Good morning, and thank you for joining us today for our pre-recorded discussion of our first quarter 2025 earnings results. Joining me on the call today are Howard Friedman, CEO, Ajay Kataria, CFO. In addition, this morning at 9:30 A.M. Eastern Time, we will host a live question-and-answer session, which you can access via webcast on our investor relations website. Please note that some of our comments today will contain forward-looking statements based on our current view of our business, and actual future results may differ materially. Please see the forward-looking statement disclaimer in the earnings materials and our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. Today, we will discuss certain adjusted or non-GAAP financial measures, which are described in more detail in this morning's earnings materials.
Reconciliations of non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our Investor relations website. Finally, the company has also posted presentation slides and additional supplemental financial information on our Investor Relations website, and now I'd like to turn the call over to Howard.
Thank you, Kevin, and good morning, everyone. Let's begin with a few key messages. We delivered a strong start to the year with first quarter organic net sales growth of 2.9%, led by branded salty snacks growth of 4.9%. We gained dollar and volume share in the salty snacks category for the 13-week period ended March 31, 2025, as measured by Circana MULO+ with convenience, driven by the continued momentum of our Power Four brands. Our strong consumption results reflect significant continued growth of Boulder Canyon, strong gains in our expansion geographies, execution of our bonus packs on our Utz and On The Border brands, and addressing consumer value-seeking behavior through targeted promotional investments. Our productivity programs, network optimization, and automation investments continue to gain momentum and fueled adjusted gross margin expansion of 100 basis points, enabling reinvestment into our brands and our capabilities.
I'm pleased with the returns on our consumer marketing activities this year and how our innovation is resonating with consumers. Importantly, while we continue to increase investments, we delivered stronger bottom-line growth, with adjusted EBITDA increasing nearly 4% and adjusted earnings per share increasing by nearly 15%. When you put it all together, our results reflect our ability to grow profitably despite category softness due to our unique geographic expansion and significant margin opportunity. Finally, in conjunction with our management changes that we announced on April 17, 2025, we reaffirmed our full-year 2025 outlook and are doing so again today. Our first quarter results continue to reflect strong execution against our clearly defined portfolio strategy as we direct our investment to support our Power Four brands to fuel our distribution gains, geographic expansion, and volume growth.
Organic net sales grew 2.9% this quarter, fueled by strong volume gains in branded salty snacks. We continue to strategically prioritize our branded salty snacks portfolio, which has now grown to 87% of our total net sales, up from 82% just two years ago. This quarter also marks our fifth consecutive quarter of growth in branded salty snacks, with 4.9% year-over-year net sales growth on top of 4.7% a year ago. As expected, the mix shift towards more branded salty snacks is also positively impacting our adjusted EBITDA margin. As we focus on our branded Salty Snack portfolio and our Power Four brands specifically, we continue to carefully manage low-margin areas of our business, such as dips and salsa and partner brands. We are continuing to address consumer value-seeking across our marketing mix.
As consumers continue to shop for value outside of traditional channels, our solid momentum continued in our non-measured channels to include natural, hard discount, and dollar. We plan to continue to support this momentum with increased marketing investments and disciplined promotional spending adjustments. To that end, this quarter, we tested the use of bonus packs, which launched in December 2024. Through this program, we offered consumers 20% more product at the same price across six Utz and On The Border SKUs, delivering strong value to our consumers. The offer resonated strongly with shoppers, helped lift our volumes, and when combined with geographic expansion, focused trade promotions, and the strength of Boulder Canyon, delivered strong organic net sales growth for the quarter. Turning to our consumption results in the quarter, we took both dollar and volume share in measured channels as we outpaced the salty snacks category.
Consumption growth was driven by our Power Four brands, which increased 1.7% in retail sales dollars, driven by 7.5% volume gains. Our growth was led by Boulder Canyon in our core and by both distribution gains and higher velocities in our expansion geographies. As discussed earlier, our average retail price per pound declined 5.4% due to channel mix, bonus packs, and disciplined promotional spend to maintain our price gaps. We remain thoughtful about where and how we reinvest to drive demand, with a focus on continuing to drive near-term value and long-term brand equity. Now turning to our core geographies, in the first quarter of 2025, we continue to gain volume share across the total company and with our Power Four brands. Retail volume for the total company increased 2.9%, and our Power Four brands grew even stronger at 4.6%, outpacing the category decline of 1.4%.
Total company retail sales declined 3.7%, with Power Four brands down 2.4% compared to the total salty snacks decline of 1.9%. In our core, consistent with our strategy, we invested to increase distribution of our Power Four brands while maintaining our price gaps versus our competition, primarily in potato chips, while we addressed consumer value-seeking behavior. In addition, it is important to note that we are lapping significant merchandising activity in the mass channel from the prior year, which created a difficult comparison in the quarter. In our expansion geographies, we drove both value and volume share for the seventh consecutive quarter for the total company and our Power Four brands. Our 4.9% retail sales growth easily outpaced the Salty Snack category decline of 1.6%, fueled by continued distribution gains and higher same-store velocities across our portfolio.
We saw strong dollar growth in key parts of our portfolio, including Utz and Zapp's pretzels, Boulder Canyon potato chips, and Golden Flake pork rinds. To support this momentum, we increased our investments across several demand-creating activities, including brand marketing, enhancements to our direct store delivery infrastructure, and point-of-sale marketing to drive in-store visibility. Our expansion geographies have grown to represent 44% of our total company retail sales, up from 41% just two years ago. As we enter new geographies, we are executing a proven playbook that's driving long-term sustainable results across our business. We offer customers a choice through our hybrid distribution model to be serviced either via our direct-to-warehouse or direct-store delivery routes to market, which allows us to deliver the right products at the right place at the right time. Once we enter these markets, we increase shopper and consumer marketing investments to drive engagement and loyalty.
We are then able to use our strong retailer relationships and prior success in other markets to accelerate performance and expand our reach. We remain grateful to our retail partners for the trust in our brands. In the quarter, we are showing that we can deliver growth year-over-year as we accelerate our momentum. Florida remains a great example of both our results and the opportunity. Since 2021, our market share has expanded from 2.6% to 4% today, almost doubling our retail sales over that period. While we're pleased with the growth, it is still well below our average core market share of 6.5%, indicating there is still significant share opportunity in the state as we continue to invest in that region. There's still substantial white space ahead as we continue expanding westward, as we have an average market share of 3% in our expansion geographies versus 6.5% in our core.
We are growing both retail sales dollars and share in over 95% of our tracked expansion geographies, highlighting the go-forward opportunity. We want to take the opportunity today to highlight the business case for why retailers in our expansion geographies add our products to their salty snacks shelf set. When our brands are on the shelf, it's a win-win. Our customers see accelerated growth in their Salty Snack category, allowing them to gain share versus the rest of the market, and consumers have more great options to choose from. From a subcategory perspective, our measured channel share gains for the total company were led by potato chips, cheese snacks, and pork. In potato chips, our retail sales grew 2.7% versus a subcategory decline of 2.5%.
Our performance is driven by strong Boulder Canyon growth in the club, food, and natural channels, and by bonus packs, which drove strong pound and perimeter activity. In tortilla chips, our retail sales declined 2.8% versus a subcategory decline of 1.8%. Our sales performance came in lower than the subcategory, primarily due to a difficult lap in the club channel in the first quarter. In pretzels, our retail sales grew 2.2%, effectively in line with the market, with growth driven primarily by food and mass channels. In cheese snacks, our retail sales declined 3% versus an overall subcategory decline of 4.6%. Our results were primarily impacted by timing, and we expect better performance later in the year. In pork rinds, our retail sales were up 8% versus a flat subcategory driven by increased velocities of our Golden Flake pork brand across all channels.
Our Boulder Canyon brand continues to outperform and gain share both in the natural and traditional channels, with growth of 42% and 158%, respectively. Consumers are connecting with the brand and are appreciating its better-for-you attributes and bold flavor profile. To share a few stats with you, Boulder Canyon has the number one selling Salty Snack SKU in the natural channel over the latest 13 and 52 weeks. It is also the number one potato chip brand in total U.S. natural channel year to date. We're continuing to grow beyond the natural channel, driven by both expanded distribution, innovation, and increased velocities. Turning to innovation, we're excited about our pipeline and are actively investing in new product development across our branded salty snacks platform. Today, we'd like to highlight three key innovations that reflect that momentum.
In March, we launched Boulder Canyon Tortilla Chips, which builds on our recent success and leverages our expertise in tortilla chips and consumer desire for better-for-you snacks. This new offering has the same credentials as Boulder Canyon potato chips, including non-GMO, made with avocado oil, and gluten-free. On The Border launched two new flavored dipping Café chips, marking an exciting step forward for the brand. As flavored tortilla chips continue to gain momentum across the broader market, we're excited to expand On The Border beyond its traditional unflavored offerings and into this growing space. Finally, a limited-time offering of Utz Lemonade Potato Chips. This innovation blends a familiar sweet and tart lemonade flavor with Utz's signature salty crunch, delivering a differentiated snacking experience. Importantly, for every bag sold, a contribution is made to Alex's Lemonade Stand Foundation to support children battling cancer.
Now moving to marketing, our spend is up over 30% year-over-year, reflecting our commitment to building strong connections with our consumers as we build our businesses overnight and our brands over time. Our collective efforts are leading to improvements in critical consumer panel metrics that reflect the power of our consumer love portfolio. For the 52-week period ended March 23, 2025, versus a comparable prior year period, our household penetration has increased 120 basis points to an all-time high of 49.1%. Buyers have increased by 1.9 million to 63.9 million, and total buyer repeat rates remain steady at 69.4%, which we are particularly proud of given the number of new consumers that have purchased our brands. Category panel trends continue to be healthy, with continued household penetration growth despite near-term headwinds.
Looking ahead, we remain confident that the salty snacks category will continue to be among the best categories in food, supported by steady consumer investments and a rational competitive environment. With that, I'll turn it over to Ajay, who will walk you through our financial results in more detail. Ajay?
Thank you, Howard, and good morning, everyone. I would like to begin with a thank you to all Utz associates for delivering a strong start to the year. The team's efforts are evident in our financial results. In the first quarter, our organic net sales increased 2.9%, adjusted EBITDA increased 3.9%, and adjusted earnings per share increased 14.3%, as our productivity programs and actions to optimize our network and portfolio delivered stronger profitability. Importantly, these actions resulted in our ninth consecutive quarter of adjusted EBITDA margin expansion, as we delivered 12.8% adjusted EBITDA margin in the quarter.
During the quarter, our organic net sales performance was led by volume growth of 6.3%, partially offset by lower pricing of 3.4%, 2.8 percentage points of which was due to investments in bonus packs. As Howard mentioned earlier, we were very pleased to deliver branded salty snacks organic net sales growth of 4.9%, led by volume mix growth of 8.3%. Our non-branded and non-salty snacks organic net sales declined 8.8% due to softer partner brand and dips in salsa trends, as we continue to carefully manage these low-margin components of our business. Finally, our total net sales performance was impacted, as expected, by the divestiture of RW Garcia and Good Health Brands, which impacted net sales growth by 1.3%. Moving down the P&L, adjusted gross margin expanded 100 basis points in the first quarter.
Our first quarter margin expansion reflects continued strength in our productivity programs this year, as our manufacturing and procurement projects delivered strong results, which more than offset investments in our supply chain. Adjusted SD&A expense, as a percentage of net sales, increased 80 basis points, primarily due to increased investments in marketing, selling, and distribution to support our growth, particularly in our expansion geographies. Bringing it together, adjusted EBITDA increased by 3.9% to $45.1 million, and adjusted EBITDA margin expanded by 30 basis points to 12.8% of net sales. The margin expansion was driven by 370 basis points of productivity, partially offset by 290 basis points of price, 40 basis points of higher supply chain costs to include investments, 30 basis points of higher marketing spend, and 20 basis points of selling and administrative expenses.
In addition, adjusted net income increased 7.2%, and adjusted EPS increased by 14.3% to $0.16 per share. Stronger operating earnings were aided by lower interest expense due to meaningful deleveraging in 2024. Our supply chain initiatives remain on track to support our growth and deliver on our productivity commitments. In the first quarter, our new Rice distribution center is now fully operational, consolidating inventory from six separate buildings into a single state-of-the-art 650,000 sq ft facility in Hanover, Pennsylvania. We have expanded our manufacturing network by investing in a new kettle line and a new pretzel line, adding much-needed capacity to support our expansion and deliver excellent quality. The result of these efforts is the delivery of strong productivity savings across the business that we can reinvest in growth of our people and capabilities, and expanding distribution while also expanding margin.
This builds on our momentum since we have gone public, as we have consistently accelerated our productivity savings from 1% of COGS in 2020 to 6% of COGS in 2024, and we are on track to deliver approximately 6% productivity savings in 2025. Turning to cash flow and the balance sheet, cash used in operations in the first quarter was $20.2 million, reflecting the use of working capital consistent with typical seasonality, as well as quarterly pacing of certain uses of cash. Capital expenditures were $38.8 million and reflect spending primarily related to the aforementioned investments in our manufacturing plants to support our productivity and network optimization initiatives. Our CapEx spend this quarter was higher than our normal pacing as we concluded several investments. Finishing up cash flow, we paid $8.9 million in dividends and distributions to shareholders.
Turning to the balance sheet, cash on hand was $62.7 million, and our liquidity remained strong at nearly $172 million, giving us ample financial flexibility. Net debt at quarter end was $800.9 million, and our net leverage ratio was four times trailing 12 months' normalized adjusted EBITDA of $201.9 million. In addition, during the quarter, we repriced our $630 million Term Loan B to lower the spread from SOFR plus 275 basis points to SOFR plus 250 basis points, a 25 basis points reduction that we expect will reduce annual interest by approximately $1.6 million. Now turning to our full year outlook for fiscal 2025, which remains unchanged since our announcement on April 17, 2025.
We continue to expect organic net sales growth of low single digits, supported by volume growth and led by our branded salty snacks as we accelerate our investments to drive faster growth in our expansion geographies. Year-over-year growth is expected to be balanced between the first and second halves of the year, and we expect pricing to be a modest headwind to growth as we maintain a disciplined pricing strategy. Moving to adjusted EBITDA, we continue to expect growth of 6%-10%, fueled by gross margin expansion from our productivity programs, partially offset by investments to drive growth. Our strong productivity delivery in 2024 and the first quarter of 2025 gives us confidence in our ability to continue to deliver on our cost-saving commitments and significantly expand adjusted Gross Margin compared to the prior year.
Our 2025 adjusted EBITDA outlook maintains a balance between productivity savings, investments in growth, and flexibility as conditions merit. Finally, we continue to expect adjusted earnings per share growth of 10%-15%. Our key assumptions include increased operating earnings, an effective normalized tax rate of between 17% and 19%, and interest expense of approximately $43 million. Capital expenditures are expected to be between $90-$100 million, with the majority focused on building increased manufacturing network capacity and delivering accelerated productivity savings. Finally, we continue to expect our net leverage ratio to approach three times at fiscal year end 2025. Before we wrap up, I want to take a moment to share that this will be my final earnings call as CFO.
It's been an incredible eight years, and I'm deeply grateful to the entire team at Utz, to our employees whose dedication drives our success, and to our investors and partners for their continued trust and support. It's been a true privilege to be part of this journey.
Thank you, Ajay. On behalf of everyone here at Utz, I want to thank Ajay for his contributions over the past eight years. We wish him all the best in his next chapter. As previously announced, Bill Kelly officially steps into the CFO role starting later today. We're confident that his leadership and experience will be a great asset as we continue to execute our strategy. I also want to take a moment to thank Mark Schreiber for his dedicated service and leadership during his time with Utz as Chief Commercial Officer.
Mark has been a true champion of the Utz brand and a driving force behind our commercial success. We're grateful for Mark's support in helping pave the way for a smooth transition as he retires and Jeremy Stewart steps into his new role. Jeremy joined the company in 2023 and brings a deep understanding of the customer landscape and an operational focus that makes him the ideal leader to build on Mark's legacy. We're confident that Jeremy's leadership will further strengthen our position in the market. Wrapping up, in today's challenging environment, we believe we are executing well against our December 2023 Investor Day commitments. We are gaining volume share in our core and expansion markets by growing our Power Four Brands distribution and velocities. We are expanding both adjusted gross and EBITDA margins thanks to strong productivity programs and a growing branded portfolio.
We are still in the early innings of our productivity program, and we are tracking to exceed our original goal of $135 million in savings across our supply chain, and we are now on track to deliver more than $150 million. These gains enable increased investments in our capabilities, supply chain, and brand support, setting us up well for the future. We've delivered double-digit adjusted EPS growth for five consecutive quarters. And finally, we are making meaningful progress on deleveraging our balance sheet and expect to approach three times by year-end, one full year ahead of the commitment we made at Investor Day. On behalf of our entire Utz team, we thank you for your support as we continue to deliver flavorful, quality snacks to consumers across the country.