utz-20230702

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended July 2, 2023
			OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Utz Brands, Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-38686

85-2751850

(State or other jurisdiction
of incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

900 High Street

Hanover, PA 17331

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (717) 637-6644

N/A

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, par value $0.0001 per share

UTZ

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

As of August 7, 2023, 81,141,417 shares of Class A Common Stock, par value $0.0001 per share, and 59,349,000 shares of Class V Common Stock, par value $0.0001 per share, were issued and outstanding.

INTRODUCTORY NOTE

On August 28, 2020 (the "Closing Date"), Utz Brands, Inc. (formerly Collier Creek Holdings) (the "Company"), consummated a business combination (the "Business Combination") with Utz Brands Holdings, LLC ("UBH") pursuant to the terms of the Business Combination Agreement, dated as of June 5, 2020 (the "Business Combination Agreement"), entered into by and among the Company, UBH, and Series U of UM Partners, LLC ("Series U") and Series R of UM Partners, LLC ("Series R" and together with Series U, the "Continuing Members"). Additional information about the Business Combination can be found in our Annual Report on Form 10-K for the year ended January 1, 2023.

Throughout this Quarterly Report on Form 10-Q, unless otherwise noted the "Company", "we", "us", "our", "UBI" and "Utz" refer to Utz Brands, Inc. and its consolidated subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for the Company’s business. Specifically, forward-looking statements may include statements relating to:

•The financial position, capital structure, indebtedness, business strategy and plans and objectives of management for future operations;

•The benefits of acquisitions, dispositions and similar transactions;

•The future performance of, and anticipated financial impact on, the Company;

•Expansion plans and opportunities;

•Expenses and other charges related to the Manufacturing Closure (as defined in Note 3 to our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q);

•The impact of inflation and supply chain disruptions on the Company's business; and

•Other statements preceded by, followed by or that include the words "may," "can," "should," "will," "estimate," "plan," "project," "forecast," "intend," "expect," "anticipate," "believe," "seek," "target" or similar expressions.

These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q and the Company management’s current expectations, forecasts and assumptions, and involve a number of judgments, known and unknown risks and uncertainties and other factors, many of which are outside the control of the Company and its directors, officers and affiliates. Accordingly, forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date. The Company does not undertake any obligation to update, add or to otherwise correct any forward-looking statements contained herein to reflect events or circumstances after the date they were made, whether as a result of new information, future events, inaccuracies that become apparent after the date hereof or otherwise, except as may be required under applicable securities laws.

As a result of a number of known and unknown risks and uncertainties, the Company’s results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ are described under Part I, Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year ended January 1, 2023 (“Annual Report on Form 10-K”). There have been no material changes to our risk factors since the filing of the Annual Report on Form 10-K.


Table of Contents

			Page
Part I - Financial Information
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS			1
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)			2
CONSOLIDATED STATEMENTS OF EQUITY			3
CONSOLIDATED STATEMENTS OF CASH FLOWS			4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS			5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			35
Item 4. Controls and Procedures			35

Part II - Other Information
Item 1. Legal Proceedings			35
Item 1A. Risk Factors			36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36
Item 3. Defaults Upon Senior Securities			36
Item 4. Mine Safety Disclosures			36
Item 5. Other Information			36
Item 6. Exhibits			36
Signatures			37

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Utz Brands, Inc.

CONSOLIDATED BALANCE SHEETS

July 2, 2023 and January 1, 2023

(In thousands)


	As of July 2, 2023		As of January 1, 2023
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	73,657	$	72,930
Accounts receivable, less allowance of $2,669 and $1,815, respectively	140,977		136,985
Inventories	122,386		118,006
Prepaid expenses and other assets	40,090		34,991
Current portion of notes receivable	5,745		9,274
Total current assets	382,855		372,186
Non-current Assets
Property, plant and equipment, net	345,664		345,198
Goodwill	915,295		915,295
Intangible assets, net	1,081,231		1,099,565
Non-current portion of notes receivable	13,975		12,794
Other assets	102,064		95,328
Total non-current assets	2,458,229		2,468,180
Total assets	$	2,841,084	$	2,840,366
LIABILITIES AND EQUITY
Current Liabilities
Current portion of term debt	$	19,290	$	18,472
Current portion of other notes payable	8,584		12,589
Accounts payable	119,597		114,360
Accrued expenses and other	63,423		92,012
Total current liabilities	210,894		237,433
Non-current portion of term debt and revolving credit facility	947,700		893,335
Non-current portion of other notes payable	21,173		20,339
Non-current accrued expenses and other	73,407		67,269
Non-current warrant liability	44,928		45,504
Deferred tax liability	122,798		124,802
Total non-current liabilities	1,210,006		1,151,249
Total liabilities	1,420,900		1,388,682
Commitments and Contingencies
Equity
Shares of Class A Common Stock, $0.0001 par value; 1,000,000,000 shares authorized; 81,141,417 and 80,882,334 shares issued and outstanding as of July 2, 2023 and January 1, 2023, respectively	8		8
Shares of Class V Common Stock, $0.0001 par value; 61,249,000 shares authorized; 59,349,000 shares issued and outstanding as of July 2, 2023 and January 1, 2023	6		6
Additional paid-in capital	935,269		926,919
Accumulated deficit	(277,111)		(254,564)
Accumulated other comprehensive income	30,345		30,777
Total stockholders' equity	688,517		703,146
Noncontrolling interest	731,667		748,538
Total equity	1,420,184		1,451,684
Total liabilities and equity	$	2,841,084	$	2,840,366

The accompanying notes are an integral part of these consolidated financial statements.

Utz Brands, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the thirteen and twenty-six weeks ended July 2, 2023 and July 3, 2022

(In thousands, except share information)

(Unaudited)


(in thousands)	Thirteen weeks ended July 2, 2023		Thirteen weeks ended July 3, 2022		Twenty-six weeks ended July 2, 2023		Twenty-six weeks ended July 3, 2022
Net sales	$	362,853	$	350,147	$	714,286	$	690,914
Cost of goods sold	245,460		238,618		492,397		475,578
Gross profit	117,393		111,529		221,889		215,336

Selling, distribution, and administrative expenses
Selling and distribution	66,869		68,796		131,915		156,906
Administrative	47,584		38,816		88,624		77,367
Total selling, distribution, and administrative expenses	114,453		107,612		220,539		234,273

(Loss) gain on sale of assets, net	(279)		1,375		(787)		1,742

Income (loss) from operations	2,661		5,292		563		(17,195)

Other (expense) income
Interest expense	(15,019)		(10,727)		(29,397)		(19,830)
Other income (expense)	272		(645)		1,887		(125)
Gain on remeasurement of warrant liability	2,808		5,760		576		7,704
Other (expense) income, net	(11,939)		(5,612)		(26,934)		(12,251)

Loss before taxes	(9,278)		(320)		(26,371)		(29,446)
Income tax benefit	(725)		(2,865)		(3,336)		(93)
Net (loss) income	(8,553)		2,545		(23,035)		(29,353)

Net loss attributable to noncontrolling interest	4,429		634		9,784		14,962
Net (loss) income attributable to controlling interest	$	(4,124)	$	3,179	$	(13,251)	$	(14,391)

Earnings (loss) per Class A Common stock: (in dollars)
Basic	$	(0.05)	$	0.04	$	(0.16)	$	(0.18)
Diluted	$	(0.05)	$	0.04	$	(0.16)	$	(0.18)
Weighted-average shares of Class A Common stock outstanding
Basic	81,063,457		80,171,174		81,020,732		79,371,789
Diluted	81,063,457		81,510,936		81,020,732		79,371,789

Net (loss) income	$	(8,553)	$	2,545	$	(23,035)	$	(29,353)
Other comprehensive income:
Change in fair value of interest rate swap	9,572		3,011		(753)		30,820
Comprehensive income (loss)	1,019		5,556		(23,788)		1,467
Net comprehensive loss (income) attributable to noncontrolling interest	383		(647)		10,105		1,715
Net comprehensive income (loss) attributable to controlling interest	$	1,402	$	4,909	$	(13,683)	$	3,182

The accompanying notes are an integral part of these consolidated financial statements.

Utz Brands, Inc.

CONSOLIDATED STATEMENTS OF EQUITY

For the thirteen and twenty-six weeks ended July 2, 2023 and July 3, 2022

(In thousands, except share data) (Unaudited)


	Class A Common Stock			Class V Common Stock			Additional Paid-in Capital		Accumulated (Deficit)		Accumulated Other Comprehensive Income		Total Stockholders' Equity		Non-controlling Interest		Total Equity
	Shares	Amount		Shares	Amount
Balance at January 2, 2022	77,644,645	$	8	59,349,000	$	6	$	912,574	$	(236,598)	$	3,715	$	679,705	$	754,968	$	1,434,673
Payments of tax withholding requirements for employee stock awards		—			—		(6,217)		—		—

SEC Form 10-Q filed by Utz Brands Inc