Snack Giant Utz Brands Simplifies Plant Network To Reduce Costs

The U.S. manufacturer of branded salty snacks, Utz Brands Inc UTZ, disclosed several network optimization initiatives to drive long-term volume growth and curtail costs. 

The company plans to simplify the existing plant network and streamline its operating structure by consolidating facilities.

UTZ expects to enhance its relationship with a key co-manufacturing partner to support network optimization, create incremental capacity in the warehousing network, boost customer service, and monetize non-core assets.

To achieve these targets, UTZ divested its manufacturing plant and all related assets in Bluffton, Indiana, and disclosed that its lowest-volume manufacturing plant in Hanover, Pennsylvania, will stop operating in Q1 FY24. 

The company also inked a built-to-suit deal for a new 650,000-square-foot leased distribution center in Hanover, Pennsylvania, which is expected to open in Q1 2025.

Moreover, UTZ plans to sell its Louisiana manufacturing plant (impacted by Hurricane Ida) and the Alabama plant.

Following these initiatives' completion, UTZ will have 13 active plants, and closure and divestiture are expected to boost net sales averages in its remaining plants.

The company expects volume from these closed facilities to be absorbed by the remaining plant network, thereby reducing fixed overhead costs and driving manufacturing conversion cost efficiencies.

UTZ doesn't expect a material impact on future cash or capital expenditures from these events.

Last month, the company reported Q2 adjusted EPS of $0.13, beating the consensus of $0.12, and sales of $362.90 million, exceeding the street view of $360.59 million.

Price Action: UTZ shares are trading lower by 0.81% at $13.45 on the last check Friday.