Utz Brands Accelerates Supply Chain Transformation, Brand Portfolio Strategy
Utz Brands, Inc. announced that certain of its subsidiaries including Utz Quality Foods, LLC have entered into a definitive agreement for the sale of certain assets and brands to Our Home, an operating company of Better-for-You brands that includes Real Food From the Ground Up, Popchips and Food Should Taste Good. Under the agreement, affiliates of Our Home have agreed to purchase the Good Health and R.W. Garcia brands, the Lincolnton, N.C., and Lititz, Penn., manufacturing facilities and certain related assets, and assume the Company’s Las Vegas facility’s lease and manufacturing operations.
Following the close of the transactions, Utz and Our Home will operate under a transition services agreement for 12 months. The total consideration for the transactions is $182.5 million, subject to customary adjustments, and the transactions are expected to close on Feb. 5. In addition, post-closing, the parties will operate under reciprocal co-manufacturing agreements under which Our Home will co-manufacture certain Utz products and Utz will co-manufacture certain Good Health products. Certain Good Health products will continue to be distributed and sold on the Utz DSD network for Our Home. Our Home plans to continue to operate and grow the brands and manufacturing facilities under its platform while offering employment to Utz associates working in those facilities as part of the transition.
Howard Friedman, chief executive officer of Utz, said, “We expect these transactions to deliver on our supply chain transformation and value creation initiatives, to fast-track our deleveraging timeline by a full year, and to accelerate our brand portfolio strategy to better optimize for growth. With this important step in the optimization of our supply chain and brand portfolio, together with immediate benefits to free cash flow from lower interest expense, we are well-positioned to execute against our expansion plans across the U.S. and deliver on our margin target.
“Our Home’s portfolio of Better-for-You brands is well aligned with Good Health and R.W. Garcia’s missions of bringing healthy, innovative snacks to consumers. On behalf of everyone at Utz, I would like to thank our associates within the Good Health and R.W. Garcia businesses for their many contributions. They have a great place within Our Home, and I am confident they will have exciting opportunities ahead.”
Aaron Greenwald, founder and CEO of Our Home, said, “We are thrilled to announce this acquisition from Utz as it significantly scales Our Home’s snacking platform and manufacturing footprint across the United States. These transactions support our vision to deliver snacks that satisfy while creating a sense of connection and comfort at tremendous value. Through our owned-production facilities led by our invaluable team members, along with a carefully curated brand portfolio, we aim to be the preferred choice for those seeking high-quality, Better-for-You snacks.”
The transactions are expected to provide approximately $150 million in after-tax net proceeds, which Utz will use to pay down its long-term debt. The debt reduction is expected to lower interest expense by approximately $12 million in fiscal 2024 based on the Company’s current outlook for interest rates, and to accelerate the Company’s plan for achieving its target of approximately 3.0x Net Leverage by a full year from the end of fiscal 2026 to the end of fiscal 2025.
The company expects the impact of the transactions to be accretive to its Adjusted Earnings per Share on a full-year basis in 2024, reflecting the foregone profit related to the Good Health and R.W. Garcia brands, and after factoring in the benefit of cost savings and the use of net proceeds from the sale to paydown long-term debt and reduce interest expense. Utz estimates that Good Health and R.W. Garcia-related products contributed approximately $65 million in net sales for the fiscal-year ended Dec. 31.
In addition, at the company’s recent 2023 Investor Day, Utz provided fiscal 2026 financial targets that included targeted Supply Chain Network Optimization cost savings of approximately $45 million to be achieved from 2024 through 2026. The Company expects that the completion of these transactions will accelerate the timing of cost savings. Management will further discuss this impact, in addition to its fiscal year 2024 outlook, on its fiscal-year 2023 earnings conference call on Feb. 29.
In the fourth quarter of fiscal 2023, the Company’s Circana total retail sales increased 4.1% and Power Brands increased 5.3 percent, both ahead of Salty Snack Category growth of 2.8 percent. The company’s total retail sales growth was led by volume growth of 4.3 percent compared to the Salty Snack Category volume decline of (1.9 percent). Additionally, based on preliminary financial information, the company estimates fourth quarter total net sales declined between (1.3 percent) to (0.2 percent) to between $350 million and $354 million. The Company anticipates that its net sales growth in the first quarter of fiscal 2024 to be more consistent with retail sales growth.
For the fiscal-year 2023, based on preliminary financial information, the Company estimates 2023 total net sales growth in a range of 2 to 2.2 percent, and is narrowing its fiscal-year 2023 Adjusted EBITDA outlook range to growth of 9.5 to 10 percent versus the prior expectation of growth of 8 to 11 percent.
These preliminary results are based on the company’s current estimate of its results for the fiscal year ended Dec. 31, 2023 and remain subject to normal year-end accounting procedures and are subject to change. Under the federal securities laws, the Company is not permitted to release non-GAAP results until it is able to disclose the most directly comparable GAAP measure. Due to the company’s year-end closing process, such GAAP figures are not available in advance of the release of such information on Feb. 29, when Utz plans to release its fiscal-year 2023 financial results. At that time, the company will host a conference call and webcast with members of the executive management team to discuss these results at 8:30 a.m. Eastern Time.
Visit the “Events & Presentations” section of Utz’s Investor Relations website at https://investors.utzsnacks.com to access the live webcast and presentation. The webcast will be available in listen-only mode, and the replay will be archived on the “Events & Presentations” section of Utz’s Investor Relations website.
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Southern Recipe Small Batch Launches Sweet BBQ Pork Rinds
Southern Recipe Small Batch, the leading authentic, handcrafted, small batch pork rind snack brand, recently announced its newest product launch, bringing a sweet and saucy new flavor to the snack food aisle: Sweet BBQ Pork Rinds. The new variety will be available in Kroger stores nationwide in late February at an SRP of $3.99 for each four-ounce bag. This new flavor is a direct response to consumer interest, and is a trending flavor for snack food, overall.
According to Flavor & the Menu magazine, “American barbecue has never showcased more flavor diversity and appeal than it does right now. Across the country, chefs are putting their own spins on the classics while also introducing consumers to the country’s wide array of on-trend regional variations.” As a result, consumers are driving demand for their beloved BBQ flavor in sweet variations in the snack food aisle as well.
“BBQ flavoring for snack foods is as traditional as it gets,” shares Mark Singleton, VP of sales and marketing at Rudolph Foods. “Especially when it comes to pork rinds, consumers just love the combination of BBQ and that bacony flavor they can find only in a pork rind. And because sweet BBQ is a trending flavor right now, we believe this is a flavor made in hog heaven.”
Southern Recipe Small Batch’s newest addition to its branded line of products are a true testament to innovation in nostalgic snacks and flavors. The new Sweet BBQ variety allows the brand to diversify its current offering and speak to the conversations with shoppers specifically requesting this culinary flavor. The brand is excited to once again help fans renew their love for pork rinds, and to become a new favorite for snack food lovers everywhere.
Southern Recipe Small Batch, a division of Southern Recipe – “The tastiest crunch in the South” – is a small batch, handcrafted brand of pork rinds. Developed with the purpose of delivering iconic flavors in a nostalgic recipe, Southern Recipe Small Batch offers this traditionally indulgent Southern snack in internationally-inspired flavors that boasts up to eight grams of protein, up to seven grams of collagen, low carbs and naturally gluten free. For additional information, please call 1-800-241-7675, or visit SouthernRecipeSmallBatch.com.
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Kellanova Adjusts Leadership as Hood Set to Retire
Kellanova’s North America president, Chris Hood, will retire at the end of April. Nicolas Amaya, president of Kellanova Latin America, will succeed Hood as president of Kellanova North America.
Victor Marroquin, general manager of Kellanova Mexico, will succeed Amaya as president of Kellanova Latin America. Both region leaders will report to Chairman, President and Chief Executive Officer Steve Cahillane. Transitions begin immediately.
“A seasoned consumer packaged goods leader, Chris joined our company as part of the Pringles acquisition in 2012 and has contributed tremendously during his tenure,” Cahillane said. “Over the past nearly six years in his role leading North America, Chris created an agile, category-led business model, driving better performance and unlocking innovation, while guiding the North America organization through major business and portfolio realignments, including the successful exit from direct-store delivery, the divestiture of non-core brands, and the recent spin-off of WK Kellogg Co. We wish Chris and his family all the best and extend our deepest appreciation for his contributions.”
Hood’s retirement prompts orderly successions by Amaya and Marroquin, both of whom have distinguished themselves as highly effective business leaders.
“In Nicolas and Victor, we have proven leaders who are committed to delivering on our Differentiate, Drive & Deliver strategy, developing talent and advancing our purpose,” Cahillane said. “These appointments demonstrate the strong caliber of our people and talent pipeline.”
Over the past four years in his role as President, Kellanova Latin America, Amaya has led the team to deliver robust and consistent top- and bottom-line growth and build strong relationships with key customers and distributors across the region. He has also been at the forefront of digital transformation.
“Nico is a visionary leader who has a strong track record of developing high-performing teams and delivering outsized growth in both Latin America and North America,” Cahillane said. “He has the successful track record and Kellanova experience to continue to drive our business forward as the new leader of our largest region.”
Since joining the company in 2001, Amaya has held a variety of leadership positions in both the United States and Latin America across the cereal, frozen and snacks businesses including general manager, snacks and growth platforms for Latin America; general manager, category marketing and innovation, Latin America; and general manager, Mexico, before being named president, Kellogg Latin America in 2019. Prior to Kellogg, Amaya held various marketing roles at Unilever.
Marroquin joined Kellogg in 1997 in sales, and then held progressive roles in marketing, customer development and commercial management. Since 2014, he has served as general manager in several roles across Latin America leading countries such as Ecuador, Peru, Brazil, Colombia and the Andean region, and then was named general manager, Mexico in 2020. In these roles, Marroquin has consistently led the team to deliver strong top- and bottom-line performance, strengthen the brands’ market positions, transform our go-to-market models and elevate key customers´ strategic partnerships.
“Victor has experience in every key market of the Latin America business,” Cahillane said. “He is well respected and well known throughout the region – both within Kellanova and the industry. He has sustained growth momentum in Mexico despite political, economic and regulatory challenges, and accelerated delivery of our Differentiate, Drive & Deliver strategy.”
Kellanova is a leader in global snacking, international cereal and noodles, and North America frozen foods, with a legacy stretching back more than 100 years. Powered by differentiated brands including Pringles, Cheez-It, Pop-Tarts, Kellogg’s Rice Krispies Treats, RXBAR, Eggo, MorningStar Farms, Special K, Coco Pops and more, Kellanova’s vision is to become the world’s best-performing snacks-led powerhouse, unleashing the full potential of our differentiated brands and our passionate people.
Kellanova is guided by our purpose to create better days and a place at the table for everyone through our trusted food brands. We are advancing sustainable and equitable access to food by addressing the intersection of hunger, sustainability, wellbeing, and equity, diversity & inclusion, with the ambition of creating Better Days for 4 billion people by the end of 2030 (from a 2015 baseline). Visit www.Kellanova.com for more information.
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