Utz Brands (NYSE:UTZ) outlined a year of margin expansion, productivity gains, and continued geographic expansion in its prerecorded discussion of fourth-quarter and full-year 2025 results, while also providing its financial outlook for 2026. Executives said the company’s supply chain consolidation is largely complete and emphasized a growing focus on free cash flow generation and balance sheet deleveraging.
Full-year 2025: Growth versus the category, margin expansion, and higher marketing
CEO Howard Friedman said 2025 featured “accelerating top-line growth versus the category,” along with “significant adjusted gross margin and Adjusted EBITDA margin expansion.” For the year, the company reported organic net sales growth of 2.4% and branded salty organic net sales growth of 4.7%, while Friedman noted the category was down 0.5% in retail sales dollars.
He also pointed to productivity as a key driver of profit improvement. The company delivered 7% productivity in 2025, above its prior goal of 6% of adjusted cost of goods sold, which Friedman said helped expand adjusted gross margin by 260 basis points and adjusted EBITDA margin by 80 basis points for the year. Friedman added that marketing spending rose 35% in 2025 on top of a nearly 70% increase in 2024, and he said the company plans to increase marketing spending again in 2026.
Supply chain consolidation, California expansion, and capital allocation
Management said its supply chain transformation and consolidation were largely complete by year-end, following elevated capital spending across 2024 and 2025 tied to network consolidation, automation, and modernization. Friedman said the company has reduced the number of major facilities from 16 to 7 since 2022, including the expected closure of Grand Rapids.
The company also highlighted its planned California expansion. Friedman said Utz has purchased Insignia’s DSD routes and select assets in the state, calling California a “key growth differentiator for the next several years.” He said California shipments through the Insignia assets will begin later in February.
On capital allocation, Friedman said the balance sheet improved with strong fourth-quarter cash flow and leverage declining to 3.4x versus 3.6x a year ago. He also said the company expects strengthening free cash flow to support deleveraging and, “as appropriate,” share repurchases under a new authorization of up to $50 million.
Fourth quarter: Shipments lagged consumption as retail inventory destocked
Friedman said fourth-quarter net sales were below expectations despite strong retail sales growth, attributing the shortfall primarily to inventory destocking that caused shipments to lag consumption in the second half of the quarter. He said shipments normalized versus consumption exiting the year and that those trends have continued so far in the first quarter of 2026, with retail inventory levels beginning to normalize.
Net sales grew 0.4% in the fourth quarter, led by branded salty snacks, with organic net sales also up 0.4% (management noted there were no acquisition or divestiture impacts in the quarter). Branded salty snacks represented 89% of total net sales and posted its eighth consecutive quarter of growth, according to Friedman.
BK Kelley, EVP and CFO, said the net sales increase was driven by 0.5% price growth, partially offset by a 0.1% decline in volume mix. Branded salty snacks organic net sales grew 2.5%, led by volume mix growth of 2.1%. Kelley said organic net sales in non-branded and non-salty snacks declined 14.8%, which he said was also impacted by the same headwinds affecting the broader business.
Category share gains, brand momentum, and 2026 innovation plans
Friedman said the company gained both dollar and volume share in salty snacks for the 13-week period ended Dec. 28, 2025, marking its 10th consecutive quarter of share growth, based on Circana MULO with convenience. He said fourth-quarter dollar consumption growth was 3.5%, led by 3.1% price per pound growth, compared with 1.1% category dollar growth.
In core geographies, Friedman cited headwinds tied to SNAP payment delays and a government shutdown, which he said pressured results versus the category. In expansion geographies, he said the company posted 7.3% retail sales growth versus 1.1% category growth, driven by distribution gains and higher velocities. He added that expansion geographies represent 45% of total company retail sales in Circana data, with average market share of 3.2% in expansion markets versus 6.7% in core markets.
Friedman also detailed subcategory performance, saying measured-channel share gains were led by potato chips and pork rinds. He said potato chip retail sales grew 11.3% versus a subcategory decline of 0.2%, while pork rinds grew 7.9% versus a 2.3% subcategory decline. He cited softness in On The Border as a driver of tortilla chip underperformance, with retail sales down 3.9% versus 1.1% subcategory growth, though he said trends improved versus the third quarter.
For product innovation in 2026, Friedman said the company plans to launch Utz Protein Pretzels and Cheese Curls in the second quarter, featuring 8–10 grams of protein per serving. He also said Boulder Canyon will launch a new non-seed oil fats line featuring kettle chips cooked in beef tallow, including Boulder Canyon Classic Sea Salt cooked in beef tallow expected to launch in the first quarter.
Financial details: Reclassification, 2026 guidance, and free cash flow focus
Kelley said the company reclassified certain expenses from SG&A to cost of goods sold beginning in the fourth quarter of 2025, including delivery and certain distribution costs tied to its DSD network. He said the change had no impact on EBITDA, Adjusted EBITDA, net income, or Adjusted Net Income, and that productivity guidance going forward will assume a higher cost of goods sold base.
In the quarter, Kelley said the company delivered adjusted gross profit margin expansion of 560 basis points, adjusted EPS growth of 18.2%, and adjusted EBITDA margin expansion of 260 basis points to 18.2%. He attributed margin expansion to productivity initiatives, with pricing contributing and offsets including volume/mix, supply chain costs and inflation, higher marketing spend, and higher SG&A.
For 2025 cash flow and leverage, Kelley reported:
- Cash provided by operations of $112.2 million (52 weeks ended Dec. 28, 2025)
- Capital expenditures of $102.8 million
- Dividends and distributions paid of $37.7 million
- Cash on hand of $120.4 million at fiscal year-end
- Liquidity of $240.1 million (including excess revolver capacity)
- Net debt of $741.8 million and net leverage of 3.4x trailing twelve-month adjusted EBITDA of $216.5 million
Looking to 2026, Kelley guided to organic net sales growth of 2%–3% (excluding the 53rd week), with an estimated approximately $20 million benefit to reported sales in the fourth quarter from the extra week. He said the company assumes a flat category at the midpoint and described the stance as “prudently conservative” given softness over the past two years.
The company expects adjusted EBITDA growth of 5%–8% in 2026, including an estimated approximately $3 million benefit in the fourth quarter from the 53rd week and including $4 million–$6 million of investment in the California expansion, weighted more to the first half.
Kelley said adjusted EPS is expected to decline 3%–6% in 2026, reflecting higher depreciation and amortization, higher interest expense, and a modestly higher tax rate. He guided to depreciation and amortization of $93 million–$97 million, interest expense of $47 million–$49 million, and an effective normalized tax rate of 17%–19%.
On cash generation, the company expects capital expenditures to decline to $60 million–$65 million in 2026 and said transformation, restructuring, and other frictional costs should “substantially normalize,” with cash costs expected at approximately $30 million–$35 million. Kelley introduced adjusted free cash flow guidance of $60 million–$80 million for 2026, defined as cash flow from operations less capital expenditures plus net sales of property and equipment.
For leverage, Kelley said the company expects to reach 3.0x–3.2x by year-end 2026, reiterating deleveraging as the top priority and adding that any buyback activity would not change the company’s ability to reach that range.
In closing remarks, Friedman said the company’s strategy remains focused on profitable growth above the category, margin expansion, and reinvestment funded by productivity, while using normalized capital expenditures and transformation costs as levers to accelerate free cash flow and support deleveraging.
About Utz Brands (NYSE:UTZ)
Utz Brands, Inc is a leading U.S. manufacturer and distributor of salty snack foods, offering a wide range of products including potato chips, pretzels, cheese snacks, popcorn and tortilla chips. Headquartered in Hanover, Pennsylvania, the company markets its snacks under several well-known brands and serves grocery, mass merchandise, club, convenience and online retailers throughout the United States.
Founded in 1921 by Bill and Salie Utz as a small country store operation, the business expanded gradually through direct delivery to local customers and sales to regional grocers.
