What changed in this filing

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Item 1. Financial Statements

2022-08-11 compared with 2022-05-12 · 181 added, 133 removed, 576 unchanged (35% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

April 3, 2022 and January 2, 2022

July 3, 2022 and January 2, 2022

(In thousands)

April 3, 2022

As of January 2, 2022

32 unchanged sentences

1,000,000,000 shares authorized;

78,597,175 and 77,644,645 shares issued and outstanding as of April 3, 2022 and January 2, 2022, respectively.

80,812,835 and 77,644,645 shares issued and outstanding as of July 3, 2022 and January 2, 2022, respectively.

Shares of Class V Common Stock, $ 0.0001 par value;

61,249,000 shares authorized;

59,349,000 shares issued and outstanding as of April 3, 2022 and January 2, 2022.

59,349,000 shares issued and outstanding as of July 3, 2022 and January 2, 2022.

Additional paid-in capital 939,575 912,574

7 unchanged sentences

Utz Brands, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the thirteen weeks ended April 3, 2022 and April 4, 2021

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the thirteen and twenty-six weeks ended July 3, 2022 and July 4, 2021

(In thousands, except share information)

Thirteen weeks ended April 3, 2022 Thirteen weeks ended April 4, 2021

Thirteen weeks ended July 3, 2022 Thirteen weeks ended July 4, 2021 Twenty-six weeks ended July 3, 2022 Twenty-six weeks ended July 4, 2021

Net sales $ 350,147 $ 297,919 $ 690,914 $ 567,101

6 unchanged sentences

Gain on sale of assets, net 1,375 2,289 1,742 3,008

(Loss) income from operations ( 22,487 ) 9,299

Income (loss) from operations 5,292 4,369 ( 17,195 ) 13,668

Other (expense) income

Interest expense ( 10,727 ) ( 7,896 ) ( 19,830 ) ( 18,757 )

Other income 520 718

Other (expense) income ( 645 ) 758 ( 125 ) 1,476

Gain (loss) on remeasurement of warrant liability 5,760 19,368 7,704 ( 2,133 )

Other (expense) income, net ( 5,612 ) 12,230 ( 12,251 ) ( 19,414 )

Loss before taxes ( 29,126 ) ( 22,345 )

Income tax expense 2,772 1,004

Net loss ( 31,898 ) ( 23,349 )

Income (loss) before taxes ( 320 ) 16,599 ( 29,446 ) ( 5,746 )

Income tax (benefit) expense ( 2,865 ) 420 ( 93 ) 1,424

Net income (loss) 2,545 16,179 ( 29,353 ) ( 7,170 )

Net loss attributable to noncontrolling interest 634 1,400 14,962 2,220

Net loss attributable to controlling interest $ ( 17,570 ) $ ( 22,529 )

Net income (loss) attributable to controlling interest $ 3,179 $ 17,579 $ ( 14,391 ) $ ( 4,950 )

Earnings (loss) per Class A Common stock:

Basic & diluted $ ( 0.22 ) $ ( 0.30 )

Basic $ 0.04 $ 0.22 $ ( 0.18 ) $ ( 0.07 )

Diluted $ 0.04 $ 0.21 $ ( 0.18 ) $ ( 0.07 )

Weighted-average shares of Class A Common stock outstanding

Basic & diluted 78,572,404 75,927,005

Net loss $ ( 31,898 ) $ ( 23,349 )

Basic 80,171,174 76,500,488 79,371,789 76,213,746

Diluted 81,510,936 81,732,056 79,371,789 76,213,746

Net income (loss) $ 2,545 $ 16,179 $ ( 29,353 ) $ ( 7,170 )

Other comprehensive income:

Change in fair value of interest rate swap 3,011 607 30,820 1,429

Comprehensive loss ( 4,089 ) ( 22,527 )

Net comprehensive loss attributable to noncontrolling interest 2,362 —

Net comprehensive loss attributable to controlling interest $ ( 1,727 ) $ ( 22,527 )

Comprehensive income (loss) 5,556 16,786 1,467 ( 5,741 )

Net comprehensive (income) loss attributable to noncontrolling interest ( 647 ) 1,400 1,715 2,220

Net comprehensive income (loss) attributable to controlling interest $ 4,909 $ 18,186 $ 3,182 $ ( 3,521 )

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

Utz Brands, Inc.

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

For the thirteen weeks ended April 3, 2022 and April 4, 2021

(In thousands, except share data)

CONSOLIDATED STATEMENTS OF EQUITY

For the thirteen and twenty-six weeks ended July 3, 2022 and July 4, 2021

(In thousands, except share data) (Unaudited)

Class A Common Stock Class V Common Stock Additional Paid-in Capital Accumulated (Deficit) Accumulated Other Comprehensive Income Total Stockholders' Equity Non-controlling Interest Total Equity

6 unchanged sentences

Balance at April 4, 2021 76,481,833 7 60,349,000 6 941,003 ( 264,019 ) 1,746 678,743 798,460 1,477,203

Stock-based compensation 88,589 1 — 3,755 — — 3,756 — 3,756

Net income — — — 17,579 — 17,579 ( 1,400 ) 16,179

Other comprehensive income — — — — 607 607 — 607

Cash dividends declared ($ 0.10 per share of Class A Common Stock)

— — — ( 7,645 ) — ( 7,645 ) — ( 7,645 )

Distribution to noncontrolling interest — — — — — — ( 10,829 ) ( 10,829 )

Balance at July 4, 2021 76,570,422 $ 8 60,349,000 $ 6 $ 944,758 $ ( 254,085 ) $ 2,353 $ 693,040 $ 786,231 $ 1,479,271

Balance at January 2, 2022 77,644,645 $ 8 59,349,000 $ 6 $ 912,574 $ ( 236,598 ) $ 3,715 $ 679,705 $ 754,968 $ 1,434,673

5 unchanged sentences

Balance at April 3, 2022 78,597,175 8 59,349,000 6 909,144 ( 254,168 ) 19,558 674,548 752,606 1,427,154

Stock-based compensation 110,287 — — 4,400 — — 4,400 — 4,400

Issuance of common stock in connection with private placement sale 2,105,373 28,000 28,000 28,000

Tax impact arising from share issuance — — ( 1,969 ) — — ( 1,969 ) — ( 1,969 )

Net income — — — 3,179 — 3,179 ( 634 ) 2,545

Other comprehensive income — — — — 1,730 1,730 1,281 3,011

Cash dividends declared ($ 0.108 per share of Class A Common Stock)

— — — ( 8,604 ) — ( 8,604 ) — ( 8,604 )

Distribution to noncontrolling interest — — — — — — ( 6,410 ) ( 6,410 )

Balance at July 3, 2022 80,812,835 $ 8 59,349,000 $ 6 $ 939,575 $ ( 259,593 ) $ 21,288 $ 701,284 $ 746,843 $ 1,448,127

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the thirteen weeks ended April 3, 2022 and April 4, 2021

For the twenty-six weeks ended July 3, 2022 and July 4, 2021

(In thousands)

Thirteen weeks ended April 3, 2022 Thirteen weeks ended April 4, 2021

Twenty-six weeks ended July 3, 2022 Twenty-six weeks ended July 4, 2021

Cash flows from operating activities

21 unchanged sentences

Proceeds from the sale of IO notes 5,017 7,922

Proceeds from insurance claims 2,000 —

Proceeds from insurance claims for capital investments 2,000 —

Notes receivable, net ( 8,849 ) ( 5,101 )

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Exercised warrants — 57,232

Proceeds from issuance of shares 28,000 —

Dividends ( 8,433 ) ( 8,082 )

Distribution to noncontrolling interest ( 6,410 ) ( 11,009 )

Net cash provided by (used in) financing activities 9,254 ( 4,317 )

Net cash provided by financing activities 51,754 50,501

Net decrease in cash and cash equivalents ( 21,765 ) ( 20,086 )

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Securities and Exchange Commission (the "SEC").

They do not include all information and notes required by US GAAP for annual financial statements.

However, except as disclosed herein, there has been no material changes in the information disclosed in the Notes to Consolidated Financial Statements included in the Company’s financial statements for the year ended January 2, 2022.

They do not include all information and notes required by U.S.

GAAP for annual financial statements.

However, except as disclosed herein, there has been no material change in the information disclosed in the Notes to Consolidated Financial Statements included in the Company’s financial statements for the year ended January 2, 2022.

The balance sheet as of January 2, 2022 has been derived from the audited combined financial statements as of and for the year ended January 2, 2022.

In the opinion of management, such financial information reflects all normal and recurring adjustments necessary for a fair presentation of the financial position and the results of operations for such interim periods in accordance with the US GAAP.

Operating results for the interim period are not necessarily indicative of the results that may be expected for any future period or for the full year.

2 unchanged sentences

Reclassification – Certain prior year amounts have been reclassified for consistency with the current year presentation.

In our Q1 Consolidated Statement of Profit and Loss and Consolidated Statement of Cash flows, we began combining gain on disposal of property, plant and equipment, net and gain on sale of routes, net, into one line item as gain on sale of assets to simplify our reporting presentation.

In our Consolidated Statements of Operation and Comprehensive Income (Loss) and our Consolidated Statements of Cash Flows, included in our Quarterly Report on Form 10-Q for the quarter ended April 3, 2022, the Company began combining gain on disposal of property, plant and equipment, net and gain on sale of routes, net, into one line item as gain on sale of assets to simplify our reporting presentation.

The reclassification had no impact on total operating costs, earnings from operations, net earnings, earnings per share or total equity.

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A liability is recognized (or amount of net operating loss carryover or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740-10.

Interest costs and related penalties related to unrecognized tax benefits are required to be calculated, if applicable.

Interest costs and penalties related to unrecognized tax benefits are required to be calculated, if applicable.

The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as selling, distribution, and administrative expenses ("SD&A").

As of April 3, 2022 and January 2, 2022, no liability for unrecognized tax benefits was required to be reported.

As of July 3, 2022 and January 2, 2022, no liability for unrecognized tax benefits was required to be reported.

The Company does not expect any significant changes in its unrecognized tax benefits in the next fiscal year.

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The Company has identified the existing snack food operations as its sole reporting unit.

As the Company has early adopted the FASB Accounting Standards Update ("ASU") No.

In accordance with FASB Accounting Standards Update ("ASU") No.

2017-04, Intangibles - Goodwill and Other ("Topic 350"):

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For the latest qualitative analysis performed, which took place on the first day of the fourth quarter of 2021, we had 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 had taken place.

We have determined that there was no significant impact that affected the fair value of the reporting unit through April 3, 2022.

We have determined that there was no significant impact that affected the fair value of the reporting unit through July 3, 2022.

Therefore, we have determined that it was not necessary to perform a quantitative goodwill impairment test for the reporting unit.

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Revenue Recognition – The Company’s revenues primarily consist of the sale of salty snack items to customers, including supermarkets, mass merchants, club stores, dollar and discount stores, convenience stores, independent grocery stores, drug stores, food service, vending, military, and other channels.

The Company sells its products in most regions of the United States primarily through its DSD network, direct to warehouse shipments, and third-party distributors.

The Company sells its products in most regions of the United States primarily through its direct-store-delivery ("DSD") network, direct to warehouse shipments, and third-party distributors.

These revenue contracts generally have a single performance obligation.

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These estimates are made using various techniques including historical data on performance of similar promotional programs.

The Company has reserves in place of $ 26.3 million as of April 3, 2022 and $ 26.5 million as of January 2, 2022.

The Company has reserves in place of $ 33.0 million as of July 3, 2022 and $ 26.5 million as of January 2, 2022.

Differences between estimated expense and actual redemptions are recognized as a change in management estimate as actual redemptions are incurred.

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Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill.

Distributor Buyouts - During the first fiscal quarter of 2022, we bought out and terminated the contracts of multiple third-party distributors who had previously been providing services to the Company.

These transactions were accounted for as contract terminations and resulted in expense of $ 23.0 million for thirteen weeks ended April 3, 2022, and are included within selling and distribution expense on the consolidated statement of operations and comprehensive loss.

Distributor Buyouts - During the first and second fiscal quarters of 2022, we bought out and terminated the contracts of multiple third-party distributors who had previously been providing services to the Company.

These transactions were accounted for as contract terminations and resulted in expense of $ 23.0 million for twenty-six weeks ended July 3, 2022, and are included within selling and distribution expense on the consolidated statement of operations and comprehensive income (loss).

Use of Estimates – Management uses estimates and assumptions in preparing the consolidated financial statements in accordance with U.S.

2 unchanged sentences

Actual results could vary materially from the estimates that were used.

Recently Issued Accounting Standards – In December 2019, the FASB issued "ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes" ("Topic 740").

This Accounting Standards Update ("ASU") is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying certain aspects of the current guidance to promote consistency among reporting entities.

For public business entities, ASU 2019-12 was effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, with early adoption permitted.

We adopted this standard upon the loss of our emerging growth status as of January 2, 2022.

Adoption of the new standard did not have a material impact on our consolidated financial statements.

In March 2020, the FASB issued "ASU No.

Recently Issued Accounting Standards –In March 2020, the FASB issued "ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting".

This ASU provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

This ASU provides practical expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The expedients and exceptions provided by the amendments in this update apply only to contracts, hedging relationships, and other transactions that reference the London interbank offered rate ("LIBOR") or another reference rate expected to be discontinued as a result of reference rate reform.

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The customer relationships are being amortized over a period of 10 years.

As of April 3, 2022, the purchase price allocation has not been finalized.

We expect to finalize the valuation report and complete the purchase price allocation no later than one-year from the acquisition date.

On November 2, 2021, the Company announced that its subsidiaries, entered into a definitive agreement to acquire the equity of R.W.

As of June 7, 2022, the purchase price allocation had been finalized.

On November 2, 2021, the Company announced that certain of its subsidiaries, entered into a definitive agreement to acquire the equity of R.W.

Garcia Holdings, LLC and its wholly-owned subsidiary, R.W.

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The trade name and customer relationships are being amortized over a period of 15 years.

As of April 3, 2022, the purchase price allocation has not been finalized.

As of July 3, 2022, the purchase price allocation has not been finalized.

We expect to finalize the valuation report and complete the purchase price allocation no later than one-year from the acquisition date.

1 unchanged sentence

(in thousands) As of

April 3, 2022

As of January 2, 2022

6 unchanged sentences

(in thousands) As of

April 3, 2022

As of January 2, 2022

8 unchanged sentences

Property, plant and equipment, net $ 338,039 $ 303,807

Depreciation expense was $ 12.4 million and $ 9.9 million for the thirteen weeks ended April 3, 2022 and April 4, 2021, respectively.

Depreciation expense is classified in cost of goods sold, selling, distribution, and administrative expenses on the consolidated statements of operations and comprehensive loss.

On April 28, 2022, the Company purchased a brand new, recently completed snack food manufacturing facility in Kings Mountain, North Carolina from Evans Food Group Ltd.

d/b/a Benestar Brands and related affiliates.

The total purchase price of the facility was approximately $ 38.4 million, plus assumed liabilities of $ 1.3 million.

The Company wired the full cash purchase price of $ 38.4 million at the closing and concurrently with the facility purchase, the Company sold 2.1 million shares of the Company’s Class A Common Stock for $ 28.0 million, to affiliates of Benestar in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933.

Depreciation expense was $ 12.7 million and $ 10.2 million for the thirteen weeks ended July 3, 2022 and July 4, 2021, respectively, and $ 25.1 million and $ 20.3 million for the twenty-six weeks ended July 3, 2022 and July 4, 2021, respectively.

Depreciation expense is classified in cost of goods sold, selling, distribution, and administrative expenses on the consolidated statements of operations and comprehensive income (loss).

GOODWILL AND INTANGIBLE ASSETS, NET

1 unchanged sentence

(in thousands)

January 2, 2022 $ 915,438

Balance as of January 2, 2022 $ 915,438

RW Garcia acquisition adjustment 52

Balance as of April 3, 2022 $ 915,490

For the first fiscal quarter of 2022, the change to goodwill was attributable to the RW Garcia acquisition adjustment.

Balance as of July 3, 2022 $ 915,490

Intangible assets, net, consisted of the following:

(in thousands) As of

April 3, 2022

As of January 2, 2022

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Intangible assets, net $ 1,120,154 $ 1,142,509

Previously, we were granted certain exclusive distribution rights for certain products manufactured by another manufacturer.

During the first fiscal quarter of 2022 we shifted our relationship with that manufacturer and worked with them to help convert that shelf space to Company-branded products.

As a result, we recorded impairment expense of $ 2.0 million and the amortizable master distribution rights decreased by $ 2.2 million.

There were no other significant changes to intangible assets during the thirteen weeks ended April 3, 2022 other than those which arise from the normal course of business of buying and selling of Company owned route assets and amortization.

Amortization of the distributor/customer relationships, technology, and trade names amounted to $ 9.4 million and $ 9.5 million for the thirteen weeks ended April 3, 2022 and April 4, 2021, respectively.

Amortization expense is classified in administrative expenses on the consolidated statements of operations and comprehensive loss.

Previously, the Company was granted certain exclusive distribution rights for certain products manufactured by another manufacturer.

During the first fiscal quarter of 2022 the Company shifted the relationship with that manufacturer and converted that shelf space to Company-branded products.

As a result, the Company recorded impairment expense of $ 2.0 million and the amortizable master distribution rights decreased by $ 2.2 million.

There were no other significant changes to intangible assets during the twenty-six weeks ended July 3, 2022 other than those which arise from the normal course of business of buying and selling of Company-owned route assets and amortization.

Amortization of the distributor/customer relationships, technology, and trade names amounted to $ 9.4 million and $ 8.9 million for the thirteen weeks ended July 3, 2022 and July 4, 2021, respectively, and $ 18.8 million and $ 18.3 million for the twenty-six weeks ended July 3, 2022 and July 4, 2021, respectively.

The expense related to the amortization of intangibles is classified in administrative expenses on the consolidated statements of operations and comprehensive income (loss).

NOTES RECEIVABLE

The Company has undertaken a program in recent years to sell company-managed DSD distribution routes to IOs.

The Company has undertaken a program in recent years to sell company-managed DSD distribution routes to independent operators ("IOs").

Contracts are executed between the Company and the IO for the sale of the product distribution route, including a note in favor of the Company, in certain cases.

The notes bear interest at rates ranging from 0.00 % to 8.55 % with terms ranging generally from one to ten years .

The notes receivable balances due from IOs at April 3, 2022 and January 2, 2022 totaled $ 25.8 million and $ 27.2 million, respectively, and are collateralized by the routes for which the loans are made.

Of the balance at April 3, 2022 and January 2, 2022, $ 22.9 million and $ 24.8 million, respectively relates to corresponding notes payable, as discussed in further detail within Note 8.

The notes receivable balances due from IOs at July 3, 2022 and January 2, 2022 totaled $ 25.6 million and $ 27.2 million, respectively, and are collateralized by the routes for which the loans are made.

The Company has a corresponding notes payable liability, related to the IO notes receivables, of $ 24.7 million and $ 24.8 million at July 3, 2022 and January 2, 2022, respectively.

The related notes payable liability is discussed in further detail within Note 8.

"Long-Term Debt".

Other notes receivable totaled $ 0.2 million and $ 0.2 million as of April 3, 2022 and January 2, 2022, respectively.

Other notes receivable totaled $ 0.2 million as of July 3, 2022 and January 2, 2022.

ACCRUED EXPENSES AND OTHER

Current accrued expenses and other consisted of the following:

(in thousands) As of April 3, 2022 January 2, 2022

(in thousands) As of July 3, 2022 January 2, 2022

Accrued compensation and benefits $ 21,285 $ 20,081

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Non-current accrued expenses and other consisted of the following:

(in thousands) As of April 3, 2022 As of January 2, 2022

(in thousands) As of July 3, 2022 As of January 2, 2022

Right-of-use liability $ 29,423 $ 23,226

9 unchanged sentences

On December 18, 2020, the ABL facility was amended to increase the credit limit up to $ 161.0 million.

As of April 3, 2022 and January 2, 2022, $ 56.0 million and $ 36.0 million, respectively, were outstanding under this facility.

As of July 3, 2022 and January 2, 2022, $ 65.8 million and $ 36.0 million, respectively, were outstanding under this facility.

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 April 3, 2022 and January 2, 2022, $ 80.8 million and $ 96.9 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 %).

Had the Company elected to use the Prime rate, the interest rate on the facility as of April 3, 2022 and April 4, 2021, would have been 3.75 %.

The Company elected to use the LIBOR rate, the interest rate on the ABL facility as of April 3, 2022 was 1.95 %.

The Company elected to use the LIBOR rate as of April 4, 2021 and the interest rate was 1.61 %.

The ABL facility is also subject to unused line fees ( 0.5 % at April 3, 2022) and other fees and expenses.

Standby letters of credit in the amount of $ 10.3 million have been issued as of April 3, 2022 and January 2, 2022.

As of July 3, 2022 and January 2, 2022, $ 82.8 million and $ 96.9 million, respectively, was available for borrowing, net of letters of credit.

The ABL facility is also subject to unused line fees ( 0.5 % at July 3, 2022) and other fees and expenses.

Standby letters of credit in the amount of $ 12.0 million and $ 10.3 million have been issued as of July 3, 2022 and January 2, 2022, respectively.

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

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(the "Bridge Credit Agreement").

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 Holdco Inc.

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

("Truco" and such acquisition, the "Truco Acquisition") and purchase and acquisition of certain intellectual property from OTB Acquisition, LLC (the "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 Bridge Credit Agreement bears interest at an annual rate based on 4.25 % 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.

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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 April 3, 2022.

The Company was in compliance with its financial covenant as of July 3, 2022.

Debt (in thousands)

Issue Date Principal Balance Interest Rate Maturity Date April 3, 2022 January 2, 2022

Issue Date Principal Balance Interest Rate Maturity Date July 3, 2022 January 2, 2022

Term loan B June-21 $ 795,000 4.06 % January-28 $ 783,261 $ 787,236

Equipment loans (1)

Revolving credit facility 56,000 36,000

3.26 %- 5.77 %

Various 49,747 26,655

ABL facility (2) 65,824 36,000

Net impact of debt issuance costs and original issue discounts ( 7,511 ) ( 7,929 )

2 unchanged sentences

Long term portion of term debt and financing obligations $ 877,066 $ 830,548

(1) In July 2021, the Company entered into two separate finance lease obligations with Banc of America Leasing & Capital, LLC, which have been treated as secured borrowing.

The Company has made a series of draws upon these agreements totaling $ 24.8 million in fiscal 2022, with varying maturities up through 2028.

(2) The facility bears interest at an annual rate based on LIBOR plus an applicable margin of 1.75 % (ranging from 1.50 % to 2.00 % based on availability) or the prime rate plus an applicable margin of 0.75 % (ranging from 0.50 % to 1.00 %).

The Company generally utilizes the Prime rate for amounts that the Company expects to pay down within 30 days, the interest rate on the facility as of July 3, 2022 and July 4, 2021, which was 5.50 % and 3.75 %, respectively under the Prime rate.

The Company elects to use the LIBOR for balances that are expected to be carried longer than 30 days, the interest rate on the ABL facility as of July 3, 2022 was 3.35 %.

Had there been an outstanding balance and the Company elected to use the LIBOR rate as of July 4, 2021, the interest rate would have been 1.60 %.

Other Notes Payable and Capital Leases

During the first fiscal quarter of 2022, we bought out and terminated the contracts of multiple distributors who had previously been providing services to the Company.

These transactions were accounted for as contract terminations and resulted in expense of $ 23.0 million for the thirteen weeks ended April 3, 2022.

As a condition of our buyout of distributors an additional $ 4.1 million is expected to be paid out and is included in other in the table below.

During the third quarter of 2021, the Company recorded liabilities related primarily to reclaiming distribution rights from distributors, of which $ 1.3 million was outstanding as of April 3, 2022 and January 2, 2022, respectively.

During the first fiscal quarter of 2020, the Company purchased intellectual property that include a deferred purchase price of $ 0.5 million, of which $ 0.3 million is outstanding as of April 3, 2022 and January 2, 2022, respectively.

These transactions were accounted for as contract terminations and resulted in expense of $ 23.0 million for the twenty-six weeks ended July 3, 2022.

The outstanding balance of these transactions was $ 3.1 million as of July 3, 2022.

Amounts outstanding under notes payable consisted of the following:

(in thousands) As of

April 3, 2022

As of January 2, 2022

7 unchanged sentences

During fiscal 2021, the Company sold an additional $ 11.8 million of notes receivable from IOs on its books for $ 12.5 million in a series of transactions to a financial institution.

During fiscal 2022, the Company sold an additional $ 5.0 million of notes receivable from IOs on its books for $ 5.0 million.

Due to the structure of the transactions, they 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;

1 unchanged sentence

The Company services the loans for the financial institution by collecting principal and interest from the IOs and passing it through to the institution.

The underlying notes have various maturity dates through March 2032.

The underlying notes have various maturity dates through June 2032.

The Company partially guarantees the outstanding loans, as discussed in further detail within Note 11.

4 unchanged sentences

Interest expense consisted of the following:

(in thousands) Thirteen weeks ended April 3, 2022 Thirteen weeks ended April 4, 2021

(in thousands) Thirteen weeks ended July 3, 2022 Thirteen weeks ended July 4, 2021 Twenty-six weeks ended July 3, 2022 Twenty-six weeks ended July 4, 2021

Company’s ABL facility and other long-term debt $ 10,073 $ 7,254 $ 18,404 $ 14,828

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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 April 3, 2022, the effective fixed interest rate on the long-term debt hedged by these contracts was 3.94 %.

On July 3, 2022, the effective fixed interest rate on the long-term debt hedged by these contracts was 4.25 %.

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

4 unchanged sentences

"Warrants" for additional information on our warrant liabilities.

A reconciliation of the changes in the warrant liability during the thirteen weeks ended April 3, 2022 is as follows:

A reconciliation of the changes in the warrant liability during the twenty-six weeks ended July 3, 2022 is as follows:

(in thousands)

2 unchanged sentences

Fair value of warrant liabilities as of April 3, 2022 44,280

Gain on remeasurement of warrant liability ( 5,760 )

Fair value of warrant liabilities as of July 3, 2022 $ 38,520

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 $ 46.3 million as of April 3, 2022.

These purchase commitments totaled $ 93.2 million as of July 3, 2022.

The Company accrues for losses on firm purchase commitments in a loss position at the end of each reporting period to the extent that there is an active observable market.

The Company has recorded purchase commitment losses totaling $ 0.0 million for the thirteen weeks ended April 3, 2022 and April 4, 2021 .

The Company has recorded purchase commitment losses totaling $ 1.1 million and $ 0.0 million for the thirteen weeks ended July 3, 2022 and July 4, 2021, respectively, and $ 1.0 million and $ 0.0 million for the twenty-six weeks ended July 3, 2022 and July 4, 2021, respectively.

FAIR VALUE MEASUREMENTS

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Derivative assets and liabilities included in Level 2 primarily represent commodity and interest rate swap contracts.

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of April 3, 2022:

(in thousands) Level I Level II Level III Total

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Commodity contracts $ — $ 1,510 $ — $ 1,510

Interest rate swaps — 174 — 174

Private placement warrants — 38,520 — 38,520

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

The outstanding balance of loans guaranteed was $ 2.0 million and $ 2.2 million at April 3, 2022 and January 2, 2022, respectively, all of which was recorded by the Company as an off balance sheet arrangement.

The outstanding balance of loans guaranteed was $ 1.8 million and $ 2.2 million at July 3, 2022 and January 2, 2022, 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 $ 22.2 million and $ 18.6 million at April 3, 2022 and January 2, 2022, respectively, which are off balance sheet.

The outstanding balance of loans guaranteed that were issued by Bank of America was $ 28.6 million and $ 18.6 million at July 3, 2022 and January 2, 2022, 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 3, 2022 and January 2, 2022 was $ 18.5 million and $ 19.7 million, respectively.

Due to the structure of the transactions, 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 Consolidated Balance Sheets;

"Long-Term Debt", the Company also sold notes receivable on its books to Bank of America during fiscal 2019, fiscal 2021, and fiscal 2022, which the Company partially guarantees.

The outstanding balance of notes purchased by Bank of America at July 3, 2022 and January 2, 2022 was $ 21.1 million and $ 19.7 million, respectively.

Due to the structure of the transactions, the sale did not qualify for sale accounting

treatment, and as such the Company records the notes payable obligation owed by the IOs to the financial institution on its Consolidated Balance Sheets;

the corresponding note receivable also remained on the Company’s Consolidated Balance Sheets.

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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 $ 4.4 million and $ 4.9 million at April 3, 2022 and January 2, 2022, respectively, all of which were included included in the Company's consolidated balance sheets.

The outstanding balance of loans guaranteed was $ 4.1 million and $ 4.9 million at July 3, 2022 and January 2, 2022, respectively, all of which were included in the Company's consolidated balance sheets.

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

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ACCUMULATED OTHER COMPREHENSIVE INCOME

Total accumulated other comprehensive income was $ 31.5 million as of April 3, 2022 and $ 3.7 million as of January 2, 2022.

Total accumulated other comprehensive income was $ 34.5 million as of July 3, 2022 and $ 3.7 million as of January 2, 2022.

Total accumulated other comprehensive income consists solely of unrealized gains from the Company’s derivative financial instruments accounted for as cash flow hedges.

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Balance as of April 4, 2021 1,746

Unrealized gain on cash flow hedges 607

Balance as of July 4, 2021 $ 2,353

Balance as of January 2, 2022 $ 3,715

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Balance as of April 3, 2022 31,524

Unrealized gain on cash flow hedges 3,011

Balance as of July 3, 2022 $ 34,535

Less balance attributable to noncontrolling interest as of July 3, 2022 13,247

Balance attributable to controlling interest as of July 3, 2022 $ 21,288

SUPPLEMENTARY CASH FLOW INFORMATION

(in thousands) Thirteen weeks ended April 3, 2022 Thirteen weeks ended April 4, 2021

(in thousands) Twenty-six weeks ended July 3, 2022 Twenty-six weeks ended July 4, 2021

Cash paid for interest $ 18,515 $ 17,391

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Payments for income taxes $ 2,475 $ 3,116

Dividends paid $ 4,189 $ 4,261

Dividends accrued $ 4,360 $ 3,826

The Company is subject to federal and state income taxes with respect to our allocable share of any taxable income or loss of UBH, as well as any standalone income or loss the Company generates.

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The Company anticipates this structure to remain in existence for the foreseeable future.

The Company recorded income tax expense of $ 2.8 million and $ 1.0 million for the thirteen weeks ended April 3, 2022 and April 4, 2021, respectively.

The effective tax rates for the thirteen weeks ended April 3, 2022 and April 4, 2021 were ( 9.5 )% and ( 4.5 )%, respectively.

The Company recorded income tax (benefit) for the thirteen and twenty-six weeks ended July 3, 2022 of $( 2.9 ) million and $( 0.1 ) million, respectively.

Comparably, the Company recorded income tax expense for the thirteen and twenty-six weeks ended July 4, 2021 of $ 0.4 million and $ 1.4 million, respectively.

The effective tax rates for the thirteen and twenty-six weeks ended July 3, 2022 were 894.8 % and 0.3 %, respectively.

Comparably, the effective tax rates for the thirteen and twenty-six weeks ended July 4, 2021 were 2.5 % and ( 24.8 )%, respectively.

The Company’s effective tax rates differ from the federal statutory rate of 21% primarily due to the impact of UBH, which is a partnership, is not taxed at the Company level, and is required to allocate some of its taxable results to the Continuing Members, as well as state taxes and the fair value impact of warrant liabilities.

The Company’s effective tax rate for the thirteen weeks ended April 3, 2022 is ( 7.2 )% before consideration of any discrete items.

During the thirteen weeks ended April 3, 2022, the effective tax rate was impacted by statutory state tax rate changes which resulted in a discrete tax expense of $ 0.5 million.

The Company’s effective tax rates for the thirteen and twenty-six weeks ended July 3, 2022 are 9.5 % and ( 5.0 )%, respectively, before consideration of any discrete items.

During the thirteen and twenty-six weeks ended July 3, 2022, the effective tax rate was impacted by updated state nexus and apportionment estimates in response to the Truco Holdco., Inc.

integration which resulted in a discrete tax (benefit) of $( 2.4 ) million and $( 1.9 ) million, respectively.

The Company regularly evaluates valuation allowances established for deferred tax assets ("DTA's") for which future realization is uncertain.

The Company assessed the available positive and negative evidence to estimate whether future taxable income would be generated to permit use of the existing DTA's.

As of April 3, 2022, a significant piece of objective negative evidence evaluated was the twelve-quarter cumulative loss before taxes.

As of July 3, 2022, a significant piece of objective negative evidence evaluated was the twelve-quarter cumulative loss before taxes.

Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth.

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The amount of DTA considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as projections for growth.

As of April 3, 2022, tax years 2018 through 2022 remain open and subject to examination by the Internal Revenue Service and the majority of the states where the Company has nexus, and tax years 2017 through 2022 remain open and subject to examination in selected states that have a longer statute of limitations.

As of July 3, 2022, tax years 2018 through 2022 remain open and subject to examination by the Internal Revenue Service and the majority of the states where the Company has nexus, and tax years 2017 through 2022 remain open and subject to examination in selected states that have a longer statute of limitations.

Upon audit, tax authorities may challenge all or part of a tax position.

A tax position successfully challenged by a taxing authority could result in an adjustment to our provision for income taxes in the period in which a final determination is made.

The Company did not maintain any unrecognized tax benefits as of April 3, 2022 and January 2, 2022.

The Company did not maintain any unrecognized tax benefits as of July 3, 2022 and January 2, 2022.

Tax receivable agreement liability

Pursuant to an election under section 754 of the Internal Revenue Code, the Company obtained an increase in its share of the tax basis in the net assets of UBH when it was deemed to purchase UBH units from the third party members of UBH and purchased UBH units from the Continuing Members per the Business Combination.

The Continuing Members have the option to exchange UBH units for UBI common stock post-Business Combination.

Pursuant to an election under section 754 of the Internal Revenue Code, the Company obtained an increase in its share of the tax basis in the net assets of UBH when it was deemed to purchase UBH units from third party members and purchased UBH units from the Continuing Members per the Business Combination.

Following the Business Combination, the Continuing Members may exchange UBH units along with the forfeiture of a corresponding number of Class V Common Stock of the Company for Class A Common Stock of the Company.

The Company intends to treat any such exchanges as direct purchases for U.S.

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(ii) tax basis increases attributable to payments made under the TRA;

and (iii) tax amortization deductions attributable to the acquisition of Kennedy Endeavors, LLC and the election to treat the transaction as an asset deal for tax purposes (the "TRA Payments").

and (iii) tax amortization deductions attributable to the acquisition of Kennedy Endeavors, LLC and the election to treat the transaction as an asset deal for tax purposes.

The rights of each party under the TRA other than the Company are assignable, subject to certain restrictions.

The timing and amount of aggregate payments due under the TRA may vary based on a number of factors, including the timing and amount of taxable income generated by the Company each year, as well as the tax rate then applicable, among other factors.

As of April 3, 2022 and January 2, 2022, the Company had a liability of $ 24.5 million and $ 24.6 million, respectively, related to its projected obligations under the TRA, which is reflected as a non-current accrued expense in the consolidated balance sheet.

As of July 3, 2022 and January 2, 2022, the Company had a liability of $ 25.4 million and $ 24.6 million, respectively, related to its projected obligations under the TRA, which is reflected within current and non-current accrued expenses on the consolidated balance sheets.

Prior to the Business Combination, CCH issued 15,833,332 warrants that were initially sold by CCH in its initial public offering of securities (the "Public Warrants"), including 1,166,666 warrants issued pursuant to those certain Forward Purchase Agreements entered into by CCH, the Sponsor, and the independent directors of CCH (the "Forward Purchase Agreements") that were issued at the closing of the Business Combination as part of the Forward Purchase Agreement discussed below (the "Forward Purchase Warrants"), and 7,200,000 warrants initially sold to the Sponsor simultaneously with the closing of its initial public offering (the "Private Placement Warrants," collectively, with the Public Warrants and Forward Purchase Warrants, the "Warrants").

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On December 14, 2020, the Company provided notice to the holders of the Public Warrants and Forward Purchase Warrants that their warrants would be redeemed in accordance with the original terms on January 14, 2021.

As of April 3, 2022 and January 2, 2022, there were 7,200,000 Private Placement Warrants outstanding.

As of July 3, 2022 and January 2, 2022, there were 7,200,000 Private Placement Warrants outstanding.

The Private Placement Warrants and the shares of Class A Common Stock issuable upon the exercise of the Private Placement Warrants were not transferable, assignable or salable until after the completion of the Business Combination, subject to certain limited exceptions.

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If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

We account for the Warrants as derivative liabilities in accordance with ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity ("ASC 815-40"), due to certain settlement provisions in the corresponding warrant agreement that do not meet the criteria to be classified in stockholders’ equity.

Pursuant to ASC 815-40, the Warrants are now classified as a liability at fair value on the Company’s consolidated balance sheet, and the change in the fair value of such liability in each period is recognized as a non-cash gain or loss in the Company’s consolidated statements of operations and comprehensive loss.

The Warrants are accounted for as derivative liabilities in accordance with ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity ("ASC 815-40"), due to certain settlement provisions in the corresponding warrant agreement that do not meet the criteria to be classified in stockholders’ equity.

The Warrants are deemed equity instruments for income tax purposes, and accordingly, there is no tax accounting relating to changes in the fair value of the Warrants recognized.

The remeasurement of the warrant liability resulted in a gain (loss) of $ 1.9 million and $( 21.5 ) million for the thirteen weeks ended April 3, 2022 and April 4, 2021, respectively.

The remeasurement of the warrant liability resulted in a gain (loss) of $ 5.8 million and $ 19.4 million for the thirteen weeks ended July 3, 2022 and July 4, 2021, respectively, and of $ 7.7 million and $( 2.1 ) million for the twenty-six weeks ended July 3, 2022 and July 4, 2021, respectively.

BUSINESS RISK

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Class A Common Stock

The Company is authorized to issue 1,000,000,000 shares of Class A Common Stock, par value $ 0.0001 per share, of which 78,597,175 and 77,644,645 shares of UBI were issued and outstanding on April 3, 2022 and January 2, 2022, respectively.

The Company is authorized to issue 1,000,000,000 shares of Class A Common Stock, par value $ 0.0001 per share, of which 80,812,835 and 77,644,645 shares of UBI were issued and outstanding on July 3, 2022 and January 2, 2022, respectively.

Upon the closing of the Business Combination, all shares of CCH Class A ordinary shares, including 3,500,000 Forward Purchase Class A Ordinary Shares of CCH that were issued at the closing of the Business Combination as part of the Forward Purchase Agreement discussed below, and Class B ordinary shares, less shareholder redemptions, were converted on a one -for-one basis into shares of Class A Common Stock, including 2,000,000 shares of Class B Common Stock initially issued to the Sponsor, which immediately vested upon the closing of the Business Combination and converted into shares of Class A Common Stock of the Company.

Class V Common Stock

The Company is also authorized to issue 61,249,000 shares of Class V Common Stock, par value of $ 0.0001 all of which were issued to the Continuing Members in connection with the closing of the Business Combination, Each of the Continuing Members' common limited liability company units of UBH along with a share of Class V Common Stock may be exchanged for one share of Class A Common Stock of the Company upon certain restrictions being satisfied.

As of April 3, 2022 and January 2, 2022, there were 59,349,000 shares of Class V Common Stock outstanding.

Each of the Continuing Members' common limited liability company units of UBH along with a share of Class V Common Stock may be exchanged for one share of Class A Common Stock of the Company upon certain restrictions being satisfied.

As of July 3, 2022 and January 2, 2022, there were 59,349,000 shares of Class V Common Stock outstanding.

Forward Purchases

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Diluted earnings (loss) per share is based on the weighted average number shares of Class A Common Stock issued and outstanding and the effect of all dilutive common stock equivalents and potentially dilutive share-based awards outstanding during the periods.

The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share:

(in thousands, except share data) Thirteen weeks ended April 3, 2022 Thirteen weeks ended April 4, 2021

The following tables reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share:

(in thousands, except share data) Thirteen weeks ended July 3, 2022 Thirteen weeks ended July 4, 2021

Basic earnings per share:

Net income attributable to controlling interest $ 3,179 $ 17,579

Dividends and income related to participating stock-based compensation awards ( 31 ) ( 384 )

Net income attributable to common stockholders $ 3,148 $ 17,195

Weighted average Class A Common Stock shares, basic and diluted 80,171,174 76,500,488

Basic earnings per share $ 0.04 $ 0.22

Diluted earnings per share:

Net income attributable to common stockholders $ 3,179 $ 17,579

Dividends and income related to participating stock-based compensation awards ( 31 ) ( 384 )

Net income attributable to common stockholders $ 3,148 $ 17,195

Weighted average Class A Common Stock shares, basic 80,171,174 76,500,488

Dilutive securities included in diluted earnings per share calculation:

Warrants 1,237,761 3,870,564

RSUs 56,544 983,648

PSUs 45,457 142,541

Stock options — 234,815

Total diluted weighted average shares 81,510,936 81,732,056

Diluted earnings per share $ 0.04 $ 0.21

Class V Common Stock not subject to earnings per share calculation 59,349,000 60,349,000

Net loss attributable to noncontrolling interest $ 634 $ 1,400

(in thousands, except share data) Twenty-six weeks ended July 3, 2022 Twenty-six weeks ended July 4, 2021

Basic and diluted earnings per share:

Net loss attributable to controlling interest $ ( 14,391 ) $ ( 4,950 )

Dividends related to participating stock-based compensation awards ( 88 ) ( 170 )

Net loss attributable to common stockholders $ ( 14,479 ) $ ( 5,120 )

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As such, earnings per share calculations were completed under the two-class method.

As of April 3, 2022 and January 2, 2022, the Continuing Members held 59,349,000 shares of Class V Common Stock issued and outstanding and also held an equal number of common limited liability company units of UBH, which comprise the noncontrolling interest.

The net loss attributable to the noncontrolling interest was $ 14.3 million and $ 0.8 million for thirteen weeks ended April 3, 2022 and April 4, 2021, respectively.

As of July 3, 2022 and January 2, 2022, the Continuing Members held 59,349,000 shares of Class V Common Stock issued and outstanding and also held an equal number of common limited liability company units of UBH, which comprise the noncontrolling interest.

The net loss attributable to the noncontrolling interest was $ 15.0 million and $ 2.2 million for twenty-six weeks ended July 3, 2022 and July 4, 2021, respectively.

SUBSEQUENT EVENTS

On April 7, 2022, our Board of Directors declared a cash dividend of $ 0.054 per share on our Class A Common Stock, to the stockholders of record on April 18, 2022.

Total dividend payment of $ 4.2 million was executed on April 28, 2022.

On April 28, 2022, the Company purchased a brand new, recently completed snack food manufacturing facility in Kings Mountain, North Carolina from Evans Food Group Ltd.

d/b/a Benestar Brands and related affiliates.

The total purchase price of the facility was approximately $ 38.4 million, plus assumed liabilities of $ 1.3 million, and was funded with approximately $ 10.4 million in cash and $ 28.0 million of proceeds from the issuance and sale of 2.1 million shares of the Company’s Class A Common Stock to affiliates of Benestar in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

The Company performed a review of events subsequent to the balance sheet date through the date the financial statements were issued and determined that there were no such events requiring recognition or disclosure in the financial statements.

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 1. Financial Statements