utz-20240929

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 September 29, 2024
			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 October 28, 2024, 82,537,542 shares of Class A Common Stock, par value $0.0001 per share, and 58,349,000 shares of Class V Common Stock, par value $0.0001 per share, were issued and outstanding.

INTRODUCTORY NOTE

On August 28, 2020, Utz Brands, Inc. (formerly Collier Creek Holdings) (“UBI”), 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 UBI, UBH, 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 December 31, 2023.

Throughout this Quarterly Report on Form 10-Q, unless otherwise noted the "Company", "we", "us", "our", "UBI" and "Utz" refer to UBI 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 Company's future financial position, capital structure, indebtedness, business strategy, opportunities and plans and objectives of management for future operations, including with respect to promotional activities and efforts to build sustainable long-term demand for the Company's products;

•The benefits of the Company's acquisitions, dispositions and similar transactions;

•The likelihood of the Company completing contemplated acquisitions, dispositions and similar transactions;

•The future operating and financial performance of the Company;

•Expansion plans and opportunities;

•Cost savings plans and network optimization strategies;

•Transformation of the Company’s supply chain;

•The Company’s product mix;

•The Company’s ability to reduce debt and anticipated interest expense savings;

•The Company’s cost savings plans and logistics optimization efforts;

•The effects of inflation or supply chain disruptions on the Company or its business;

•The benefits of the Company’s productivity initiatives;

•The effects of the Company’s marketing and innovation initiatives; 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, reflect Company management’s current expectations, forecasts and assumptions and involve a number of judgments regarding known and unknown risks, 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 to or 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 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 include, without limitation: the risk that the Company’s gross profit margins may be adversely impacted by a variety of factors, including variations in raw materials pricing, retail customer requirements and mix, sales velocities and required promotional support; changes in consumers’ loyalty to the Company’s brands due to factors beyond the Company’s control, including changes in consumer spending due to factors such as increasing household debt; changes in demand for the Company’s products affected by changes in consumer preferences and tastes or the Company's ability to innovate or market its products effectively, particularly in the Company’s expansion geographies; costs associated with building brand loyalty and interest in the Company’s products which may be affected by actions by the Company’s competitors that result in the Company’s products not being suitably differentiated from the products of their competitors; consolidation of key suppliers to the Company; any inability of the Company to adopt efficiencies into its manufacturing processes, including automation and labor optimization, its network, including through plant consolidation and lowest landed cost for shipping its products, or its logistics operations; fluctuations in results of operations of the Company from quarter to quarter because of changes in promotional activities; the possibility that the Company may be adversely affected by other economic, business or competitive factors; the risk that recently completed business combinations and other acquisitions or dispositions disrupt plans and operations; the ability to recognize the anticipated benefits of such business combinations, acquisitions or dispositions, which may be affected by, among other things, competition and the ability of the Company to grow and manage growth profitably and retain its key employees; the ability of the Company to close planned acquisitions or dispositions; the outcome of any legal proceedings that may be instituted against the Company following the consummation of such business combinations, acquisitions or dispositions; changes in applicable law or regulations; costs related to business combinations, acquisitions or dispositions; the ability of the Company to maintain the listing of the Company’s Class A Common Stock on the New York Stock Exchange; and the ability of the Company to develop and maintain effective internal controls. Additional factors that could cause actual results to differ can be found under Part I, Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023.


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			5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS			6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			18
Item 3. Quantitative and Qualitative Disclosures About Market Risk			28
Item 4. Controls and Procedures			28

Part II - Other Information
Item 1. Legal Proceedings			29
Item 1A. Risk Factors			29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			29
Item 3. Defaults Upon Senior Securities			29
Item 4. Mine Safety Disclosures			29
Item 5. Other Information			29
Item 6. Exhibits			30
Signatures			31

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Utz Brands, Inc.

CONSOLIDATED BALANCE SHEETS

September 29, 2024 and December 31, 2023

(In thousands, except share information)


	As of September 29, 2024		As of December 31, 2023
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	64,891	$	52,023
Accounts receivable, less allowance of $3,140 and $2,933, respectively	132,913		135,130
Inventories	101,572		104,666
Prepaid expenses and other assets	40,386		30,997
Current portion of notes receivable	4,603		5,237
Total current assets	344,365		328,053
Non-current Assets
Assets held for sale	—		7,559
Property, plant and equipment, net	315,535		318,881
Goodwill	870,695		915,295
Intangible assets, net	1,003,872		1,063,413
Non-current portion of notes receivable	9,912		12,413
Other assets	99,527		101,122
Total non-current assets	2,299,541		2,418,683
Total assets	$	2,643,906	$	2,746,736
LIABILITIES AND EQUITY
Current Liabilities
Current portion of term debt	$	16,021	$	21,086
Current portion of other notes payable	7,110		7,649
Accounts payable	138,772		124,361
Accrued expenses and other	74,913		77,590
Current portion of warrant liability	48,600		—
Total current liabilities	285,416		230,686
Non-current portion of term debt and revolving credit facility	764,792		878,511
Non-current portion of other notes payable	16,592		19,174
Non-current accrued expenses and other	78,986		76,720
Non-current warrant liability	—		43,272
Deferred tax liability	113,597		114,690
Total non-current liabilities	973,967		1,132,367
Total liabilities	1,259,383		1,363,053
Commitments and Contingencies
Equity
Shares of Class A Common Stock, $0.0001 par value; 1,000,000,000 shares authorized; 82,537,542 and 81,187,977 shares issued and outstanding as of September 29, 2024 and December 31, 2023, respectively	8		8
Shares of Class V Common Stock, $0.0001 par value; 61,249,000 shares authorized; 58,349,000 and 59,349,000 shares issued and outstanding as of September 29, 2024 and December 31, 2023, respectively	6		6
Additional paid-in capital	972,060		944,573
Accumulated deficit	(301,750)		(298,049)
Accumulated other comprehensive income	15,359		22,958
Total stockholders' equity	685,683		669,496
Noncontrolling interest	698,840		714,187
Total equity	1,384,523		1,383,683
Total liabilities and equity	$	2,643,906	$	2,746,736

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 thirty-nine weeks ended September 29, 2024 and October 1, 2023

(In thousands, except share information)

(Unaudited)


(in thousands)	Thirteen weeks ended September 29, 2024		Thirteen weeks ended October 1, 2023		Thirty-nine weeks ended September 29, 2024		Thirty-nine weeks ended October 1, 2023
Net sales	$	365,523	$	371,852	$	1,068,236	$	1,086,138
Cost of goods sold	234,500		252,583		692,886		744,980
Gross profit	131,023		119,269		375,350		341,158

Selling, distribution, and administrative expenses
Selling and distribution	80,140		70,973		227,586		202,888
Administrative	29,901		34,531		96,496		123,155
Total selling, distribution, and administrative expenses	110,041		105,504		324,082		326,043

(Loss) gain on sale of assets, net	(1,501)		(8,488)		402		(9,275)

Income from operations	19,481		5,277		51,670		5,840
Other (expense) income, net
Gain on sale of business	—		—		44,015		—
Interest expense	(12,591)		(15,537)		(36,631)		(44,934)
Loss on debt extinguishment	—		—		(1,273)		—
Other income	450		392		1,558		2,279
(Loss) gain on remeasurement of warrant liability	(6,408)		15,984		(5,328)		16,560
Other (expense) income, net	(18,549)		839		2,341		(26,095)

Income (loss) before taxes	932		6,116		54,011		(20,255)
Income tax expense (benefit)	160		(10,099)		25,395		(13,435)
Net income (loss)	772		16,215		28,616		(6,820)
Net (income) loss attributable to noncontrolling interest	(2,970)		(222)		(14,956)		9,562
Net (loss) income attributable to controlling interest	$	(2,198)	$	15,993	$	13,660	$	2,742

(Loss) income per Class A Common stock: (in dollars)
Basic	$	(0.03)	$	0.20	$	0.17	$	0.03
Diluted	$	(0.03)	$	0.19	$	0.16	$	0.03
Weighted-average shares of Class A Common stock outstanding
Basic	82,445,064		81,141,417		81,763,848		81,060,961
Diluted	82,445,064		83,444,275		84,948,754		83,567,756

Net income (loss)	$	772	$	16,215	$	28,616	$	(6,820)
Other comprehensive (loss) income:
Change in fair value of interest rate swap	(15,471)		4,047		(12,954)		3,294
Comprehensive (loss) income	(14,699)		20,262		15,662		(3,526)
Net comprehensive loss (income) attributable to noncontrolling interest	3,447		(1,932)		(9,601)		8,173
Net comprehensive (loss) income attributable to controlling interest	$	(11,252)	$	18,330	$	6,061	$	4,647

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

Utz Brands, Inc.

CONSOLIDATED STATEMENTS OF EQUITY

For the thirteen and thirty-nine weeks ended September 29, 2024 and October 1, 2023

(In thousands, except share information)

(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 1, 2023	80,882,334	$	8	59,349,000	$	6	$	926,919	$	(254,564)	$	30,777	$	703,146	$	748,538	$	1,451,684
Share-based compensation	259,083	—			—		8,939		—		—		8,939		—		8,939
Payments of tax withholding requirements for employee stock awards		—			—		(589)		—		—		(589)		—		(589)
Net loss		—			—		—		(13,251)		—		(13,251)		(9,784)		(23,035)
Cash dividends declared		—			—		—		(9,296)		—		(9,296)		—		(9,296)
Distribution to noncontrolling interest		—			—		—		—		—		—		(6,766)		(6,766)
Other comprehensive loss		—			—		—		—		(432)		(432)		(321)		(753)
Balance at July 2, 2023	81,141,417	$	8	59,349,000	$	6	$	935,269	$	(277,111)	$	30,345	$	688,517	$	731,667	$	1,420,184
Share-based compensation		—			—		3,629		—		—		3,629		—		3,629
Net income		—			—		—		15,993		—		15,993		222		16,215
Other comprehensive income

SEC Form 10-Q filed by Utz Brands Inc