. They're seeking value across the spectrum from premium to merchandising support, promotional support, and different classes of trade. I think that's, I think, really the kind of the story of our print. You continue to see that value-seeking reaction and consumers responding well to what we're doing and what we're offering across the spectrum. Okay. Great. Thanks. I'll pass it along. Our next question comes from the line of Jim Salera with Stephens Inc. Your line is open. Hey, Ajay. Thanks for taking the question. Howard, I wanted to maybe drill down a little bit on potato chip subcategory. Obviously, that's where your growth saw kind of the most stark outperformance driven by both Boulder and Utz, which is interesting because Boulder is kind of a premium offering where Utz, particularly with the bonus pack, is, I would use, more of a value offering. Can you just kind of walk us through the dynamic at play there and how we're seeing household growth both at the kind of premium and at the value side? Yeah. I think there's a couple of things. One, I think we believe that consumers are seeking value broadly, right? As you look at Boulder Canyon, Boulder Canyon obviously is the most—it is a premium-priced chip. It is delivered into different classes of trade. I think, to your point on Utz, Utz is really—we're quite proud of the brand, and we're quite proud of the consumer response to it. The opportunity for us was really in that expansion market, distribution gains, and the perimeter display activity that we were able to get, that our IOs were able to deliver behind the bonus pack. Kind of different reasons for their outperformance, right? Boulder, distribution gains; Utz, a little bit more merchandising support are really what's driving that difference. Okay. Are there any significant distinctions between when we think about an Utz household versus the Boulder household? I mean, is there a lot of overlap there, or are there kind of unique characteristics that you can assign to each, and you find that there is not a ton of cross-pollination? I'm not sure we've ever actually shared sort of the overlaps. I would be a little cautious on thinking that they would be exclusive households. It just doesn't, it wouldn't necessarily be what I would expect to happen, right? What I would tell you is the Boulder household specifically tends to be a household that is a little bit more affluent and is actually looking for better-for-you credentials than non-seed oil, where I think what you see in Utz is a more mainstream household, broadly speaking. I don't know that we've ever really looked to say, is there an overlap or an exclusivity to them? Generally speaking, I think we would expect to see overlap across the portfolio. Okay. If I could just sneak in one other quick one. Just thinking about the distribution gain opportunity at Boulder, you talked about still a lot of runway ahead of you. I've seen the product in some new places and retailers in my area. Could you just give us a sense for kind of maybe what we should expect from a sequencing perspective this year? I mean, is it in all the major club regions? I mean, is there anything kind of imminent that we should be thinking about as we're building out the demand drivers for the back half of the year? Look, I think we've seen a significant amount of distribution gains. We have gotten some support and some rotational support and some retailers as well. I think what you'll see is continued distribution gains in the business. Obviously, in the natural channel, it's a little harder to see, but we continue to get incremental space there. You're seeing it now in the more conventional grocers as well. You should see continued distribution gains. We've got a lot of white space left across this portfolio, as you know. We would expect to continue to demonstrate our benefits to the category and to consumers with retailers across our portfolio, with Boulder being, I think, a near-term beneficiary. I'm not surprised you're seeing it. I expect you'll see more of it as we go forward. Okay. Great. Ajay, I just wanted to say it's been a pleasure working with you. Best of luck in whatever the next endeavor is for you. Thank you, Jim. Next question comes from the line of Scott Marks with Jefferies. Your line is open. Hey, good morning, guys. Thanks so much for taking our questions. Hey, Scott. First question from my side is you spoke to kind of volume share gains in core geographies. It seems like maybe some of that could be attributed to those bonus packs. Just wondering, one, if that's the case, and then two, how do you think about incremental distribution opportunities within those core geographies as maybe larger peers continue to see a bit more pressure? Yeah. The first answer to your question is, of course, some of the volume share gain that we had is being driven by bonus packs. You'll recall at our investor day, what we basically have said is we believe that we can continue to grow by holding our volume share in the core and then driving outsized distribution gains in our expansion markets and to be able to deliver on our top-line expectations. Part of what was happening in the core was also our core ex-Utz core has significant opportunity on three of our remaining powerful brands. On the Border, Zapp's, and Boulder Canyon all have average item carry opportunities and distribution opportunities within the core geography to be able to drive gains, which is part and parcel to how we expect to hold our volume share. What you certainly see in the current quarter is you do see gains on On the Border and Boulder Canyon in our core geography. Distribution gains are up, which is also helping support volume share. Obviously, again, to your point, the bonus packs was a contributor as well. I think as you go forward, you should expect us to continue to drive our white space opportunities in our core with those items and then our expansion geographies and incrementally in additional classes of trade with the rest of our portfolio because the one thing that we continue to see is that as we gain distribution, we stay and we're helpful to the consumer, the customer, and obviously the category. Understood. Thanks for that. Then a second question for me. Understand you've been speaking about this bonus pack program being more limited and winding down right now. I guess based on what we've heard maybe from some peers around the industry is that the U.S. consumer seems to be maybe a little bit more pressured. Maybe there's some weakening sentiment out there. What might change your mind about maybe bringing back this bonus pack program? Is there certain metrics you might have to see that would make you want to bring that back and test it again? Thanks. Yeah. Look, I think, and I'm not going to break any new ground here by saying that I think we're watching how the market is responding and what consumer behavior looks like as a branded company. That's obviously job one for us. Value-seeking across the consumer base continues to be an area that we're all watching. Our theory has been that we can add value in a variety of different ways, whether it's in premium products and value offerings or in innovation and marketing, which have always been the thing that have sustained this category. We've never been a price-driven business. Consumers come down the aisle because they like the brands, they like the innovation, and they like the marketing, and then fair pricing. We'll continue to look at ways to address value as we go forward. The bonus pack program, obviously, was one way that we went after it. We maintained our price gaps. We have also gained distribution in our items. We are going to play the full marketing mix. If the opportunity came back again, we have a lot of learnings from this round of bonus packs, and we will evaluate it as conditions change. Understood. Thanks so much. I'll pass it on. Our last question comes from the line of John Baumgartner with Mizuho. Your line is open. Good morning. Thanks for the question. Hey, John. Fine. Maybe first off, just sticking with the bonus packs and the volume response there, I'm curious how if you can see through to any impact on consumption from new trial and new consumers relative to benefits from frequency, how much has been subsidized relative to maybe accelerating new buyer growth? That has a longer-tail benefit for you from here. I know it's not a long-duration program, but just any gleanings you have thus far. Yeah. Look, I think I would say it's a little hard for us to tease it out exclusively for bonus packs because it was a flow-through item. They were not what we did was we delivered the product. We wanted to have it sell through this window of time and then move forward. It's a little harder for us to tease that out. What I would point to, however, John, is if you look at the household penetration results that we continue to see on our business, we've gotten now to 49% if you look at the rolling 12 months, which is an all-time high for us. We are, broadly speaking, holding our buy rate, which, as you know, is hard to do when you bring in a lot of new users and then they try you and then they move on. We're obviously quite proud of the panel metrics and continue to be pretty optimistic about the resonance of our overall portfolio and its quality. I do believe that there is some trial that is happening with respect to expansion markets with the bonus pack because it was broadly consumed. It was broadly delivered to the classes of trade. We'll obviously continue to watch it as we go forward. Trial and repeat rates on our business are pretty strong, and household penetration continues to grow, which, at least from my seat, is the one thing that we want to make sure that we continue to deliver against. Okay. As a follow-up on C-stores specifically, I think the comment there was that performance is improving, but it's not yet back to growth. Is there anything at this point that you can do as a company to accelerate that turn, or is it just largely dependent on overall traffic trends and sort of the macro backdrop? Yeah. I think there's a two-part answer to that. Obviously, the channel needs to continue to improve. As the channel improves, I think what you're seeing now is that that is starting to happen. I wouldn't broadly say that it's improved, period. I think it's getting better. I think for us specifically, there are three things that we are continuing to work on, and they're kind of things we've talked about in previous calls. First is we need to continue to drive our distribution in convenience stores and make sure that we have the price pack architecture correct, get the sizes right, get the items right, get the planograms correct. We're focused on distribution. The second is delivering innovation in that channel. At times, it can be a little different because a lot of that, a lot of convenience is a me moment, right? Smaller bags that tend to be consumed right away. I think we have opportunities on the flavor profiles of some of our products as well and the innovation that we need to offer to that class of trade. The last is just making sure that we continue to work with those retailers and our IOs to make sure that we have the space and service that I think the consumer reasonably should expect when they walk in to be able to get our products wherever it is that they want to shop. Okay. Okay. Great. Thanks, Howard. And Ajay. Hey. That's a deal. That concludes the question-and-answer session. I would like to turn the call back over to our CEO, Howard Friedman, for final remarks. Yeah. Thanks, Desiree. I just want to say thank you to everybody for the call. I think what you see through our Q1 is, you know, us executing our playbook and continuing to drive the results that we expect to deliver. Obviously, it's only the Q1, and so there's quite a bit more to do. I would be remiss if I didn't thank Ajay live on the call for all his leadership and support over the last several years and say thank you and good luck. We appreciate everything that you've done. Thank you, Howard. Last but not least, I'd like to thank Kevin, who is also moving forward as he winds down his time. Obviously, many of you know we have an extraordinary IR program here at Utz, and it's been largely driven by his leadership and support over the years. We also wish Kevin all the best as he moves on to his next great adventure. Thank you, Howard. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining, and you may now disconnect.