utz-20240630

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 June 30, 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 July 29, 2024, 82,530,122 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 (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 December 31, 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 the Company's acquisitions, dispositions and similar transactions;

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

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

•Expansion plans and opportunities;

•Cost savings plans and network optimization strategies;

•Transformation of the Company’s supply chain; 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 December 31, 2023. There have been no material changes to our risk factors since the filing of the 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			17
Item 3. Quantitative and Qualitative Disclosures About Market Risk			27
Item 4. Controls and Procedures			27

Part II - Other Information
Item 1. Legal Proceedings			27
Item 1A. Risk Factors			28
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			28
Item 3. Defaults Upon Senior Securities			28
Item 4. Mine Safety Disclosures			28
Item 5. Other Information			28
Item 6. Exhibits			29
Signatures			30

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Utz Brands, Inc.

CONSOLIDATED BALANCE SHEETS

June 30, 2024 and December 31, 2023

(In thousands, except share information)


	As of June 30, 2024		As of December 31, 2023
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	66,574	$	52,023
Accounts receivable, less allowance of $3,077 and $2,933, respectively	137,962		135,130
Inventories	100,710		104,666
Prepaid expenses and other assets	44,539		30,997
Current portion of notes receivable	4,581		5,237
Total current assets	354,366		328,053
Non-current Assets
Assets held for sale	—		7,559
Property, plant and equipment, net	300,050		318,881
Goodwill	870,695		915,295
Intangible assets, net	1,012,447		1,063,413
Non-current portion of notes receivable	9,968		12,413
Other assets	102,590		101,122
Total non-current assets	2,295,750		2,418,683
Total assets	$	2,650,116	$	2,746,736
LIABILITIES AND EQUITY
Current Liabilities
Current portion of term debt	$	12,034	$	21,086
Current portion of other notes payable	7,365		7,649
Accounts payable	121,793		124,361
Accrued expenses and other	68,263		77,590
Total current liabilities	209,455		230,686
Non-current portion of term debt and revolving credit facility	785,539		878,511
Non-current portion of other notes payable	17,291		19,174
Non-current accrued expenses and other	73,843		76,720
Non-current warrant liability	42,192		43,272
Deferred tax liability	116,068		114,690
Total non-current liabilities	1,034,933		1,132,367
Total liabilities	1,244,388		1,363,053
Commitments and Contingencies
Equity
Shares of Class A Common Stock, $0.0001 par value; 1,000,000,000 shares authorized; 81,530,122 and 81,187,977 shares issued and outstanding as of June 30, 2024 and December 31, 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 June 30, 2024 and December 31, 2023	6		6
Additional paid-in capital	955,280		944,573
Accumulated deficit	(293,750)		(298,049)
Accumulated other comprehensive income	24,413		22,958
Total stockholders' equity	685,957		669,496
Noncontrolling interest	719,771		714,187
Total equity	1,405,728		1,383,683
Total liabilities and equity	$	2,650,116	$	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 twenty-six weeks ended June 30, 2024 and July 2, 2023

(In thousands, except share information)

(Unaudited)


(in thousands)	Thirteen weeks ended June 30, 2024		Thirteen weeks ended July 2, 2023		Twenty-six weeks ended June 30, 2024		Twenty-six weeks ended July 2, 2023
Net sales	$	356,190	$	362,853	$	702,713	$	714,286
Cost of goods sold	231,436		245,460		458,386		492,397
Gross profit	124,754		117,393		244,327		221,889

Selling, distribution, and administrative expenses
Selling and distribution	73,780		66,869		147,446		131,915
Administrative	30,813		47,584		66,595		88,624
Total selling, distribution, and administrative expenses	104,593		114,453		214,041		220,539

Gain (loss) on sale of assets, net	2,373		(279)		1,903		(787)

Income from operations	22,534		2,661		32,189		563
Other income (expense), net
Gain on sale of business	—		—		44,015		—
Interest expense	(10,209)		(15,019)		(24,040)		(29,397)
Loss on debt extinguishment	(1,273)		—		(1,273)		—
Other income	198		272		1,108		1,887
Gain on remeasurement of warrant liability	12,888		2,808		1,080		576
Other income (expense), net	1,604		(11,939)		20,890		(26,934)

Income (loss) before taxes	24,138		(9,278)		53,079		(26,371)
Income tax (benefit) expense	(1,309)		(725)		25,236		(3,336)
Net income (loss)	25,447		(8,553)		27,843		(23,035)
Net (income) loss attributable to noncontrolling interest	(5,599)		4,429		(11,986)		9,784
Net income (loss) attributable to controlling interest	$	19,848	$	(4,124)	$	15,857	$	(13,251)

Income (loss) per Class A Common stock: (in dollars)
Basic	$	0.24	$	(0.05)	$	0.19	$	(0.16)
Diluted	$	0.23	$	(0.05)	$	0.19	$	(0.16)
Weighted-average shares of Class A Common stock outstanding
Basic	81,457,014		81,063,457		81,423,240		81,020,732
Diluted	84,954,412		81,063,457		84,762,662		81,020,732

Net income (loss)	$	25,447	$	(8,553)	$	27,843	$	(23,035)
Other comprehensive income (loss):
Change in fair value of interest rate swap	(2,142)		9,572		2,517		(753)
Comprehensive income (loss)	23,305		1,019		30,360		(23,788)
Net comprehensive (income) loss attributable to noncontrolling interest	(4,696)		383		(13,048)		10,105
Net comprehensive income (loss) attributable to controlling interest	$	18,609	$	1,402	$	17,312	$	(13,683)

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 June 30, 2024 and July 2, 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	130,534	—			—		4,634		—		—		4,634		—		4,634
Payments of tax withholding requirements for employee stock awards		—			—		(589)		—		—		(589)		—		(589)
Net loss		—			—		—		(9,127)		—		(9,127)		(5,355)		(14,482)
Cash dividends declared		—			—		—		(56)		—		(56)		—		(56)
Other comprehensive loss		—			—		—		—		(5,958)		(5,958)		(4,367)		(10,325)
Balance at April 2, 2023	81,012,868	$	8	59,349,000	$	6	$	930,964	$	(263,747)	$	24,819	$	692,050	$	738,816	$	1,430,866
Share-based compensation	128,549	—			—		4,305		—		—		4,305		—		4,305
Net loss		—			—		—		(4,124)		—		(4,124)		(4,429)		(8,553)
Other comprehensive income		—			—		—		—		5,526		5,526		4,046		9,572
Cash dividends declared		—			—		—		(9,240)		—		(9,240)		—		(9,240)
Distribution to noncontrolling interest		—			—		—		—		—		—		(6,766)		(6,766)
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

Balance at December 31, 2023	81,187,977	$	8	59,349,000	$	6	$	944,573	$	(298,049)	$	22,958	$	669,496	$	714,187	$	1,383,683
Share-based compensation	218,850	—			—		3,913		—		—		3,913		—		3,913
Payments of tax withholding requirements for employee stock awards		—			—		(1,397)		—		—		(1,397)		—		(1,397)
Deferred tax impact from divestiture		—			—		3,003		—		—

SEC Form 10-Q filed by Utz Brands Inc