HANOVER, PA. — Utz Brands Inc. chalked up market share gains amid heated competition in the fiscal 2024 third quarter, turning in adjusted earnings per share just above Wall Street’s forecast.

The performance came as Hanover, Pa.-based Utz drives expansion into new geographies and boosts its marketing investment to cater to value-hungry shoppers, said Howard Friedman, chief executive officer.

“We maintained a disciplined pricing strategy and gained volume share in the salty snack category for the fifth consecutive quarter,” Friedman said in remarks on the salty snack maker’s quarterly results. “Our combination of brand-building, innovation, execution and distribution gains are helping to sustain our volume market share trends in a more competitive environment.”

Utz expects a 60% increase in marketing spend for 2024, up from a planned 40% increase coming into the year.

“To date, our strong productivity and cost performance are providing flexibility to increase investments behind our brands, support our geographic expansion, and manage our promotional activities to address consumer value expectations, which are collectively driving solid volume growth,” Friedman said. “We continue to observe consumers seeking more value, whether it be deal-shopping, channel-shifting or moving up and down the price ladder. These behaviors are influencing the competitive environment and resulted in more promotional pricing during the third quarter, particularly in potato chips.”

For the quarter ended Sept. 29, net income dropped to $772,000 from $16.2 million a year ago, Utz said, attributing the decrease to a higher loss on the remeasurement of a warrant liability of $22.4 million. The company sustained a 3¢ loss per diluted share of Class A common stock versus diluted EPS of 19¢ in the prior-year period. Adjusted net earnings came in at $29.6 million, equal to 21¢ per share, compared with $24.6 million, or 17¢ per share, a year earlier. Analysts’ average estimate was for adjusted EPS of 20¢.

Third-quarter net sales fell 1.7% to $365.5 million from $371.9 million a year earlier, with the divestiture of the R.W. Garcia and Good Health brands negatively impacting results by 3.6%, Utz said.

Organic net sales rose 1.9% to $365.5 million from $358.8 million, reflecting a 2.4% uptick in volume/mix fueled by strong growth in Power Brands — led by Utz, On The Border, Zapp’s and Boulder Canyon — that was offset by a 0.5% decrease in net price realization, according to the company.

“Across measured and unmeasured channels combined, our Power Brands volume increased 4% in the quarter,” Friedman said. “Importantly, as consumers continue to shop for value outside of traditional (retail) channels, our solid momentum continued in our non-measured channels to include club, hard discount, dollar and e-commerce. In the quarter, our branded volumes increased nearly 8% in our non-measured channels.”

Utz Brands’ consumption in measured channels during the quarter decreased 1.3%, compared with a 0.4% dip in the overall salty snacks category, Friedman said. Still, the company’s retail volumes increased 0.4% versus a 0.2% decline for the total salty snacks segment, he noted.

“As we entered July and August, the salty snack category saw further increased promotional activities, particularly in the convenience store and mass channels, and we began to see a shift in consumer behavior to buying more based on price,” he said. “Importantly, household penetration in the salty snack category in the third quarter has increased, but we have simultaneously seen buy rates decrease, largely led by fewer consumer shopping trips.

“While we were aware during our second-quarter earnings call that some of our competitors had begun to take discrete pricing actions, the environment became more promotional over the third quarter than we anticipated, led by a greater number of competitors and affecting more channels. As a result, we saw share losses, particularly in potato chips, for about a six-week period, and then our share trends began to improve as we also utilized our own focused promotional activities.”

Among its product categories, Utz generated year-over year retail sales growth of 2.6% in cheese snacks, 2.3% in tortilla chips and 1.6% in pretzels, with decreases of 4.7% in potato chips and 2% in pork rinds — though in the latter segment the Golden Flake brand tallied a 4.8% gain.

“As we wrap up 2024, from a portfolio standpoint, our focus remains driving outsized investment on our Power Four Brands,” Friedman said. “We expect this will be seen in our fourth-quarter and full-year results.”

Utz reaffirmed its full-year guidance for adjusted EPS growth of 28% to 32% and organic net sales growth of 2% to 2.5%. The sales outlook had been pruned in early September from an earlier forecast of 3% or better to 3%.

“The company’s 2% to 2.5% organic growth target for 2024 implies Q4 organic growth acceleration to about 4%,” TD Cowen analyst Robert Moskow said in an Oct. 31 research note. “Management cited tailwinds from a step up in marketing, innovation, distribution as well as an easy comparison from SKU rationalization. We continue to view the company’s array of brands, price tiers and channels as a competitive advantage in an environment where consumers are seeking value.”

TD Cowen projects 2.2% organic sales growth for Utz Brands this fiscal year.