HANOVER, PA. — Top-line strategies are working at Utz Brands, Inc. as the company drove faster growth in its Power Brands, expanded its presence in key salty snack sub-categories, grew distribution in underpenetrated channels, and continued its geographic expansion, said Dylan Lissette, chief executive officer.

“Power Brands today improved to 87% of our retail sales, up approximately 200 basis points from this time two years ago,” Mr. Lissette said during a Nov. 10 conference call with analysts. “As per our plans, this will continue to build to an even higher percentage as we go forward.”

Lines identified by the company as Power Brands include Boulder Canyon, Golden Flake pork skins, Good Health, Hawaiian, Herdez snacks, On The Border, TGIF, Utz and Zapp’s.

Net income at Utz Brands, Inc. in the third quarter ended Oct. 3 totaled $31.35 million, equal to 43¢ per share on the common stock, which compared with a loss of $25.26 million in the same period a year ago. Adjusted net income was $25.6 million, up 41% from $18.2 million in the same period a year ago.

Net sales in the quarter were $312.68 million, up 26% from $248.03 million a year ago.

“Our sales growth continues to accelerate, and we delivered two-year gains across both the mass and c-store channels as well as our expansion in emerging geographies, and we increased our presence and share in certain subcategories, most notably tortilla chips,” Mr. Lissette said.

He said the total Utz portfolio gained share across four of the five major subcategories that it tracks and gained share in salsa and queso as well.

“We continue to increase our presence in key salty stuff snack subcategories, with share gains on a year-over-year basis in tortilla chips, pretzels, cheese and salsa queso, and on a two-year CAGR basis, we grew 8% in potato chips versus a subcategory of 5.1% and 17% growth in tortilla chips versus the subcategory of 7.6%,” Mr. Lissette said. “It is truly great to see our two largest subcategories in dollar sales are growing and are taking share.”

Mr. Lissette took an opportunity during the conference call to point out Utz’s rapidly growing presence in tortillas, a category the company was “nearly nonexistent” in a year ago.

“Today, we have a 4.3% share, and we are the No. 3 brand in tortilla due to our acquisition of On The Border in December 2020 as well as the continued growth of our Tortiyahs! brand,” he said. “In the quarter, we continued to make great progress driving geographic expansion while also executing to improve the performance in our core. We grew 13.3% in expansion and 14% in emerging geographies, outpacing the category by about 400 bps and 500 bps, respectively. There is no doubt that our brands travel very well beyond our core, and it's exciting to see our continued successes as we outpace the market consistently in these whitespace geographies.”

Mr. Lissette said Utz continues to transition from company-owned routes to independent operators. During the third quarter the company converted approximately 42 routes and remains on track to convert approximately 200 routes in 2021 with a continued goal of 100% conversion to independent operators by the middle of 2022. He said the company also has grown its direct-store delivery (DSD) route base to more than 1,800 routes, which includes approximately 60 new routes in 2021.

“We continue to believe (this shift) is a very important part of our competitive advantage in the industry,” he said.

Earlier this month Utz reached an agreement to acquire the equity and certain real estate assets related to the operation of RW Garcia from RW Garcia Holdings, LLC and related entities for $56 million. A family-owned company based in Scott’s Valley, Calif., RW Garcia makes organic tortilla chips, crackers and corn chips.

During the conference call, Mr. Lissette described the deal for RW Garcia as a “supply chain enhancement acquisition.”

“They have the ability to start making some of our brands today right away,” he said. “They've got the excess capacity. So we don't have to wait and order a new line or anything like that. So it's a very immediate increase to our capacity, and that allows us to in-source some things that we can make more margin on.”