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Item 2. Management’s Discussion and Analysis

2021-05-13 compared with 2020-11-05 · 204 added, 341 removed, 232 unchanged (70% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Throughout this section, unless otherwise noted “the Company” , “we”, “us”, “our”, "Successor", "UBI" and “Utz” refer to Utz Brands, Inc.

and its consolidated subsidiaries.

The Predecessor period refers to Utz Brands Holdings, LLC ("UBH" or the "Predecessor"), which closed the Business Combination with the Company on August 28, 2020.

The following discussion and analysis of our financial condition and results of operations of Utz (the “MD&A”) should be read in conjunction with our unaudited combined interim consolidated financial statements as of and for the periods ended September 27, 2020, together with related notes to those statements include under Item 1 hereof and the financial statements of UBH as of December 29, 2019 and December 30, 2018, and for the fiscal years ended December 29, 2019, December 30, 2018 and December 31, 2017 and related notes thereto, as well as the sections entitled “Information About Utz Brands” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Utz” incorporated by reference to the Form 8-K filed by UBI with the SEC on September 3, 2020.

In addition to historical information, the following discussion contains forward-looking statements, including, but not limited to, statements regarding our expectations for future performance, liquidity and capital resources that involve risks, uncertainties and assumptions that could cause actual results to differ materially from our expectations.

Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Factors that could cause such differences include those identified below and those described under “Risk Factors” and “Forward-Looking Statements,”.

We assume no obligation to update any of these forward-looking statements.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited combined interim consolidated financial statements as of and for the thirteen weeks ended April 4, 2021 (Successor), together with our audited combined consolidated financial statements for our most recently completed fiscal year set forth under Item 8 of our Annual Report on Form 10-K/A.

This discussion contains forward-looking statements that involve risks and uncertainties.

Our actual results could differ materially from those discussed below.

Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in Item 1A “Risk Factors” of our Annual Report on Form 10-K/A and other filings under the Exchange Act.

Our fiscal year end is the Sunday closest to December 31.

Our fiscal year 2019 ended December 29, 2019 and was a fifty-two-week period and our fiscal year 2020 ends January 3, 2021 and is a fifty-three-week fiscal year.

Our fiscal quarters are comprised of thirteen weeks each, except for fifty-three-week fiscal periods for the which the fourth quarter is comprised of fourteen weeks, and end on the thirteenth Sunday of each quarter (fourteenth Sunday of the fourth quarter, when applicable).

Our third fiscal quarters for 2020 and 2019 ended on September 27, 2020 and September 29, 2019, respectively.

Our fiscal year 2020 ended January 3, 2021 and was a fifty-three-week period and our fiscal year 2021 will end January 2, 2022 and is a fifty-two-week fiscal year.

Our fiscal quarters are comprised of thirteen weeks each, except for fifty-three-week fiscal periods of which the fourth quarter is comprised of fourteen weeks, and end on the thirteenth Sunday of each quarter (fourteenth Sunday of the fourth quarter, when applicable).

We are a leading manufacturer, marketer, and distributor of high-quality, branded snacking products in the United States.

We produce a broad offering of salty snacks, including potato chips, pretzels, cheese snacks, veggie snacks, pork skins, pub/party mixes, and other snacks.

Our iconic portfolio of authentic, craft, and “better for you” brands, which includes Utz®, Zapp’s®, Golden Flake®, Good Health®, Boulder Canyon®, Hawaiian® Brand, and TORTIYAHS!®, among others, enjoys strong household penetration in the United States, where our products can be found in approximately 40% of U.S.

Our iconic portfolio of authentic, craft, and “better for you” brands, which includes Utz®, ON THE BORDER® , Zapp’s®, Golden Flake®, Good Health®, Boulder Canyon®, Hawaiian® Brand, and TORTIYAHS!®, among others, enjoys strong household penetration in the United States, where our products can be found in approximately 49% of U.S.

We operate 14 manufacturing facilities with a broad range of capabilities, and our products are distributed nationally to grocery, mass merchant, club, convenience, drug and other retailers through direct shipments, distributors, and more than 1,600 direct-store-delivery (“DSD”) routes.

Our company was founded in 1921 in Hanover, Pennsylvania, and benefits from nearly 100 years of brand awareness and heritage in the salty snack industry.

We have historically expanded our geographic reach and product portfolio organically and through acquisitions and have achieved more than 40 consecutive years of growth.

Based on 2019 retail sales, we are second-largest producer of branded salty snacks in our core geographies, consisting of our legacy Northeast and Mid-Atlantic states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington D.C.

as well as Alabama, Illinois, Oregon, and Washington where we have acquired strong regional brands and distribution capabilities in recent years.

Our company was founded in 1921 in Hanover, Pennsylvania, and benefits from 100 years of brand awareness and heritage in the salty snack industry.

We have historically expanded our geographic reach and product portfolio organically and through acquisitions.

Based on 2020 retail sales, we are the second-largest producer of branded salty snacks in our core geographies, where we have acquired strong regional brands and distribution capabilities in recent years.

Business Combination

On August 28, 2020 (the "Closing Date"), Collier Creek Holdings ("CCH") domesticated into a Delaware corporation and changed its name to "Utz Brands, Inc." (the “Domestication”) and consummated the acquisition of certain limited liability company units of UBH, the parent of Utz Quality Foods, LLC (“UQF”), as a result of a new issuance by UBH and purchases from UBH’s existing equity holders pursuant to a Business Combination Agreement, dated as of June 5, 2020 (the “Business Combination Agreement”) among CCH, 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”) (the Domestication and the transactions contemplated by the Business Combination Agreement, collectively, the “Business Combination”), following the approval at the extraordinary general meeting of the shareholders of CCH held on August 27, 2020.

On August 28, 2020, CCH domesticated into a Delaware corporation and changed its name to "Utz Brands, Inc." (the “Domestication”) and consummated the acquisition of certain limited liability company units of UBH, the parent of Utz Quality Foods, LLC (“UQF”), as a result of a new issuance by UBH and purchases from UBH’s existing equity holders pursuant to a Business Combination Agreement, dated as of June 5, 2020 (the “Business Combination Agreement”) among CCH, 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”), following the approval at the extraordinary general meeting of the shareholders of CCH held on August 27, 2020.

UBI was determined to be the accounting acquirer and UBH was determined to be the accounting acquiree, in accordance with ASC 810, as the Company is considered to be the primary beneficiary of UBH after the Business Combination.

Under the ASC 805, Business Combinations, acquisition method of accounting, purchase price allocation of assets acquired and liabilities assumed of UBH are presented based on their estimated fair values as of the Closing.

As a result of the Business Combination, UBI’s financial statement presentation distinguishes UBH as the “Predecessor” for periods prior to the Closing.

UBI, which includes consolidation of UBH subsequent to the Business Combination, is the “Successor” for periods after the Closing.

As a result of the Business Combination, UBI’s financial statement presentation distinguishes UBH as the “Predecessor” for periods prior to the closing of the Business Combination.

UBI, which includes consolidation of UBH subsequent to the Business Combination, is the “Successor” for periods after the closing of the Business Combination.

As a result of the application of the acquisition method of accounting in the Successor period, the financial statements for the Successor period are presented on a full step-up basis as a result of the Business Combination, and are therefore not comparable to the financial statements of the Predecessor period that are not presented on the same full step-up basis due to the Business Combination.

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salty snacks category, within the broader $97 billion market for U.S.

The salty snacks category has grown retail sales at an approximately 4.3% compound annual growth rate (“CAGR”) over the last five years.

During fiscal 2020, snacking occasions are on the rise as consumers increasingly seek out convenient, delicious snacks for both on-the-go and at-home lifestyles.

The salty snacks category has grown retail sales at an approximately 5.6% compound annual growth rate (“CAGR”) over the last four years, including the increased in-home consumption of salty snacks due to COVID-19 during 2020.

During fiscal 2020, snacking occasions surged as consumers increasingly seek out convenient, delicious snacks for both on-the-go and at-home lifestyles.

According to data from the Hartman Group, The Consumer Goods Forum, and IRI, approximately 50% of U.S.

eating occasions are snacks, with 95% of the U.S.

population snacking daily and the average American snacking 2.6 times per day.

population snacking daily and the average American snacking 2.6 times per day based upon the latest available IRI data.

Additionally, the salty snacks category has historically benefited from favorable competitive dynamics, including low private label penetration and category leaders competing primarily through marketing and innovation.

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As a staple food product with resilient consumer demand and a predominantly domestic supply chain, the salty snack category is well positioned to navigate periods of economic disruption or other unforeseen global events.

salty snack category has demonstrated strong performance through economic downturns historically, growing at a 4% CAGR from 2007 to 2010 during the last recession and more recently demonstrated during the novel coronavirus (“COVID-19”) pandemic which began in March 2020 in the U.S.

For the 39 weeks ended September 27, 2020, U.S.

retail sales for salty snacks based on IRI data increased by 9.8% versus the comparable prior year period while our retail sales increased by 15.4% in the same period.

salty snack category has demonstrated strong performance through economic downturns historically, growing at a 4% CAGR from 2007 to 2010 during the last recession.

More recently, the U.S.

salty snack category demonstrated strong performance during the novel coronavirus (“COVID-19”) pandemic which began in March 2020 in the U.S.

For the thirteen weeks ended April 4, 2021 (Successor), U.S.

retail sales for salty snacks based on IRI data increased by 1.7% versus the comparable prior year period.

In the same period, our retail sales decreased by 2.3%.

salty snack category has grown at a 6% CAGR from 2019 to 2021, while the Company has grown at a 5.9% CAGR over the same time period.

Competition – The salty snack industry is highly competitive and includes many diverse participants.

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The CARES Act is an approximately $2 trillion emergency economic stimulus package in response to the Coronavirus outbreak, which among other things contains numerous income tax provisions.

Some of these tax provisions are effective retroactively for years ending before the date of enactment.

The Company deferred $5.2 million of payroll tax deposits per the CARES Act.

Some of these tax provisions are effective retroactively for years ending before the date of enactmen t.

We deferred $7.8 million of payroll tax deposits per the CARES Act.

The deferred payroll taxes must be deposited in two installments, with half due on December 31, 2021 and the remainder on December 31, 2022.

We continue to evaluate the impact of the CARES Act;

however, we believe it is unlikely to have a material effect on the Company’s consolidated financial position, results of operations, and cash flow.

however, we believe it is unlikely to have a material effect on our consolidated financial position, results of operations, and cash flow.

Financing Costs – We regularly evaluate our variable and fixed-rate debt.

We continue to use low-cost, short- and long-term debt to finance our ongoing working capital, capital expenditures and other investments, dividends and share repurchases.

Our weighted average interest rate for both the thirteen week and thirty-nine weeks period ended September 27, 2020 was 4.7%, down from 6.7% during the same timeframe in fiscal 2019.

We have begun to use interest rate swaps to manage our exposure to interest rate changes, which can drive cash flow variability related to our debt.

Refer to Note 8 "Long-Term Debt" and Note 9 "Derivative Financial Instruments and Purchase Commitments" to our unaudited condensed consolidated financial statements included under Part I, Item 1 to this Quarterly Report on Form 10-Q for additional information on debt, derivative and purchase commitment activity.

LIBOR Transition – As of September 27, 2020, we had $410.0 million in variable rate indebtedness, down from $649.3 million at March 29, 2020 and $650.6 million at December 29, 2019, all or a portion of which uses London interbank offered rates, or LIBOR, as a benchmark for establishing applicable rates.

We continue to use low-cost, short- and long-term debt to finance our ongoing working capital, capital expenditures and other investments and dividends.

Our weighted average interest rate for the thirteen weeks ended April 4, 2021 (Successor) was 3.7%, down from 5.4% during the thirteen weeks ended March 29, 2020 (Predecessor).

We have used interest rate swaps to help manage some of our exposure to interest rate changes, which can drive cash flow variability related to our debt.

Refer to Note 8.

"Long-Term Debt" and Note 9.

"Derivative Financial Instruments and Purchase Commitments" to our unaudited condensed consolidated financial statements included under Part I, Item 1 of this filing for additional information on debt, derivative and purchase commitment activity.

LIBOR Transition – As of April 4, 2021, we had $718.2 million in variable rate indebtedness, down from $780.0 million at January 3, 2021.

As of April 4, 2021 our variable rate indebtedness is tied to the Eurocurreny Rate which currently uses the London Inter Bank Offered Rate ("LIBOR") as a benchmark for establishing applicable rates.

As announced in July 2017, LIBOR is expected to be phased out by the end of 2021.

Although many of our LIBOR-based obligations provide for alternative methods of calculating the interest rate payable if LIBOR is not reported, the extent and manner of any future changes with respect to methods of calculating LIBOR or replacing LIBOR with another benchmark are unknown and impossible to predict at this time and, as such, may result in interest rates that are materially higher than current interest rates.

On November 30, 2020, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of Currency and the Federal Deposit Insurance Corporation issued a public statement that the administrator of LIBOR announced it will consult on an extension of publication of certain U.S.

Dollar LIBOR tenors until June 30, 2023, which would allow additional legacy USD LIBOR contracts to mature before the succession of LIBOR.

The Eurocurrency Rate could change benchmarks, the extent and manner of any future changes with respect to methods of calculating LIBOR or replacing LIBOR with another benchmark are unknown and impossible to predict at this time and, as such, may result in interest rates that are materially higher than current interest rates.

If interest rates applicable to our variable interest indebtedness increase, our interest expense will also increase, which could make it difficult for us to make interest payments and fund other fixed costs and, in turn, adversely impact our cash flow available for general corporate purposes.

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Demand for product increased significantly for several weeks in late March and into April 2020 as customers “pantry-loaded” in response to “shelter-in-place” measures that were enacted in many markets.

Following that initial spike, in the weeks that followed, demand for product has continued to out-pace prior year rates as families have favored “at-home” dining at a greater rate than pre-pandemic levels.

Following that initial spike, in the weeks that followed, demand for product continued to out-pace prior year rates as families have favored “at-home” dining at a greater rate than pre-pandemic levels.

We have serviced that demand by increasing production and distribution activities.

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Recent Developments and Significant Items Affecting Comparability

On November 19, 2019, we entered into a stock purchase agreement to acquire all outstanding shares of common stock and certain real estate assets of Kitchen Cooked Inc., an Illinois corporation (“Kitchen Cooked”).

We acquired Kitchen Cooked to expand our distribution and production capacity in Illinois and the surrounding area.

The acquisition closed on December 30, 2019 when we made a cash payment of $6.9 million and recorded $2.0 million in deferred payment obligations for the acquisition of the outstanding shares of Kitchen Cooked as well as certain real estate supporting its operations.

The $2.0 million in deferred payments are payable in installments of $1.0 million each on the first two anniversaries following the closing date.

On October 21, 2019, we closed on our acquisition of Kennedy Endeavors, LLC (“Kennedy”) from Conagra Brands Inc.

Kennedy consists of two divisions:

Tim’s Cascade Snacks and Snyder of Berlin, which are snack food manufacturers.

We acquired this business to expand our national footprint and our DSD snacks business as well as capture significant synergies.

The acquisition provided us with the second largest DSD network for branded salty snacks in the Pacific Northwest, a regional production facility outside of Seattle, Washington, and increased scale with retailers in the Western United States.

Our Consolidated Statements of Operations and Comprehensive Income include the operations of this business from October 21, 2019 through December 29 in 2019 and also the first two fiscal quarters of 2020.

On November 2, 2020, we completed the acquisition of certain assets from Conagra Brands, Inc.

related to the H.K.

Anderson business, a leading brand of peanut butter-filled pretzels for approximately $8 million.

The transaction enables us to jump-start our entry into the growing filled pretzel segment, leveraging the synergies of our salty snack platform.

On November 11, 2020 the Company caused its subsidiaries, UQF and Heron, to enter into a Stock Purchase Agreement among UQF, Heron, Truco and Truco Holdings LLC.

On December 14, 2020, pursuant to the Stock Purchase Agreement, the Company caused its subsidiary, Heron, to consummate the Truco Acquisition.

Upon completion of the Truco Acquisition, Truco became a wholly owned subsidiary of Heron.

At the closing of the Truco Acquisition, the Company paid the aggregate cash purchase price of approximately $404.0 million to Truco Holdings LLC, including payments of approximately $3.0 million for cash on hand at Truco at the closing of the Truco Acquisition, less estimated working capital adjustments, subject to customary post-closing adjustments.

In addition, on December 14, 2020, UQF consummated the IP Purchase pursuant to which it purchased and acquired from OTB Acquisition, LLC the OTB IP pursuant to an Asset Purchase Agreement, dated November 11, 2020, among UQF, Truco Seller and OTB Acquisition, LLC.

The IP Purchase was determined to be an asset acquisition under the provisions of ASC Subtopic 805-50.

The IP Purchase is accounted for separately from the Truco Acquisition, as Truco and the OTB IP were acquired from two different selling parties that were not under common control and the two acquisitions are separate transactions.

The OTB IP was initially recognized and measured by the Company based on its purchase price of $79.0 million since it was acquired in asset purchase and is treated as an indefinite lived intangible assets.

On February 8, 2021, the Company closed on a definitive agreement with Snak-King Corp.

to acquire certain assets of the C.J.

Vitner's business, a leading brand of salty snacks in the Chicago, IL area.

The acquisition increases our distribution in the Chicago area and Midwest Region and expands our product offering.

The Company paid the aggregate cash purchase price of approximately $25 million which was funded from current cash-on-hand.

Commodity Trends

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We address commodity costs primarily through the use of buying-forward, which locks in pricing for key materials between three and 18 months in advance.

Other methods include hedging, net pricing adjustments to cover longer term cost inflation, and manufacturing and overhead cost control.

Other methods include hedging, net pricing adjustments, and manufacturing and overhead cost control.

Our hedging techniques, such as forward contracts, limit the impact of fluctuations in the cost of our principal raw materials; however, we may not be able to fully hedge against commodity cost changes, where there is a limited ability to hedge, and our hedging strategies may not protect us from increases in specific raw material costs.

Due to competitive or market conditions, planned trade or promotional incentives, or other factors, our pricing actions may also lag commodity cost changes temporarily.

Toward the end of 2020, we began to experience an increase in pricing in certain commodities that has continued into Q1 2021.

We expect this trend to continue throughout 2021.

Due to competitive or market conditions, planned trade or promotional incentives, or other factors, our pricing actions may also lag commodity cost changes.

While the costs of our principal raw materials fluctuate, we believe there will continue to be an adequate supply of the raw materials we use and that they will generally remain available from numerous sources.

Independent Operator Conversions

Our DSD distribution is executed via company-owned routes operated by company employee route sales professionals (“RSPs”), and third-party routes managed by independent operators, or IOs.

Our DSD distribution is executed via company-owned routes operated by route sales professionals ("RSP" or "RSPs"), and third-party routes managed by IOs.

We have used the IO and RSP models for more than a decade.

In fiscal year 2017, we embarked on a multi-year strategy to convert all company owned RSP routes to the IO model.

The mix between IOs and RSP was approximately 78% and 22%, respectively as of September 27, 2020 versus a 76% and 24% ratio for IOs and RSPs respectively as of September 29, 2019.

We anticipate completing all remaining conversions by the first half of 2022.

The mix between IOs and RSP was approximately 81% and 19%, respectively as of April 4, 2021 versus 76% and 24% ratio for IOs and RSPs respectively as of March 29, 2020.

We anticipate completing substantially all remaining conversions by the second quarter of fiscal year 2022.

The conversion process involves selling distribution rights to a defined route to an IO.

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Conversions also impact our balance sheet resulting in cash proceeds to us as a result of selling the route to an IO, or by creating notes receivable related to the sale of the routes.

Controls and Procedures

We are not currently required to comply with the SEC’s rules implementing Section 404 of the Sarbanes-Oxley Act and are therefore not required in connection with periods ended prior to the consummation of the Business Combination to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose.

Upon the consummation of the Business Combination, we will be required to comply with the SEC’s rules implementing Section 302 of the Sarbanes-Oxley Act, which will require our management to certify financial and other information in our quarterly and annual reports.

We will be required to provide an annual management report on the effectiveness of our internal control over financial reporting beginning with our annual report for the fiscal year ending January 3, 2021.

We will not be required to have our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404 until our first annual report subsequent to our ceasing to be an “emerging growth company” within the meaning of Section 2(a) of the Securities Act.

Financial Outlook

We seek to achieve profitable, long-term growth and manage our business to attain this goal using our key operating metrics:

Adjusted Gross Profit, EBITDA, Adjusted EBITDA and Further Adjusted EBITDA.

We use these non-GAAP financial metrics and related computations to evaluate and manage the business and to plan and make near and long-term operating and strategic decisions.

As such, we believe these metrics are useful to investors as they provide supplemental information in addition to U.S.

Generally Accepted Accounting Principles (“U.S.

GAAP”), financial results.

We believe it is useful to provide investors with the same financial information that we use internally to make comparisons of historical operating results, identify trends in underlying operating results, and evaluate our business.

We believe our non-GAAP financial measures should always be considered in relation to results under U.S.

We have provided reconciliations between U.S.

GAAP and non-GAAP financial measures under the heading “Non-GAAP Financial Measures”, which appears later in this section.

Results of Operations

The following table presents selected financial data for the Successor period from August 29, 2020 through September 27, 2020 and the Predecessor periods from June 29, 2020 through August 28, 2020 and the 13 weeks ended September 29, 2019.

Additionally, we have presented the Predecessor periods from December 30, 2019 through August 28, 2020 and the 39 weeks ended September 29, 2019.

We have prepared our discussion of the results of operations by comparing the results of the combined Successor period from August 29, 2020 through September 27, 2020 and Predecessor period from June 29, 2020 through August 28, 2020 with the 13 week period ended September 29, 2019.

Additionally, we compared the results of the combined Successor period from August 29, 2020 through September 27, 2020 and Predecessor period from December 30, 2019 through August 28, 2020 with the 39 week period ended September 29, 2019.

We believe this approach provides the most meaningful basis of comparison and is more useful in identifying current business trends for the periods presented.

The combined results of operations included in our discussion below are not considered to be prepared in accordance with U.S.

GAAP and have not been prepared as pro forma results under applicable regulations, may not reflect the actual results we would have achieved had the Business Combination occurred at the beginning of fiscal 2019, and should not be viewed as a substitute for the results of operations of the Predecessor and Successor periods presented in accordance with U.S.

Successor Predecessor Predecessor

(in thousands) From

August 29, 2020

September 27, 2020 From

June 29, 2020

August 28, 2020 For the 13 weeks ended September 29, 2019 From

December 30, 2019

August 28, 2020 For the 39 weeks ended

September 29, 2019

The following tables present selected unaudited financial data for the thirteen weeks ended April 4, 2021 (Successor) and the thirteen weeks ended March 29, 2020 (Predecessor).

Successor Predecessor

(in thousands) Thirteen weeks ended April 4, 2021 Thirteen weeks ended March 29, 2020

Net sales $ 269,182 $ 228,029

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Gross profit 95,241 80,014

Selling and administrative expenses

Selling, general and administrative expenses

Selling 56,728 48,333

Administrative 8,451 25,626 10,432 64,050 33,908

Total selling and administrative expenses 25,310 59,274 50,922 195,629 147,858

General and administrative 29,933 19,940

Total selling, general and administrative expenses 86,661 68,273

Gain on sale of assets

Gain (loss) on disposal of property, plant and equipment 5 (14) 4,790 79 5,806

Gain on disposal of property, plant and equipment 297 68

Gain on sale of routes, net 422 404

Total gain on sale of assets 719 472

(Loss) income from operations (1,179) 3,117 24,882 32,781 52,549

Income from operations 9,299 12,213

Other (expense) income

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Other (expense) income 718 580

Loss on remeasurement of warrant liabilities (21,501) —

Other (expense) income, net (31,644) (9,063)

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Net (loss) income (23,349) 1,692

Net loss (income) attributable to noncontrolling interest 2,320 — (723) — (1,420)

Net loss attributable to noncontrolling interest 820 —

Net (loss) income attributable to controlling interest $ (22,529) $ 1,692

Adjusted EBITDA $ 13,679 $ 24,483 $ 27,300 $ 86,271 $ 69,900

Thirteen Weeks Ended September 27, 2020 (Successor and Predecessor) versus Thirteen Weeks Ended September 29, 2019 (Predecessor)

Net sales was $79.4 million for the Successor period, $168.7 million from June 29, 2020 through August 28, 2020, and $199.6 million for the thirteen weeks ended September 29, 2019.

Net sales for the combined thirteen weeks ended September 27, 2020 increased $48.4 million or 24.2% over the comparable period in 2019.

The increase in net sales in the third fiscal quarter of 2020 was related to the Kennedy acquisition and Kitchen Cooked acquisition, as well as increased sales across customers and geographies that were heightened by increased in-home consumption of salty snacks due to COVID-19.

IO discounts increased from $20.0 million for the thirteen weeks ended September 29, 2019 to $25.2 million for the corresponding fiscal period in 2020.

Excluding the impacts of acquisitions and changes to IO discounts, total net sales grew 9.5% for the thirteen weeks ended September 27, 2020 versus the corresponding period in 2019.

Net sales are evaluated based on classification as Power and Foundation brands.

Thirteen weeks ended April 4, 2021 (Successor) versus thirteen weeks ended March 29, 2020 (Predecessor)

Net sales was $269.2 million and $228.0 million for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

Net sales for the thirteen weeks ended April 4, 2021 (Successor) increased $41.2 million or 18.0% over the comparable period in 2020.

The increase in net sales for the thirteen weeks ended April 4, 2021 (Successor) was primarily related to the acquisitions of Truco, Vitner's, and H.K.

Anderson and favorable price/mix of 1.9%.

The thirteen weeks ended March 29, 2020 (Predecessor) experienced increased sales across customers and geographies that were heightened by increased in-home consumption of salty snacks due to COVID-19.

IO discounts increased to $26.5 million for the thirteen weeks ended April 4, 2021 (Successor) from $24.1 million for the corresponding thirteen weeks ended March 29, 2020 (Predecessor).

Excluding the impacts of acquisitions and changes to IO discounts due to RSP to IO conversion, total net sale declined 2.9% for the thirteen weeks ended April 4, 2021 (Successor) versus the corresponding period in 2020.

Net sales are evaluated based on our classification as Power and Foundation brands.

Power brands include our iconic heritage Utz brand;

craft brands such as Zapp’s ®, Golden Flake ® Pork Skins, and Hawaiian ®;

craft brands such as ON THE BORDER®, Zapp’s ®, Golden Flake ® Pork Skins, and Hawaiian ®;

“better for you” brands such as Good Health ® and Boulder Canyon ®;

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Our Foundation brands are comprised of several regional brands, including Bachman ®, Golden Flake ® Chips and Cheese, Tim’s Cascade ® Snacks , Snyder of Berlin ®, and “ Dirty ” Potato Chips® as well as partner and private label brands.

For the thirteen weeks ended September 27, 2020, excluding the impact of higher IO discounts and brands acquired through our Kennedy and Kitchen Cooked acquisitions, Power Brand sales increased by approximately 10%, while Foundation Brand sales decreased approximately 2%.

Growth in Power Brands was led by Utz®, Zapp’s®, TORTIYAHS!® and Golden Flake Pork® Skins brands, with strong increases across Core, Expansion and Emerging geographies.

The decline in Foundation Brands reflects our strategy to focus on our Power Brands and continued softness in foodservice, up-and-down-the-street customers, and the convenience channel due to COVID-19.

Conversely, our Power Brands have a stronger presence in large format channels, which have performed well during this time period.

Cost of goods sold and Gross profit

Gross profit was $24.1 million for the Successor period, $62.2 million from June 29, 2020 through August 28, 2020, and $69.8 million for the thirteen weeks ended September 29, 2019.

Gross profit for the thirteen weeks ended September 27, 2020 increased $16.4 million or 23.5% over the comparable period in 2019.

The increase in gross profit in the fiscal third quarter of 2020 was driven by higher sales, contributions from the Kennedy and Kitchen Cooked acquisitions, leveraging our existing infrastructure and available capacity, as well as lower per unit costs for materials and overhead driven by productivity initiatives, and lower commodity costs, which were partially offset by the amortization of acquired inventory of $5.8 million.

Our gross profit margin was 34.8% for the fiscal third quarter of 2020 versus 35.0% for the corresponding thirteen week period in 2019.

Excluding the amortization of acquired inventory, the improvement in gross profit margin was primarily driven by the sales volume leverage on controllable overhead costs and productivity savings.

IO discounts increased from $20.0 million in the third fiscal quarter of the prior year to $25.2 million in the corresponding period of fiscal 2020, reducing gross profit by $5.2 million.

Selling and administrative expense

Selling and administrative expenses was $25.3 million for the Successor period, $59.3 million from June 29, 2020 through August 28, 2020, and $50.9 million for the thirteen weeks ended September 29, 2019.

Selling and administrative expenses increased $33.7 million or 66.1% over the comparable period in 2019.

The increased expenses in the third quarter of 2020 were driven by higher transaction-related service provider fees, higher operational costs related to incremental sales volume, operating expense of the acquired Kennedy and Kitchen Cooked businesses, and higher incentive compensation expense, partially offset by a $5.1 million gain on the modification of certain stock compensation awards during the period ending August 28, 2020.

Gain (loss) on sale of assets

Gain on sale of assets was $0.1 million for the Successor period, $0.2 million from June 29, 2020 through August 28, 2020, and $6.0 million for the thirteen weeks ended September 29, 2019.

Gain on sale of assets was primarily driven by a reduction in the number of conversions of RSP routes to IO routes, which resulted in lower proceeds from the sale of routes in the third fiscal quarter of 2020 compared to the same time period in 2019.

Additionally, Company owned routes were recorded at fair value as a result of the Business Combination.

Other (expense) income, net

Other expense, net was $4.1 million for the Successor period, $6.6 million from June 29, 2020 through August 28, 2020, and $13.5 million for the thirteen weeks ended September 29, 2019.

The Company incurred a $2.5 million of expenses for the prepayment penalty paying off the Senior Secured First Lien Note during the Successor period.

Interest expense decreased $3.8 million for the thirteen weeks ended September 27, 2020, versus the corresponding period in 2019.

The lower interest expense was driven by a reduction in the comparative average LIBOR rate and payoff of the existing second lien and subsequent origination of a new term loan with a lower fixed rate component in the fiscal fourth quarter of 2019, which favorably impacted the third fiscal quarter of 2020.

Income tax benefit was $2.9 million for the Successor period, compared to Income tax expense of $1.3 million from June 29, 2020 through August 28, 2020 and $1.0 million for the thirteen weeks ended September 29, 2019.

Adjusted EBITDA

Adjusted EBITDA was $13.7 million for the Successor period, $24.5 million from June 29, 2020 through August 28, 2020, and $27.3 million for the thirteen weeks ended September 29, 2019.

The adjusted EBITDA growth of $10.9 million or 39.8% for the third quarter of fiscal 2020 was driven by strong operating results due to higher sales and improved gross profit margins, as well as EBITDA contributions from the Kennedy and Kitchen Cooked acquisitions.

Thirty-nine Weeks Ended September 27, 2020 (Successor and Predecessor) versus Thirty-nine Weeks Ended September 29, 2019 (Predecessor)

Net sales was $79.4 million for the Successor period, $638.7 million from December 30, 2019 through August 28, 2020, and $566.5 million for the thirty-nine weeks ended September 29, 2019.

Net sales for the combined thirty-nine weeks ended September 27, 2020 increased $151.6 million or 26.8% compared to net sales for the thirty-nine weeks ended September 29, 2019.

The increase in net sales in the first three fiscal quarters of 2020 was related to the Kennedy acquisition and Kitchen Cooked acquisition, as well as increased sales across customers and geographies that were heightened by stay-at-home measures and increased in-home consumption of salty snacks due to COVID-19.

For the thirty-nine weeks ended September 27, 2020, IO discounts were $44.5 million versus $37.4 million in the corresponding period in 2019.

Excluding the impacts of acquisitions and changes to IO discounts, total net sales grew 11.0% for the first three quarters of fiscal 2020 compared to the corresponding fiscal period in fiscal 2019.

For the thirty-nine weeks ended September 27, 2020, excluding the impact of higher IO discounts and brands acquired through our Kennedy and Kitchen Cooked acquisitions, Power Brand sales increased by approximately 13%, while Foundation Brand sales were down approximately 1%.

Growth in Power Brands was led by Utz®, Zapp’s®, TORTIYAHS!® and Golden Flake Pork® Skins brands, with strong increases across Core, Expansion and Emerging geographies.

The decline in Foundation Brands reflects our strategy to focus on our Power Brands and continued softness in food service, up-and-down-the-street customers, and the convenience channel due to COVID-19.

Conversely, our Power Brands have a stronger presence in large format channels, which have performed well during this time period.

For the thirteen weeks ended April 4, 2021 (Successor), excluding brands acquired through our H.K.

Anderson, Truco, and Vitner's acquisitions, Power Brand sales decreased by approximately 1%, while Foundation Brand sales decreased approximately 4% from the thirteen weeks ended March 29, 2020 (Predecessor).

The decline in both Power and Foundation Brands is due to lapping of prior period sales driven by pantry loading at the onset of the COVID-19 pandemic in the first quarter of 2020.

Conversely, our Power Brands have a stronger presence in the grocery channel, which have performed well during this time period.

In addition the eCommerce channel continues to grow and we experienced some rebounding sales in the convenience store channel due to a lower impact of COVID-19 related conditions.

Cost of goods sold and Gross profit

Gross profit was $24.1 million for the Successor period, $227.1 million from December 30, 2019 through August 28, 2020, and $188.2 million for the thirty-nine weeks ended September 29, 2019.

Gross profit for the combined thirty-nine weeks ended September 27, 2020 was increased $63.0 million or 33.5% compared to the thirty-nine weeks ended September 29, 2019.

The increase in gross profit in the first three quarters of fiscal 2020 was driven by higher sales, contributions from the Kennedy and Kitchen Cooked acquisitions, leveraging our existing infrastructure and available capacity, as well as lower per unit costs for materials and overhead driven by productivity initiatives, and lower commodity costs.

Our gross profit margin was 35.0% for the thirty-nine weeks ended September 27, 2020 versus 33.2% for the corresponding thirty-nine week period in 2019.

The improvement in gross profit margin was primarily driven by the sales volume leverage on controllable overhead costs and productivity savings, partially offset by the amortization of the step up in basis attributable to the fair value of finished goods inventory as a result of the Business Combination Agreement with CCH, which was $5.8 million.

For the thirty-nine weeks ended September 27, 2020, IO discounts were $69.6 million versus $57.2 million in the corresponding period in fiscal 2019, reducing gross profit by $12.4 million for the period.

Selling and administrative expense

Selling and administrative expenses was $25.3 million for the Successor period, $195.6 million from December 30, 2019 through August 28, 2020, and $147.9 million for the thirty-nine weeks ended September 29, 2019.

Selling and administrative expenses for the combined thirty-nine weeks ended September 27, 2020 increased $73.1 million or 49.4%, compared to selling and administrative expenses for the thirty-nine weeks ended September 29, 2019.

The increased expenses during the first thirty-nine weeks of 2020 were driven by higher transaction-related service provider fees, higher operational costs related to incremental sales volume, operating expense of the acquired Kennedy and Kitchen Cooked businesses, higher incentive compensation expense, and incremental costs needed to maintain safe business operations during the COVID-19 pandemic, partially offset by a $5.1 million gain on the modification of certain stock compensation awards during the period ending August 28, 2020.

Gross profit was $95.2 million and $80.0 million for the thirteen weeks ended April 4, 2021 (Successor) and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

The increase in gross profit for thirteen weeks ended April 4, 2021 (Successor) was driven by higher sales driven by acquisitions, contributions from the acquisition of Truco, Vitner's, and H.K.

Anderson, leveraging our existing infrastructure and available capacity, improving efficiencies with productivity initiatives, which were partially offset by the commodity cost inflation.

Our gross profit margin was 35.4% for the thirteen weeks ended April 4, 2021 (Successor) versus 35.1% for the thirteen weeks ended March 29, 2020 (Predecessor).

The improvement in gross profit margin was primarily driven by net price realization and favorable mix of Power Brands with better margins, partially offset by increased commodity costs.

Additionally, IO discounts increased to $26.5 million for the thirteen weeks ended March 29, 2020 (Predecessor) from $24.1 million for the thirteen weeks ended April 4, 2021 (Successor), reducing gross profit by $2.4 million.

Selling, general and administrative expense

Selling, general and administrative expenses were $86.7 million and $68.3 million for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

Selling, general and administrative expenses for the thirteen weeks ended April 4, 2021 (Successor) increased $18.4 million or 26.9% over the corresponding period in 2020.

The increased expenses for the thirteen weeks ended April 4, 2021 (Successor) were driven by higher Business transformation initiatives, primarily attributable to expenses associated with the conversion of company-owned routes to IO routes and higher operational costs related to incremental operating expense of the acquired Truco, Vinter's, and H.K.

Anderson businesses, higher public company compliance costs, higher delivery costs, partially offset by lower Acquisition and Integration expenses.

Gain (loss) on sale of assets

Gain on sale of assets was $0.1 million for the Successor period, $1.3 million from December 30, 2019 through August 28, 2020, and $12.2 million for the thirty-nine weeks ended September 29, 2019.

The decrease was primarily driven by a reduction in the number of conversions of RSP routes to IO routes, which resulted in lower proceeds from the sale of routes during the first three fiscal quarters of 2020 compared to the same time period in 2019.

Gain on sale of assets was $0.7 million and $0.5 million for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectivel y.

Company owned routes were recorded at fair value as a result of the Business Combination, which resulted in increasing the IO route asset by $10.5 million.

During the first fiscal quarter of 2021 conversions continued, gains were offset by the values of the routes that were established as part of the Business Combination.

Other (expense) income, net

Other expense, net was $4.1 million for the Successor period, $25.4 million from December 30, 2019 through August 28, 2020, and $39.1 million for the thirty-nine weeks ended September 29, 2019.

Other expense, net for the combined thirty-nine weeks ended September 27, 2020 decreased $9.6 million compared to the thirty-nine weeks ended September 29, 2019.

The reduction was primarily related to lower interest expense of $9.5 million for the thirty-nine weeks ended September 27, 2020, versus the corresponding period in fiscal 2019.

During the Successor period, we incurred a $2.1 million expense related to the prepayment penalty for the pay-down of debt in connection with the Business Combination.

Income tax benefit was $2.9 million for the Successor period, compared to Income tax expense of $4.0 million from December 30, 2019 through August 28, 2020 and income tax expense of $2.8 million for the thirty-nine weeks ended September 29, 2019.

Adjusted EBITDA

Adjusted EBITDA was $13.7 million for the Successor period, $86.3 million from December 30, 2019 through August 28, 2020, and $69.9 million for the thirty-nine weeks ended September 29, 2019.

The adjusted EBITDA growth of $30.1 million, or 43.0%, for the first three quarters of fiscal 2020 was primarily driven by strong operating results due to higher sales and improved gross profit margins, as well as EBITDA contributions from the Kennedy and Kitchen Cooked acquisitions.

Non-GAAP Financial Measures

We use non-GAAP financial information and believe it is useful to investors as it provides additional information to facilitate comparisons of historical operating results, identify trends in our underlying operating results and provides additional insight and transparency on how we evaluate the business.

We use non-GAAP financial measures to budget, make operating and strategic decisions, and evaluate our performance.

We have detailed the non-GAAP adjustments that we make in our non-GAAP definitions below.

The adjustments generally fall within the categories of non-cash items, acquisition and integration costs, business transformation initiatives, and financing-related costs.

We believe the non-GAAP measures should always be considered along with the related U.S.

GAAP financial measures.

We have provided the reconciliations between the U.S.

GAAP and non-GAAP financial measures below, and we also discuss our underlying U.S.

GAAP results throughout this MD&A section.

Our primary non-GAAP financial measures are listed below and reflect how we evaluate our current and prior-year operating results.

As new events or circumstances arise, these definitions could change.

When the definitions change, we will provide the updated definitions and present the related non-GAAP historical results on a comparable basis.

Thirteen Weeks Ended Thirty-nine Weeks Ended

September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019

(dollars in millions) (Combined Successor and Predecessor) (Predecessor) (Combined Successor and Predecessor) (Predecessor)

Pro Forma Net Sales $ 248.0 $ 231.3 $ 718.0 $ 653.3

Adjusted Gross Profit 99.2 73.6 274.9 199.6

Adjusted Gross Profit as a % of Net Sales 40.0 % 36.9 % 38.3 % 35.2 %

Pro Forma Adjusted Gross Profit 99.2 85.3 274.9 230.7

Pro Forma Adjusted Gross Profit as a % of Pro Forma Net Sales 40.0 % 36.9 % 38.3 % 35.3 %

Adjusted EBITDA 38.2 27.3 100.0 69.9

Adjusted EBITDA as a % of Net Sales 15.4 % 13.7 % 13.9 % 12.3 %

Further Adjusted EBITDA 38.2 31.4 100.0 79.4

Further Adjusted EBITDA as % of Pro Forma Net Sales 15.4 % 13.6 % 13.9 % 12.2 %

Net Sales and Pro Forma Net Sales

Pro Forma Net Sales includes the historical net sales of Kennedy from the pre-acquisition period and the historical net sales of Kitchen Cooked from fiscal year 2019.

Successor Predecessor

(in millions) From August 29, 2020 through September 27, 2020 From June 29, 2020 through August 28, 2020 For the Combined 13 Weeks Ended September 27, 2020 For the 13 Weeks Ended September 29, 2019

Net Sales $ 79.4 $ 168.6 $ 248.0 $ 199.6

Kennedy Pre-Acquisition Net Sales — 29.5

Kitchen Cooked Pre-Acquisition Net Sales — 2.2

Pro Forma Net Sales $ 248.0 $ 231.3

Successor Predecessor

(in millions) From August 29, 2020 through September 27, 2020 From December 30, 2019 through August 28, 2020 For the Combined 39 Weeks Ended September 27, 2020 For the 39 Weeks Ended September 29, 2019

Net Sales $ 79.4 $ 638.6 $ 718.0 $ 566.4

Kennedy Pre-Acquisition Net Sales — 80.6

Kitchen Cooked Pre-Acquisition Net Sales — 6.3

Pro Forma Net Sales $ 718.0 $ 653.3

Adjusted Gross Profit and Pro Forma Adjusted Gross Profit

We define Adjusted Gross Profit as Gross Profit excluding Depreciation and Amortization expense.

Adjusted Gross Profit is one of the key performance indicators that our management uses to evaluate operating performance.

We believe that the presentation of Adjusted Gross Profit is useful to investors in the evaluation of our operating performance compared to other companies in the salty snack industry, as similar measures are commonly used by the companies in this industry.

This measure increases transparency and assists investors to understand and analyze our ongoing operational performance by excluding the impact from Depreciation and Amortization, a non-cash item.

Pro Forma Adjusted Gross Profit is adjusted to include the historical gross profit (excluding depreciation and amortization) of Kennedy from the pre-acquisition period and the pre-acquisition gross profit of Kitchen Cooked for fiscal 2019.

The following tables provides a reconciliation from Gross Profit to Adjusted Gross Profit and from Pro Forma Gross Profit to Pro Forma Adjusted Gross Profit for the thirteen and thirty-nine weeks ended September 27, 2020 and September 29, 2019.

Successor Predecessor

(in millions) From August 29, 2020 through September 27, 2020 From June 29, 2020 through August 28, 2020 For the Combined 13 Weeks Ended September 27, 2020 For the 13 Weeks Ended September 29, 2019

Gross Profit $ 24.1 $ 62.1 $ 86.2 $ 69.8

Depreciation and Amortization 13.0 3.8

Adjusted Gross Profit 99.2 73.6

Depreciation and Amortization (13.0) (3.8)

Kennedy Pre-Acquisition Gross Profit — 9.8

Kitchen Cooked Pre-Acquisition Gross Profit — 1.4

Pro Forma Gross Profit 86.2 81.0

Depreciation and Amortization 13.0 3.8

Pro Forma Pre-Acquisition Kennedy D&A — 0.5

Pro Forma Adjusted Gross Profit $ 99.2 $ 85.3

Successor Predecessor

Gross Profit $ 24.1 $ 227.0 $ 251.1 $ 188.1

Depreciation and Amortization 23.8 11.5

Adjusted Gross Profit 274.9 199.6

Depreciation and Amortization (23.8) (11.5)

Kennedy Pre-Acquisition Gross Profit — 25.7

Kitchen Cooked Pre-Acquisition Gross Profit — 3.9

Pro Forma Gross Profit 251.1 217.7

Depreciation and Amortization 23.8 11.5

Pro Forma Pre-Acquisition Kennedy D&A — 1.5

Pro Forma Adjusted Gross Profit $ 274.9 $ 230.7

Other expense, net was $31.6 million and $9.1 million for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

The incremental expense for the thirteen weeks ended April 4, 2021 (Successor) was primarily due to a $21.5 million loss from the remeasurement of warrant liability and additional interest expense of $1.2 million.

Inco me tax expense was $1.0 million and $1.5 million for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

EBITDA, Adjusted EBITDA, and Further Adjusted EBITDA

We define EBITDA as Net Income before Interest, Income Taxes, and Depreciation and Amortization.

We define Adjusted EBITDA as EBITDA further adjusted to exclude certain non-cash items, such as accruals for long-term incentive programs, hedging and purchase commitments adjustments, and asset impairments;

Acquisition and Integration Costs;

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and Financing-Related Costs.

We define Further Adjusted EBITDA as Adjusted EBITDA after giving effect to pre-acquisition EBITDA of Kennedy, pre-acquisition Adjusted EBITDA of Kitchen Cooked, and pre-acquisition EBITDA of Collier Creek Holdings.

We define Further Adjusted EBITDA as Adjusted EBITDA after giving effect to pre-acquisition EBITDA of Truco, pre-acquisition Adjusted EBITDA of Vitner's, and pre-acquisition EBITDA of H.K.

We also report Further Adjusted EBITDA as a percentage of Pro Forma Net Sales as an additional measure to evaluate our Further Adjusted EBITDA margins on Pro Forma Net Sales.

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We also report Adjusted EBITDA as a percentage of Net Sales as an additional measure for investors to evaluate our Adjusted EBITDA margins on Net Sales.

The following tables provides a reconciliation from Net (Loss) Income to EBITDA and Adjusted EBITDA for the thirteen and thirty-nine weeks ended September 27, 2020 and September 29, 2019:

Successor Predecessor

(dollars in millions) From August 29, 2020 through September 27, 2020 From June 29, 2020 through August 28, 2020 For the Combined 13 Weeks Ended September 27, 2020 For the 13 Weeks Ended September 29, 2019

Net (loss) income $ (2.4) $ (4.9) $ (7.3) $ 10.3

Plus non-GAAP adjustments:

Income Tax (Benefit) or Expense (1.5) 1.0

Depreciation and Amortization 17.4 6.8

Interest Expense, Net 8.8 12.6

Interest Income (IO loans) (1)

EBITDA 16.8 29.9

Certain Non-Cash Adjustments (2)

Acquisition and Integration (3)

Business Transformation Initiatives (4)

Financing-Related Costs (5)

Adjusted EBITDA 38.2 27.3

Adjusted EBITDA as a % of Net Sales 15.4 % 13.7 %

Kennedy Pre-Acquisition EBITDA (6)

Kitchen Cooked Pre-Acquisition Adjusted EBITDA (7)

Further Adjusted EBITDA $ 38.2 $ 31.4

Further Adjusted EBITDA as % of Pro Forma Net Sales 15.4 % 13.6 %

The following table provides a reconciliation from Net (Loss) Income to EBITDA and Adjusted EBITDA for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectively:

Successor Predecessor

(dollars in millions) From August 29, 2020 through September 27, 2020 From December 30, 2019 through August 28, 2020 For the Combined 39 Weeks Ended September 27, 2020 For the 39 Weeks Ended September 29, 2019

(dollars in millions) Thirteen weeks ended April 4, 2021 Thirteen weeks ended March 29, 2020

Net (loss) income $ (23.3) $ 1.7

Plus non-GAAP adjustments:

Income Tax (Benefit) or Expense 1.1 2.8

Income Tax Expense 1.0 1.5

Depreciation and Amortization 19.4 8.9

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Financing-Related Costs (5)

Loss on Remeasurement of Warrant Liability (6)

Adjusted EBITDA 37.9 29.2

Adjusted EBITDA as a % of Net Sales 14.1 % 12.8 %

Kennedy Pre-Acquisition EBITDA (6)

Kitchen Cooked Pre-Acquisition Adjusted EBITDA (7)

HKA Pre-Acquisition Adjusted EBITDA (7)

Vitner's Pre-Acquisition Adjusted EBITDA (7)

Truco Pre-Acquisition Adjusted EBITDA (7)

Further Adjusted EBITDA $ 37.9 $ 39.6

Further Adjusted EBITDA as % of Pro Forma Net Sales 13.9 % 12.2 %

(1) Interest Income from IO Loans refers to Interest Income that we earn from IO notes receivable that have resulted from our initiatives to transition from RSP distribution to IO distribution.

(“Business Transformation Initiatives”) .

(1) Interest Income from IO Loans refers to Interest Income that we earn from IO notes receivable that have resulted from our initiatives to transition from RSP distribution to IO distribution (“Business Transformation Initiatives”) .

There is a Notes Payable recorded that mirrors the IO notes receivable, and the interest expense associated with the Notes Payable is part of the Interest Expense, Net adjustment.

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Incentive programs – Utz Quality Foods, LLC, our wholly-owned subsidiary, established the 2018 Long-Term Incentive Plan (the “2018 LTIP”) for employees in February 2018.

The Company reco rded income of $5.1 million and $3.1 million for the thirteen and thirty-nine weeks ended September 27, 2020, respectively.

The income was the result of the conversion rate of the 2018 LTIP Phantom Units into the 2020 LTIP RSUs.

The Company recorded ex penses of $0.9 million and $2.6M for the thirteen and thirty-nine weeks ended September 29, 2019, respectively.

The Company recorded expense of $0.8 million for thirteen weeks ended March 29, 2020 (Predecessor).

Expenses incurred for the 2018 LTIP are non-operational in nature and are expected to decline upon the vesting of the remaining phantom units from fiscal year 2018 and fiscal year 2019 at the end of fiscal year 2021.

The phantom units under the 2018 LTIP were converted into the 2020 LTIP RSUs as part of the Business Combination.

Additionally, in the Successor period, the Company incurred $1.1 million of share based compensation during the thirteen weeks ended September 27, 2020.

For the thirteen weeks ended April 4, 2021 (Successor), the Company incurred $2.9 million of share based compensation under the 2020 LTIP.

Purchase Commitments and Other Adjustments – We have purchased commitments for specific quantities at fixed prices for certain of our products’ key ingredients.

To facilitate comparisons of our underlying operating results, this adjustment was made to remove the volatility of purchase commitment related gains and losses.

For the thirteen weeks ended September 27, 2020, we recorded a benefit of $0.5 million compared to a benefit of $0.5 million during the corresponding period in the prior year.

Year-to-date, total charges for the thirty-nine weeks ended September 27, 2020 was $0.5 million compared to a benefit of $0.8 million for the thirty-nine weeks ended September 29, 2019.

For the thirteen weeks ended April 4, 2021 (Successor) we recorded a loss of $0.0 million compared to a benefit of $0.3 million for thirteen weeks ended March 29, 2020 (Predecessor).

(3) Adjustment for Acquisition and Integration Costs – This is comprised of consulting, transaction services, and legal fees incurred for acquisitions and certain potential acquisitions.

Through the first thirty-nine weeks of 2020, the majority of charges are related to costs incurred for the Business Combination, where we incurred costs of $22.2 million for the thirteen weeks and $31.3 million for the thirty-nine weeks ended September 27, 2020 compared to a benefit of $3.7 million and $2.2 million for the same periods in 2019 respectively.

The majority of charges are related to costs incurred for the Vitner's acquisition, the Truco acquisition, the Kitchen Cooked acquisition, and related integration expenditures where we incurred costs of $1.9 million and $5.2 million for the thirteen weeks ended April 4, 2021 (Successor) and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

(4) Business Transformation Initiatives Adjustment – This adjustment is related to consultancy, professional, and legal fees incurred for specific initiatives and structural changes to the business that do not reflect the cost of normal business operations.

In addition, certain Rice/Lissette family-related costs incurred but not part of normal business operations, and gains realized from the sale of distribution rights to IOs and the subsequent disposal of trucks, offset by severance costs associated with the elimination of RSP positions, fall into this category.

For the period ended September 27, 2020, the total net cost was $1.1 million for the most recent thirteen weeks and $3.5 million through the first three fiscal quarters of the 2020 fiscal year.

This compares to $0.6 net spend for the same thirteen-week period and $0.8 million for the thirty-nine weeks ended September 29, 2019.

The year-over-year difference through the third fiscal quarter was primarily driven by greater gains for the sale of distribution rights to IOs in 2019 as the conversions were slowed as a result of COVID-19 stay at home measures and during the process to combine with CCH in 2020.

(5) Financing-Related Costs – These costs include adjustments for various items related to raising debt and preferred equity capital.

During the thirteen weeks ended September 27, 2020 we incurred $2.5 million of expenses related to a prepayment penalty for the pay-down of debt compared to a $0.1 million adjustment for the same thirteen weeks in 2019.

Total for the thirty-nine weeks ended September 27, 2020 was $2.6 compared to $0.2 million for the first three quarters in fiscal 2019.

(6) The following table presents a reconciliation from pro forma Kennedy Pre-Acquisition Net Income to Kennedy Pre-Acquisition EBITDA:

Thirteen Weeks Ended Thirty-nine Weeks Ended

September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019

(in millions) (Combined Successor and Predecessor) (Predecessor) (Combined Successor and Predecessor) (Predecessor)

Kennedy Pre-Acquisition Net Income $ 0.0 $ 3.2 $ 0.0 $ 7.0

Pro Forma Pre-Acquisition Depreciation and Amortization 0.0 0.8 0.0 2.2

Kennedy Pre-Acquisition EBITDA $ 0.0 $ 4.0 $ 0.0 $ 9.2

(7) Kitchen Cooked Pre-Acquisition Adjusted EBITDA represents a $0.2 million pre-acquisition net loss from Kitchen Cooked in fiscal 2019, primarily adjusted for depreciation and amortization, interest income, and certain adjustments related to its acquisition by Utz, such as transaction costs, one-time transaction-related incentives, and a one-time rent payout upon acquisition of certain Kitchen Cooked facilities.

In addition, certain Rice/Lissette family-related costs incurred but not part of normal business operations, and gains realized from the sale of distribution rights to IOs and the subsequent disposal of trucks, and ERP transition costs, offset by severance costs associated with the elimination of RSP positions, fall into this category.

The Company incurred such costs of $3.3 million and $1.6 million for the thirteen weeks ended April 4, 2021 (Successor) and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

(5) Financing-Related Costs – These costs include adjustments for various items related to raising debt and preferred equity capital or debt extinguishment costs.

The Company incurred expenses of $0.1 million for the thirteen weeks ended March 29, 2020 (Predecessor).

(6) Losses (or gains) related to the changes in the remeasurement of warrant liabilities are not expected to be settled in cash, and when exercised would result in a cash inflow to the Company with the Warrants converting to Class A Common Stock with the liability being extinguished and the fair value of the Warrants at the time of exercise being recorded as an increase to equity.

(7) Pre-Acquisition Adjusted EBITDA – This adjustment represents the adjusted EBITDA of acquired companies prior to the acquisition date.

Liquidity and Capital Resources

The following table presents net cash provided by operating activities, investing activities and financing activities for the thirty-nine weeks ended September 27, 2020 and September 29, 2019.

The following table presents net cash provided by operating activities, investing activities and financing activities for the thirteen weeks ended April 4, 2021 (Successor) and thirteen weeks ended March 29, 2020 (Predecessor).

Successor Predecessor

(in thousands) From August 29, 2020 through September 27, 2020 From December 30, 2019 through August 28, 2020 For the Combined 39 Weeks Ended September 27, 2020 For the 39 Weeks Ended September 29, 2019

Net cash (used in) provided by operating activities $ (27,748) $ 30,627 $ 2,879 $ 4,085

Net cash (used in) provided by investing activities (188,501) (21,516) (210,017) 27,247

Net cash used in financing activities (239,399) (10,451) (249,850) (15,936)

For the thirty-nine weeks ended September 27, 2020, our consolidated cash balance, including cash equivalents, was $32.0 million or $9.7 million higher than at September 29, 2019.

Net cash provided by operating activities for the thirty-nine weeks ended September 27, 2020 was $2.9 million compared to $4.1 million for the thirty-nine weeks ended September 29, 2019, with the difference largely driven by higher use of cash by working capital.

Cash used in investing activities for the thirty-nine weeks ended September 27, 2020 was $210.0 million mostly driven by the Business Combination and capital expenditures of $14.8 million, versus cash provided by investing activity of $27.2 million for the thirty-nine weeks ended September 29, 2019, which was driven by the proceeds from the sale of notes receivable from IOs to a financial institution in the amount of $31.9 million;

capital expenditures for the thirty-nine weeks ended September 29, 2019 were $13.2 million.

Net cash used in financing activities was $249.9 million for the thirty-nine weeks ended September 27, 2020, which was primarily as a result of the repayment of debt in connection with the Business Combination, versus a usage of $15.9 million for the thirty-nine weeks ended September 29, 2019.

(in thousands) Thirteen weeks ended April 4, 2021 Thirteen weeks ended March 29, 2020

Net cash used in operating activities $ (13,183) $ (2,773)

Net cash used in investing activities (25,311) (14,464)

Net cash (used in) provided by financing activities (4,317) 7,815

For the thirteen weeks ended April 4, 2021 (Successor), our consolidated cash balance, including cash equivalents, was $4.0 million or $42.8 million lower than at January 3, 2021.

Net cash used in operating activities for the thirteen weeks ended April 4, 2021 (Successor) was $25.3 million compared to $14.5 million thirteen weeks ended March 29, 2020 (Predecessor), with the difference largely driven by changes increases in accounts receivable and inventory, and reductions in accrued expense largely driven higher year over year compensation payouts.

Cash used in investing activities for the thirteen weeks ended April 4, 2021 (Successor) was $25.3 million mostly driven by the Vitner's acquisition of $25.2 million, versus cash used in investing activity of $14.5 million for the thirteen weeks ended March 29, 2020 (Predecessor), which was primarily driven by the acquisitions of Kitchen Cooked.

Net cash used in financing activities was $4.3 million for the thirteen weeks ended April 4, 2021 (Successor), which was primarily a result of the payoffs of the First Term Loan and the Bridge Credit Agreement, offset by the borrowings under Term Loan B, proceeds from the redemption of warrants, and net borrowings on the ABL, versus net cash provided by financing activities of $7.8 million for the thirteen weeks ended March 29, 2020 (Predecessor) which was primarily the result of net borrowings on the ABL.

Financing Arrangements

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On April 1, 2020, the ABL facility was amended to increase the credit limit up to $116.0 million and to extend the maturity through August 22, 2024.

No amounts were outstanding under this facility as of September 27, 2020 or December 29, 2019.

On December 18, 2020 the ABL facility was amended to increase the credit limit up to $161.0 million and as of April 4, 2021, the outstanding balance of the ABL facility was $15.0 million.

No amounts were outstanding under this facility as of January 3, 2021.

Availability under the ABL facility is based on a monthly accounts receivable and inventory borrowing base certification, which is net of outstanding letters of credit.

As of September 27, 2020 and December 29, 2019, $101.8 million and $83.0 million, respectively, was available for borrowing, net of letters of credit.

As of April 4, 2021 and January 3, 2021, $93.4 million and $106.4 million, respectively, was available for borrowing, net of letters of credit.

The facility bears interest at an annual rate based on LIBOR plus an applicable margin of 1.50% (ranging from 1.50% to 2.00% based on availability) or the prime rate plus an applicable margin of 0.50% (ranging from 0.50% to 1.00%).

Under the Prime rate, had there been outstanding balances, the interest rate on the facility as of September 27, 2020 and September 29, 2019 would have been 3.75% and 5.50%, respectively.

Had there been outstanding balances and the Company elected to use the LIBOR rate, the interest rate on the ABL facility as of September 27, 2020 and September 29, 2019 would have been 1.68% and 3.48%, respectively.

The ABL facility is also subject to unused line fees (0.5% at September 27, 2020) and other fees and expenses.

The Company incurred interest of $0.2 million related to the ABL facility during each of the fiscal quarters ended September 27, 2020 and September 29, 2019 and $0.6 million and $0.9 million during the thirty-nine weeks ended September 27, 2020 and September 29, 2019, respectively.

Standby letters of credit in the amount of $14.1 million have been issued as of each of September 27, 2020 and December 29, 2019.

Had the Company elected to use the Prime rate, the interest rate on the facility as of April 4, 2021 and March 29, 2020, would have been 3.75% and 3.75%, respectively.

The Company elected to use the LIBOR rate, the interest rate on the ABL facility as of April 4, 2021 (Successor) and was 1.61%.

The Company elected to use the LIBOR rate as of March 29, 2020 (Predecessor) and the interest rate was 2.36%.

The ABL facility is also subject to unused line fees (0.5% at April 4, 2021) and other fees and expenses.

Standby letters of credit in the amount of $14.1 million have been issued as of April 4, 2021 and January 3, 2021.

The standby letters of credit are primarily issued for insurance purposes.

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The First Lien Term Loan requires quarterly principal payments of $1.3 million beginning March 2018, with a balloon payment due for any remaining balance on the seventh anniversary of closing, or November 21, 2024.

On August 28, 2020, as part of the Business Combination (as described in Note 1 " Operations and Summary of Significant Accounting Policies" and Note 2 "Acquisitions" an advance payment of principal was made on the First Lien Term Loan of $111.6 million, as such no principal payments are due until November 21, 2024.

On August 28, 2020, as part of the Business Combination (as described in Note 1.

" Operations and Summary of Significant Accounting Policies" and Note 2.

"Acquisitions") an advance payment of principal was made on the First Lien Term Loan of $111.6 million.

The First Lien Term Loan bears interest at an annual rate based on either LIBOR plus an applicable margin of 3.50%, or prime rate plus an applicable margin of 2.50%.

The interest rate on the First Lien Term Loan as of September 27, 2020 and September 29, 2019 was 3.7% and 5.60%, respectively.

The interest rate on the First Lien Term Loan as of March 29, 2020 was 5.10%.

In connection with Amendment No.

2 to the Credit Agreement, dated November 21, 2017 with Bank of America, N.A., as further described within this note, the outstanding balance of $410 million was repaid in full the interest rate on this instrument was 3.64% at the time of payoff.

The Company incurred closing and other costs associated with the Term Loans, which were allocated to each loan on a specific identification basis based on original principal amounts.

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Deferred fees are amortized ratably over the respective lives of each term loan.

Deferred fees associated with the term loans under the January 2017 credit agreement were fully expensed during 2017 and deferred financing fees were derecognized as a result of the Business Combination as described in the Note 1 " Operations and Summary of Significant Accounting Policies" and Note 2 "Acquisitions".

On October 1, 2019, the Company repaid the Second Lien Term Loan with the proceeds of the sale of preferred and common units by Series U, Series R, and SRS.

The Company accounted for the repayment of the Second Lien Term Loan as a debt extinguishment as the investors who purchased the preferred stock and common units were not parties to the Second Lien Term Loan.

The total repayment was $126.3 million, and resulted in a loss on early extinguishment of approximately $4.3 million.

" Operations and Summary of Significant Accounting Policies" and Note 2.

"Acquisitions".

Separately, on October 21, 2019, the Company entered into a Senior Secured First Lien Floating Rate Note (the “Secured First Lien Note”) in a principal amount of $125.0 million.

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The Secured First Lien Note bears interest at an annual rate based on 3 month LIBOR plus an applicable margin of 5.25%.

The interest rate on the Secured First Lien Note on August 28, 2020, prior to payoff was 6.7%.

On August 28, 2020, as part of the Business Combination Agreement with CCH (as described in Note 1 " Operations and Summary of Significant Accounting Policies" and Note 2 "Acquisitions", the Senior Secured First Lien Floating Rate Note was paid off.

The total repayment was $128.8 million, which includes a $2.5 million early termination fee included within other expense (income), net in the Successor period and $1.3 million of interest expense which had been accrued in the Predecessor period.

The First Lien Term Loan, the Secured First Lien Note and the ABL facility are collateralized by substantially all of the assets and liabilities of the Company.

On December 14, 2020, the Company entered into a Bridge Credit Agreement with a syndicate of banks, led by Bank of America, N.A.

The proceeds of the Bridge Credit Agreement were used to fund the Company’s acquisition of Truco and the IP Purchase from OTB Acquisition, LLC, in which the Company withdrew $490.0 million to finance the Truco Acquisition and IP Purchase.

The Bridge Credit Agreement bears interest at an annual rate based on 4.25% Base plus 1 month LIBOR with scheduled incremental increases to the base rate, as defined in the Bridge Credit Agreement.

The loan converts into an Extended Term Loan if the Loan remains open 365 days after the closing date.

As of January 3, 2021, the outstanding balance of the Bridge Credit Agreement was $370.0 million, with $120.0 million being repaid from the redemption of the Company's warrants.

Commitment fees and deferred financing costs on the Bridge Credit Agreement totaled $7.2 million, of which $2.6 million remained on the books as of January 3, 2021.

In connection with Amendment No.

2 to the Credit Agreement, and a $12.0 million repayment in the first quarter of 2021, the outstanding balance of $370.0 million was repaid in full.

On January 20, 2021, the Company entered into Amendment No.

2 which provided additional operating flexibility and revisions to certain restrictive covenants.

Pursuant to the terms of Amendment No.

2, the Company raised $720 million in aggregate principal of Term Loan B which bears interest at LIBOR plus 3.00%, and extended the maturity of the Credit Agreement to January 20, 2028.

The proceeds were used, together with cash on hand and proceeds from our exercised warrants to redeem the outstanding principal amount of existing Term Loan B and Bridge Credit Agreement of $410 million and $358 million, respectively.

The refinancing was accounted for as an extinguishment.

The Company incurred debt issuance costs and original issuance discounts of $8.4 million.

The interest rate on this instrument was 3.11% as of April 4, 2021.

The First Lien Term Loan, the Secured First Lien Note, Term Loan B, and the ABL facility are collateralized by substantially all of the assets and liabilities of the Company.

The credit agreements contain certain affirmative and negative covenants as to operations and the financial condition of the Company.

The Company was in compliance with its financial covenant as of September 27, 2020.

The Company was in compliance with its financial covenant as of April 4, 2021.

Derivative Financial Instruments

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The Company entered into this transaction to reduce its exposure to changes in cash flows associated with its variable rate debt and has designated this derivative as a cash flow hedge.

At September 27, 2020, the effective fixed interest rate on the long-term debt hedged by this contract was 4.2%.

At April 4, 2021, the effective fixed interest rate on the long-term debt hedged by this contract was 3.47%.

For further treatment of the Company’s interest rate swap, refer to Note 10.

"Fair Value Measurements” and Note 12.

Accumulated Other Comprehensive (Loss) Income.”

"Accumulated Other Comprehensive Income (Loss)”.

IO Loan Purchase Commitments

The Company sold notes receivable on its books to Bank of America during 2019, which the Company partially guarantees.

The outstanding balance of notes purchased by Bank of America at September 27, 2020 and December 29, 2019 was $18.3 million and $25.1 million, respectively.

Due to the structure of the transaction, the sale did not qualify for sale accounting treatment, as such the Company records the notes payable obligation owed by the IOs to the financial institution on its books;

the corresponding note receivable also remained on the Company’s books.

The maximum amount of future payments the Company could be required to make under these guarantees equates to 25% of the outstanding loan balance on the first day of each calendar year plus 25% of the amount of any new loans issued during such calendar year.

These loans are collateralized by the routes for which the loans are made.

Accordingly, the Company has the ability to recover substantially all of the outstanding loan value upon default.

The Company guarantees loans made to IOs by M&T Bank for the purchase of routes.

The agreement with M&T Bank was amended in January 2020 so that the Company guaranteed up to 25% of the greater of the aggregate principal amount of loans outstanding on the payment date or January 1st of the subject year.

The outstanding balance of loans guaranteed was $7.2 million and $8.6 million at September 27, 2020 and December 29, 2019, respectively, all of which was on the balance sheet.

The outstanding balance of loans guaranteed was $6.2 million and $6.6 million at April 4, 2021 and January 3, 2021, respectively, all of which was on balance sheet.

These loans are collateralized by the routes for which the loans are made.

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Other Notes Payable and Capital Leases

During the first fiscal quarter of 2020, the Company closed on the acquisition of Kitchen Cooked, as described in Note 2 "Acquisitions" and the acquisition included a deferred purchase price of $2.0 million.

Additionally, during the first fiscal quarter of 2020, the Company purchased intellectual property that include a deferred purchase price of $0.5 million.

During the first fiscal quarter of 2020, the Company closed on the acquisition of Kitchen Cooked and the acquisition included a deferred purchase price of $2.0 million, of which $1.0 million is still outstanding as of April 4, 2021 and January 3, 2021.

Additionally, during the first fiscal quarter of 2020, the Company purchased intellectual property that include a deferred purchase price of $0.5 million, of which $0.4 million and $0.5 million is outstanding as of April 4, 2021 and January 3, 2021, respectively.

During fiscal 2019, the Company sold $33.2 million of notes receivable from IOs on its books for $34.1 million in a series of transactions to a financial institution.

Due to the structure of the transaction, the sale did not qualify for sale accounting treatment and the Company has recorded the notes payable obligation owed by the IOs to the financial institution on its books;

During fiscal the first quarter of 2021, the Company sold an additional $2.3 million of notes receivable from IOs on its books for $2.5 million to a financial institution.

Due to the structure of the transactions, the sale did not qualify for sale accounting treatment and the Company has recorded the notes payable obligation owed by the IOs to the financial institution on its books;

the corresponding notes receivable also remained on the Company’s books.

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Accordingly, the Company has the ability to recover substantially all of the outstanding loan value upon default.

Interest expense for the Successor period from August 29, 2020 to September 27, 2020 was $1.8 million, $1.7 million of which was related to the Company’s credit facility and other long-term debt, $0.0 million of which was related to amortization of deferred financing fees, and $0.1 million of which was related to IO loans.

Interest expense for the Predecessor period from June 29, 2020 to August 28, 2020 was $7.0 million, $6.2 million of which was related to the Company’s credit facility and other long-term debt, $0.4 million of which was related to amortization of deferred financing fees, and $0.4 million of which was related to IO loans.

Interest expense for the 13 week period ended September 29, 2019 was $12.6 million, $11.4 million of which was related to the Company’s credit facility and other long-term debt, $0.5 million of which was related to amortization of deferred financing fees, and $0.7 million of which was related to IO loans.

The interest expense on IO loans is a pass-through expense that has an offsetting interest income within Other Income (Expense).

Interest expense for the Predecessor period from December 30, 2019 to August 28, 2020 was $26.7 million, $23.3 million of which was related to the Company’s credit facility and other long-term debt, $1.7 million of which was related to amortization of deferred financing fees, and $1.7 million of which was related to IO loans.

Interest expense for the 39 weeks ended September 29, 2019 was $38.0 million, $34.9 million of which was related to the Company’s credit facility and other long-term debt, $1.5 million of which was related to amortization of deferred financing fees, and $1.6 million of which was related to IO loans.

The interest expense on IO loans is a pass-through expense that has an offsetting interest income within Other Income (Expense).

Interest expense for the thirteen weeks ended April 4, 2021 (Successor) was $10.9 million, $7.6 million of which was related to the Company’s credit facility and other long-term debt, of which $2.9 million was related to amortization of deferred financing fees, and $0.4 million of which was related to IO loans.

Interest expense for the thirteen weeks ended March 29, 2020 (Predecessor) was $9.6 million, $8.3 million of which was related to the Company’s credit facility and other long-term debt, $0.7 million of which was related to amortization of deferred financing fees, and $0.6 million of which was related to IO loans.

The interest expense on IO loans is a pass-through expense that has an offsetting interest income within Other (expense) income.

Off-Balance Sheet Arrangements

Purchase Commitments

The Company has outstanding purchase commitments for specific quantities at fixed prices for certain key ingredients to economically hedge commodity input prices.

These purchase commitments totaled $53.0 million as of September 27, 2020.

The Company has recorded purchase commitment gain (losses) totaling $0.2 million for the Successor period from August 29, 2020 to September 27, 2020, $0.3 million for the Predecessor period from June 29, 2020 to August 28, 2020, and $(0.5) million for the 13 week period ended September 29, 2019.

The Company has recorded purchase commitment losses totaling $(0.7) million for the Predecessor period from December 30, 2019 to August 28, 2020 and $(0.8) million for the 39 weeks ended September 29, 2019.

Additionally, the Company has outstanding purchase commitments for specific quantities at fixed prices for certain key ingredients to economically hedge commodity input prices.

These purchase commitments totaled $81.2 million as of April 4, 2021.

The Company has recorded purchase commitment losses totaling $— million and $0.3 million for the thirteen weeks ended April 4, 2021 (Successor), and the thirteen weeks ended March 29, 2020 (Predecessor), respectively.

IO Guarantees-Off-Balance Sheet

The Company partially guarantees loans made to IOs by Cadence Bank for the purchase of routes.

The outstanding balance of loans guaranteed was $4.2 million and $5.1 million at September 27, 2020 and December 29, 2019, respectively, all of which was recorded by the Company as an off balance sheet arrangement.

The outstanding balance of loans guaranteed was $3.3 million and $4.1 million at April 4, 2021 and January 3, 2021, respectively, all of which was recorded by the Company as an off balance sheet arrangement.

The maximum amount of future payments the Company could be required to make under the guarantees equates to 25% of the outstanding loan balance up to $2.0 million.

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The Company partially guarantees loans made to IOs by Bank of America for the purchase of routes.

The outstanding balance of loans guaranteed that were issued by Bank of America was $4.3 million and $0.7 million at September 27, 2020 and December 29, 2019, respectively, which are off balance sheet.

The maximum amount of future payments we could be required to make under these guarantees equates to 25% of the outstanding loan balance on the first day of each calendar year plus 25% of the amount of any new loans issued during such calendar year.

The outstanding balance of loans guaranteed that were issued by Bank of America was $8.4 million and $7.1 million at April 4, 2021 and January 3, 2021, respectively, which are off balance sheet.

As discussed in Note 8.

"Long-Term Debt", the Company also sold notes receivable on its books to Bank of America during fiscal 2019 and fiscal 2021, which the Company partially guarantees.

The outstanding balance of notes purchased by Bank of America at April 4, 2021 and January 3, 2021 was $17.4 million and $16.5 million, respectively.

the corresponding note receivable also remained on the Company’s books.

These loans are collateralized by the routes for which the loans are made.

Accordingly, we have the ability to recover substantially all of the outstanding loan value upon default.

Accordingly, the Company has the ability to recover substantially all of the outstanding loan value upon default.

New Accounting Pronouncements

See Note 1, Summary of Significant Accounting Policies, to the unaudited condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

"Operations and Summary of Significant Accounting Policies," to the unaudited condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Application of Critical Accounting Policies and Estimates

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Management regularly reviews the estimates and assumptions used in the preparation of our financial statements for reasonableness and adequacy.

Our significant accounting policies are discussed in Note 1, Summary of Significant Accounting Policies, of the unaudited condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q; however, the following discussion pertains to accounting policies we believe are most critical to the portrayal of our financial condition and results of operations and that require significant, difficult, subjective or complex judgments.

Our significant accounting policies are discussed in Note 1.

"Operations and Summary of Significant Accounting Policies", of the unaudited Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q; however, the following discussion pertains to accounting policies we believe are most critical to the portrayal of our financial condition and results of operations and that require significant, difficult, subjective or complex judgments.

Other companies in similar businesses may use different estimation policies and methodologies, which may affect the comparability of our financial condition, results of operations and cash flows to those of other companies.

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We purchase and sell distribution routes as a part of our maintenance of our DSD network.

As new IOs are identified, we either sell our existing routes to the IOs or sells routes that were previously purchased by us to the IOs.

As new IOs are identified, we either sell our existing routes to the IOs or sell routes that were previously purchased by us to the IOs.

Gain/loss from the sale of a distribution route is recorded upon the completion of the sale transaction and signing of the relevant documents and is calculated based on the difference between the sale price of the distribution route and the asset carrying value of the distribution route as of the date of sale.

We record intangible assets for distribution routes that it purchases based on the payment that we make to acquire the route and records the purchased distribution routes as indefinite-lived intangible assets under FASB ASC 350, Intangibles – Goodwill and Other.

We record intangible assets for distribution routes that we purchase based on the payment that we make to acquire the route and record the purchased distribution routes as indefinite-lived intangible assets under Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other.

The indefinite lived intangible assets are subject to annual impairment testing.

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We test goodwill for impairment at the reporting unit level.

As we have early adopted ASU 2017-04, Simplifying the Test for Goodwill Impairment, we will record an impairment charge based on the excess of a reporting unit’s carrying amount over our fair value.

As we have early adopted Accounting Standards Update 2017-04, Simplifying the Test for Goodwill Impairment, we will record an impairment charge based on the excess of a reporting unit’s carrying amount over our fair value.

ASC 350, Goodwill and Other Intangible Assets also permits an entity to first assess qualitative factors to determine whether it is necessary to perform quantitative impairment tests for goodwill and indefinite-lived intangibles.

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We have identified the existing snack food operations as our sole reporting unit.

For the third fiscal quarter of 2020, we reviewed Goodwill and Intangibles to determine if any triggering events occurred, which indicated that fair values were less than the carrying values, and we determined that no additional impairment testing was necessary.

For the qualitative analysis performed, which took place on the first day of the fourth quarter, we have taken into consideration all the events and circumstances listed in FASB ASC 350, Intangibles—Goodwill and Other, in addition to other entity-specific factors that have taken place from the period of the business combination which assessed goodwill o n August 28, 2020.

We have determined that there was no significant impact that affected the fair value of the reporting unit.

We account for income taxes pursuant to the asset and liability method of ASC 740, Income Taxes, which require us to recognize current tax liabilities or receivables for the amount of taxes we estimate are payable or refundable for the current year, and deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts and their respective tax bases of assets and liabilities and the expected benefits of net operating loss and credit carryforwards.

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Our policy is to classify assessments, if any, for tax related interest as interest expense and penalties as selling and administrative expenses.

As of September 27, 2020, and December 29, 2019, no liability for unrecognized tax benefits was required to be reported.

As of April 4, 2021, and January 3, 2021, no liability for unrecognized tax benefits was required to be reported.

We do not expect any significant changes in our unrecognized tax benefits in the next year.

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We have utilized a number of different insurance vehicles and programs for these insurable risks and recognizes expenses and reserves in accordance with the provisions of each insurance vehicle/program.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about market risk, see Item 7A.

"Quantitative and Qualitative Disclosures About Market Risk" of our Annual Report on Form 10-K/A for the year ended January 3, 2021.

Our exposures to market risk have not changed materially since January 3, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis