Utz Q3 2026 Earnings: Inflation Compresses Margins

Utz Brands (NYSE: UTZ) reported fiscal Q3 2026 net sales of $369.2 million, down 2.3% from $377.8 million, while diluted loss per share widened to $0.27 from $0.17 and adjusted EPS fell to $0.10 from $0.23. Profitability weakened much faster than revenue as supply-chain inflation, channel mix, and lower volumes drove a 530-basis-point contraction in adjusted gross profit margin. The pending Intersnack take-private transaction also increased GAAP expenses, and Utz did not update its full-year outlook.

Core Financial Results

Organic net sales also declined 2.3%. A 5.2% reduction from volume and mix more than offset a 2.9% benefit from higher net price realization, while lower adjusted SG&A provided only a partial cushion against gross-margin pressure.

The quarter produced lower earnings on both a GAAP and adjusted basis, with operating cash flow and adjusted free cash flow turning negative.

Adjusted figures are non-GAAP measures as defined by Utz and should be considered alongside the company’s GAAP results.

Business and Brand Performance

Branded Salty Snacks accounted for 92% of total net sales and recorded 0.3% organic growth, led by the company’s Power Four brands: Utz, On The Border, Zapp’s, and Boulder Canyon. Power Four retail sales increased 2.1%, while Utz also reported retail sales gains in its expansion geographies.

Non-Branded & Non-Salty Snacks organic sales declined 23.8%, primarily because Utz accelerated the elimination of low-margin non-branded products. This indicates that the consolidated sales decline was concentrated outside the core branded snack portfolio, although branded growth remained limited.

Circana-measured Branded Salty Snacks retail sales increased 0.2%, compared with 1.1% growth for the overall salty snack category. Utz’s retail volumes fell 3.3%, while category volumes increased 0.1%, showing that the company’s pricing benefit came alongside weaker unit demand.

Pricing Limited the Sales Decline but Could Not Protect Margins

Higher net pricing offset part of the volume and mix decline, limiting the reduction in organic sales to 2.3%. However, pricing did not compensate for what management described as abrupt and significant supply-chain cost inflation, together with unfavorable channel mix and lower volumes.

That imbalance explains why adjusted gross profit fell 18.3% even though net sales declined only 2.3%. The resulting gross-margin contraction flowed through to adjusted EBITDA, which fell 30.3%, despite savings in adjusted operating expenses.

CEO Howard Friedman also cited a modestly weaker consumer as an industry headwind that intensified during the quarter. The combination of softer volume and higher supply-chain costs therefore affected both the top line and the amount of profit generated from each dollar of sales.

Profitability, Cash Flow, and the Balance Sheet

GAAP SG&A rose 11.1% to $97.4 million, increasing to 26.4% of net sales from 23.2%. Utz attributed the increase primarily to costs associated with the take-private transaction.

On an adjusted basis, SG&A declined 5.0% to $58.4 million, while its share of sales improved by 50 basis points to 15.8%. Lower adjusted expenses, including reduced variable compensation, helped mitigate the gross-profit decline but were not large enough to prevent adjusted earnings from falling.

Negative quarterly cash generation represented another deterioration from the prior year. At September 27, 2026, Utz had $153.8 million of liquidity, consisting of $70.1 million in cash and $83.7 million available under its revolving credit facility. Net debt was $815.4 million, and the net leverage ratio remained at 3.9 times trailing-12-month adjusted EBITDA of $208.0 million, consistent with the prior year.

Pending Take-Private Raised GAAP Costs and Paused Guidance Updates

Under the definitive agreement announced on July 20, 2026, Intersnack subsidiaries will acquire all outstanding Utz Class A shares for $14.25 per share in cash. Transaction-related expenses contributed to the increase in GAAP SG&A and the wider GAAP net loss during the quarter.

Utz did not provide a further update to its fiscal 2026 outlook and did not hold an earnings call because of the pending transaction. The company expects the deal to close in the fourth quarter of 2026, subject to closing conditions. Regulatory conditions had been satisfied, and a stockholder meeting was scheduled for November 13, 2026.

Following the expected closing, Utz will become private, with the Rice and Lissette Family entities and an Intersnack subsidiary each owning 50% of Utz Brands Holdings. John Lindeman is also expected to succeed Howard Friedman as CEO following the transaction.

Risks Investors Need to Watch

• Supply-chain inflation: Continued cost inflation could keep gross margins under pressure if pricing and productivity measures do not offset higher expenses.
• Volume and consumer demand: A 5.2% volume/mix decline and a 3.3% reduction in measured retail volume indicate that softer demand could weigh on revenue and operating leverage.
• Cash flow and leverage: Quarterly operating cash flow and adjusted free cash flow were negative, while net debt stood at $815.4 million and leverage remained at 3.9 times.
• Take-private execution: Although regulatory conditions had been satisfied, the transaction remained subject to closing conditions. The process was already creating additional costs and a management transition.

Summary

Utz’s core branded snack business remained near flat and its Power Four brands generated retail sales growth, but those gains were outweighed by weaker volume, the removal of low-margin non-branded products, and substantial supply-chain cost pressure. Pricing and lower adjusted SG&A limited some of the damage, yet margins, adjusted earnings, and cash flow all deteriorated. The main remaining areas to monitor are cost inflation, branded volume trends, cash generation, and completion of the expected fourth-quarter take-private transaction.