What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-11 · 203 added, 189 removed, 568 unchanged (41% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

July 3, 2022 and January 2, 2022

October 2, 2022 and January 2, 2022

(In thousands)

October 2, 2022

As of January 2, 2022

32 unchanged sentences

1,000,000,000 shares authorized;

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

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

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

Additional paid-in capital 941,375 912,574

7 unchanged sentences

Utz Brands, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

For the thirteen and thirty-nine weeks ended October 2, 2022 and October 3, 2021

(In thousands, except share information)

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

Thirteen weeks ended October 2, 2022 Thirteen weeks ended October 3, 2021 Thirty-nine weeks ended October 2, 2022 Thirty-nine weeks ended October 3, 2021

Net sales $ 362,818 $ 312,680 $ 1,053,732 $ 879,781

5 unchanged sentences

Total selling, distribution, and administrative expenses 102,445 98,709 336,718 278,850

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

(Loss) gain on sale of assets, net ( 823 ) ( 1,043 ) 919 1,965

Income (loss) from operations 15,005 2,875 ( 2,190 ) 16,543

1 unchanged sentence

Interest expense ( 11,648 ) ( 7,726 ) ( 31,478 ) ( 26,483 )

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

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

Other income 205 740 80 2,216

(Loss) gain on remeasurement of warrant liability ( 3,672 ) 36,288 4,032 34,155

Other (expense) income, net ( 15,115 ) 29,302 ( 27,366 ) 9,888

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

(Loss) income before taxes ( 110 ) 32,177 ( 29,556 ) 26,431

Income tax (benefit) expense ( 1,595 ) 827 ( 1,688 ) 2,251

Net income (loss) 1,485 31,350 ( 27,868 ) 24,180

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

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

Net (gain) loss attributable to noncontrolling interest ( 2,373 ) 1,902 12,589 4,122

Net (loss) income attributable to controlling interest $ ( 888 ) $ 33,252 $ ( 15,279 ) $ 28,302

Earnings (loss) per Class A Common stock:

7 unchanged sentences

Change in fair value of interest rate swap 19,655 686 50,475 2,115

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

Comprehensive income 21,140 32,036 22,607 26,295

Net comprehensive (income) loss attributable to noncontrolling interest ( 10,696 ) 1,902 ( 8,981 ) 4,122

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

Net comprehensive income attributable to controlling interest $ 10,444 $ 33,938 $ 13,626 $ 30,417

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF EQUITY

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

For the thirteen and thirty-nine weeks ended October 2, 2022 and October 3, 2021

In thousands, except share data) (Unaudited)

6 unchanged sentences

Other comprehensive income — — — — 1,429 1,429 — 1,429

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

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

Stock-based compensation — — 2,041 — — 2,041 — 2,041

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

Exchange 1,000,000 — ( 1,000,000 ) — 12,949 — — 12,949 ( 12,949 ) —

Net income (loss) — — — 33,252 — 33,252 ( 1,902 ) 31,350

Other comprehensive income — — — — 686 686 — 686

2 unchanged sentences

Distribution to noncontrolling interest — — — — — — ( 3,131 ) ( 3,131 )

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 October 3, 2021 77,570,422 $ 8 59,349,000 $ 6 $ 959,748 $ ( 224,662 ) $ 3,039 $ 738,139 $ 768,249 $ 1,506,388

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

1 unchanged sentence

Share-based compensation 1,062,817 — — 5,779 — — 5,779 — 5,779

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 — — ( 561 ) — — ( 561 ) — ( 561 )

1 unchanged sentence

Other comprehensive income — — — — 17,573 17,573 13,247 30,820

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

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

Stock-based compensation — — 1,800 — — 1,800 — 1,800

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

Net (loss) income — — — ( 888 ) — ( 888 ) 2,373 1,485

Other comprehensive income — — — — 11,332 11,332 8,323 19,655

2 unchanged sentences

Distribution to noncontrolling interest — — — — — — ( 3,205 ) ( 3,205 )

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

Balance at October 2, 2022 80,812,835 $ 8 59,349,000 $ 6 $ 941,375 $ ( 264,845 ) $ 32,620 $ 709,164 $ 754,334 $ 1,463,498

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

For the thirty-nine weeks ended October 2, 2022 and October 3, 2021

(In thousands)

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

Thirty-nine weeks ended October 2, 2022 Thirty-nine weeks ended October 3, 2021

Cash flows from operating activities

Net loss $ ( 29,353 ) $ ( 7,170 )

Net (loss) income $ ( 27,868 ) $ 24,180

Adjustments to reconcile net loss to net cash used in operating activities:

1 unchanged sentence

Depreciation and amortization 66,345 59,295

(Gain) loss on remeasurement of warrant liability ( 7,704 ) 2,133

Gain on remeasurement of warrant liability ( 4,032 ) ( 34,155 )

Gain on sale of assets ( 919 ) ( 1,965 )

7 unchanged sentences

Accounts payable and accrued expenses and other 21,358 ( 8,235 )

Net cash used in operating activities ( 26,268 ) ( 44 )

Net cash provided by operating activities 8,071 4,282

Cash flows from investing activities

19 unchanged sentences

Net cash provided by financing activities 54,776 52,929

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

Net increase (decrease) in cash and cash equivalents 9,907 ( 20,870 )

Cash and cash equivalents at beginning of period 41,898 46,831

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

In our Consolidated Statements of Operation and Comprehensive Income and our Consolidated Statements of Cash Flows, included in our Quarterly Report on Form 10-Q for the fiscal 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 (loss) 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.

Operations – The Company through its subsidiary, Utz Quality Foods, LLC ("UQF"), is a premier producer, marketer and distributor of snack food products since 1921.

The Company has steadily expanded its distribution channels to where it now sells products to supermarkets, mass merchants, club stores, dollar and discount stores, convenience stores, independent grocery stores, drug stores, food service, vending, military, and other channels in most regions of the United States through routes to market, that include direct-store-delivery, direct to warehouse, and third-party distributors.

Operations – The Company through its subsidiary, Utz Quality Foods, LLC ("UQF"), has been a premier producer, marketer and distributor of snack food products since 1921.

The Company has steadily expanded its distribution channels to where it now sells products to supermarkets, mass merchants, club stores, dollar and discount stores, convenience stores, independent grocery stores, drug stores, food service, vending, military, and other channels in most regions of the United States through routes to market, that include direct-store-delivery (“DSD”), direct to warehouse, and third-party distributors.

The Company manufactures and distributes a full line of high-quality salty snack items, such as potato chips, tortilla chips, pretzels, cheese balls, pork skins, party mixes, and popcorn.

4 unchanged sentences

Accounts Receivables – Accounts receivable are reported at net realizable value.

The net realizable value is based on management’s estimate of the amount of receivables that will be collected based on analysis of historical data and trends, as well as review of significant customer accounts.

The net realizable value is based on Company management’s estimate of the amount of receivables that will be collected based on analysis of historical data and trends, as well as review of significant customer accounts.

Accounts receivable are considered to be past due when payments are not received within the customer’s credit terms.

9 unchanged sentences

The Company assesses for impairment on property, plant and equipment upon the occurrence of a triggering event.

Income Taxes – The Company accounts for income taxes pursuant to the asset and liability method of ASC 740, Income Taxes, which requires it to recognize current tax liabilities or receivables for the amount of taxes it estimates 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.

Income Taxes – The Company accounts for income taxes pursuant to the asset and liability method of Accounting Standards Codification (“ASC”) 740, Income Taxes, which requires it to recognize current tax liabilities or receivables for the amount of taxes it estimates 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.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

2 unchanged sentences

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible.

The Company follows the provisions of ASC 740-10 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements.

The Company follows the provisions of ASC 740-10 related to accounting for uncertainty in income taxes recognized in an enterprise’s financial statements.

ASC 740-10 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns.

4 unchanged sentences

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

As of October 2, 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.

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

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update ("ASU") No.

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

3 unchanged sentences

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 July 3, 2022.

We have determined that there was no significant impact that affected the fair value of the reporting unit through October 2, 2022.

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

4 unchanged sentences

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 direct-store-delivery ("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 DSD network, direct to warehouse shipments, and third-party distributors.

These revenue contracts generally have a single performance obligation.

11 unchanged sentences

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

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

The Company has reserves in place of $ 43.5 million as of October 2, 2022, which include adjustments taken by customers of $ 33.5 million that are awaiting final processing and reserves of $ 26.5 million as of January 2, 2022, which include adjustments taken by customers of $ 16.9 million that are awaiting final processing.

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

2 unchanged sentences

If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs which would meet the definition of a business.

Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets.

Significant judgment is required in the application of the screen test to determine whether an acquisition is accounted for as a business combination or an acquisition of assets.

The Company uses the acquisition method of accounting for acquired businesses.

2 unchanged sentences

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 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).

Distributor Buyouts - During the first and second fiscal quarters of 2022, the Company 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 thirty-nine weeks ended October 2, 2022 and are included within selling and distribution expense on the Consolidated Statement of Operations and Comprehensive Income.

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

4 unchanged sentences

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

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

Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("Topic 848").

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

1 unchanged sentence

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.

2020-04 is elective and effective as of March 12, 2020 through December 31, 2022.

Once elected, this ASU must be applied prospectively for all eligible contract modifications.

The Company will adopt this guidance when relevant contracts are modified upon transition to alternative reference rates.

The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements and related disclosures.

Topic 848 is elective and effective as of March 12, 2020 through December 31, 2022.

Once elected, Topic 848 must be applied prospectively for all eligible contract modifications.

As part of the response to reference rate reform, in September 2022 the Company modified contracts related to the revolving credit facility, Term Loan B, and the interest rate hedge from an interest rate based upon the LIBOR benchmark to the Term SOFR Screen Rate ("SOFR").

"Long-Term Debt" and Note 9.

"Derivative Financial Instruments and Purchase Commitments" for additional details about these changes and to the referenced instruments.

Concurrent with these modifications the Company adopted Topic 848.

The Company utilized optional practical expedients for contract modifications and the adoption of the standard did not have a material impact on our debt or hedge instruments.

In June 2016, ASU No.

1 unchanged sentence

Measurement of Credit Losses on Financial Instruments ("Topic 326") was issued.

This ASU requires entities to measure the impairment of certain financial instruments, including accounts receivables, based on expected losses rather than incurred losses.

This ASU is effective for the Company for fiscal years beginning after December 15, 2022, with early adoption permitted, and will be effective for the Company beginning in 2023.

Topic 326 requires entities to measure the impairment of certain financial instruments, including accounts receivables, based on expected losses rather than incurred losses.

Topic 326 is effective for the Company for fiscal years beginning after December 15, 2022, with early adoption permitted, and will be effective for the Company beginning in 2023.

The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements and related disclosures.

1 unchanged sentence

to acquire certain assets of the C.J.

Vitner business ("Vitner's acquisition" or "acquisition of Vitner's"), a leading brand of salty snacks in the Chicago, IL area.

Vitner business ("Vitner's acquisition" or the "acquisition of Vitner's"), a leading brand of salty snacks in the Chicago, Illinois area.

The Company closed this transaction on February 8, 2021 and the purchase price of approximately $ 25.2 million was funded from current cash-on-hand.

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On May 11, 2021, the Company announced that its subsidiary, UQF, entered into a definitive agreement with Great Lakes Festida Holdings, Inc.

to acquire all assets including real estate located in Grand Rapids, Michigan related to the operations of Festida Foods ("Festida Foods acquisition" or "acquisition of Festida Foods"), a manufacturer of tortilla chips, corn chips, and pellet snacks, and the largest manufacturer of tortilla chips for the Company's ON THE BORDER® brand.

to acquire all assets including real estate located in Grand Rapids, Michigan related to the operations of Festida Foods ("Festida Foods acquisition" or the "acquisition of Festida Foods"), a manufacturer of tortilla chips, corn chips, and pellet snacks, and the largest manufacturer of tortilla chips for the Company's ON THE BORDER® brand.

The Company closed this transaction on June 7, 2021 and the purchase price of approximately $ 40.3 million was funded in part from incremental financing on an existing term loan.

The following table summarizes the provisional fair values of the assets acquired and liabilities assumed by the Company at the date of the acquisition:

(in thousands)

Purchase consideration $ 40,324

Assets acquired:

Accounts receivable 2,776

Inventory 2,704

Prepaid expenses and other assets 182

Property, plant and equipment 24,650

Customer relationships 1,270

Total assets acquired:

Liabilities assumed:

Accounts payable 2,017

Accrued expenses 844

Total liabilities assumed:

Net identifiable assets acquired 28,721

Goodwill $ 11,603

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

3 unchanged sentences

Garcia Co., Inc.

("RW Garcia"), an artisan maker of high-quality organic tortilla chips, crackers, and corn chips ("RW Garcia acquisition").

(together "RW Garcia"), an artisan maker of high-quality organic tortilla chips, crackers, and corn chips ("RW Garcia acquisition" or the “acquisition of RW Garcia”).

The Company closed on this transaction on December 6, 2021, and the cash purchase price of approximately $ 57.9 million funded in part from a draw on the Company's line of credit and cash on hand.

22 unchanged sentences

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

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

As of October 2, 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

October 2, 2022

As of January 2, 2022

6 unchanged sentences

(in thousands) As of

October 2, 2022

As of January 2, 2022

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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).

The Company paid 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 $ 12.0 million and $ 11.5 million for the thirteen weeks ended October 2, 2022 and October 3, 2021, respectively, and $ 37.1 million and $ 31.8 million for the thirty-nine weeks ended October 2, 2022 and October 3, 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.

During the thirty-nine weeks ended October 2, 2022, the Company recorded impairments totaling $ 2.7 million related to property and equipment damaged in one of the Company's smaller manufacturing facilities by a natural disaster.

The Company has received $ 3.9 million in insurance proceeds related to a partial settlement of damaged property and equipment, resulting in a gain to date of $ 1.2 million.

As a result of the damage to the facility the Company has had to shift production to other facilities as well as utilize a co-manufacturer which has resulted in additional production and distribution costs.

During the thirteen weeks ended October 2, 2022 the Company also received $ 4.0 million in proceeds related to a partial settlement of business interruption insurance.

The Company has recognized receipts of the business interruption insurance as a reduction of the cost of goods sold and the receipts related to the damage to property plant and equipment within the (loss) gain on sale of assets, net in the Company's Consolidated Statement of Operations and Comprehensive Income.

The Company continues to negotiate future payments with its insurance provider.

The Company recognizes gains from insurance proceeds, at the earliest, after receipt of insurance proceeds.

GOODWILL AND INTANGIBLE ASSETS, NET

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RW Garcia acquisition adjustment ( 143 )

Balance as of July 3, 2022 $ 915,490

Balance as of October 2, 2022 $ 915,295

Intangible assets, net, consisted of the following:

(in thousands) As of

October 2, 2022

As of January 2, 2022

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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).

There were no other significant changes to intangible assets during the thirty-nine weeks ended October 2, 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 October 2, 2022 and October 3, 2021, respectively, and $ 28.3 million and $ 27.3 million for the thirty-nine weeks ended October 2, 2022 and October 3, 2021, respectively.

The expense related to the amortization of intangibles is classified in administrative expenses on the Consolidated Statements of Operations and Comprehensive Income.

NOTES RECEIVABLE

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.

Contracts are executed between the Company and the IOs 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 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 notes receivable balances due from IOs at October 2, 2022 and January 2, 2022 totaled $ 23.3 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 IOs notes receivables, of $ 22.0 million and $ 24.8 million at October 2, 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 as of July 3, 2022 and January 2, 2022.

Other notes receivable totaled $ 0.2 million as of each of October 2, 2022 and January 2, 2022.

ACCRUED EXPENSES AND OTHER

Current accrued expenses and other consisted of the following:

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

(in thousands) As of October 2, 2022 As of January 2, 2022

Accrued compensation and benefits $ 29,182 $ 20,081

5 unchanged sentences

Short term interest rate hedge liability — 4,548

Accrued dividends 4,360 4,189

Accrued dividends and distributions 7,569 4,189

Accrued sales tax — 1,300

2 unchanged sentences

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

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

(in thousands) As of October 2, 2022 As of January 2, 2022

Right-of-use liability $ 32,619 $ 23,226

8 unchanged sentences

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.

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

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

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

On September 22, 2022, the ABL facility was amended to further increase the credit limit up to $ 175.0 million and replaced the interest rate benchmark from LIBOR to SOFR.

As of October 2, 2022 and January 2, 2022, $ 76.4 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 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.

As of October 2, 2022 and January 2, 2022, $ 86.1 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 October 2, 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 October 2, 2022 and January 2, 2022, respectively.

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

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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").

("Truco" and such acquisition, the "Truco Acquisition") and certain intellectual property from OTB Acquisition, LLC (the "IP Purchase").

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.

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.

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 exercise 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 was expended in the thirteen weeks ended April 4, 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.

2 (as defined below), 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 to the Credit Agreement ("Amendment No.

2 to the Bridge Credit Agreement ("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 ("Term Loan B") which bears interest at LIBOR plus 3.00 %, and extended the maturity of the Credit Agreement to January 20, 2028.

2, the Company raised $ 720 million in aggregate principal of Term Loan B ("Term Loan B") which bore interest at LIBOR plus 3.00 % and extended the maturity of the Bridge 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.

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On June 22, 2021, the Company entered into Amendment No.

3 to the Credit Agreement ("Amendment No.

3 to the Bridge Credit Agreement ("Amendment No.

Pursuant to the terms of Amendment No.

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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 July 3, 2022.

The Company was in compliance with its financial covenant as of October 2, 2022.

Subsequent to the end of the third fiscal quarter of 2022, as further discussed in Note 18.

"Subsequent events," the Company entered into a loan agreement in the amount of $ 88.1 million, which was secured by the majority of the Company's real estate assets.

The Company used part of these proceeds to pay off the ABL facility.

Debt (in thousands)

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

Issue Date Principal Balance Maturity Date October 2, 2022 January 2, 2022

Term Loan B (1)

June-21 $ 795,000 January-28 $ 781,273 $ 787,236

Equipment loans (2)

3.26 %- 5.77 %

Various 53,068 26,655

ABL facility (3)

76,390 36,000

Net impact of debt issuance costs and original issue discounts ( 8,372 ) ( 7,929 )

2 unchanged sentences

Long term portion of term debt and financing obligations $ 887,270 $ 830,548

(1) On September 22, 2022, the Company entered into Amendment No.

4 to the Bridge Credit Agreement ("Amendment No.

4"), which replaced the interest rate benchmark from LIBOR to SOFR.

The weighted average interest rate on the Term Loan B debt for the thirteen weeks ended October 2, 2022 was 5.26 %.

(2) 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 %.

The Company has made a series of draws upon these agreements throughout fiscal year 2021 and has drawn a total of $ 29.9 million in fiscal year 2022.

These draws bear interest ranging from 3.26 % through 5.77 % and have varying maturities up through 2028.

(3) The facility bore 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 October 2, 2022 and October 3, 2021, was 7.00 % and 4.00 %, respectively, under the prime rate.

The Company elects to use the LIBOR, prior to the amendment on September 22, 2022 which changed the reference rate to SOFR as described above, for balances that are expected to be carried longer than 30 days, the interest rate on the ABL facility as of October 2, 2022 was 4.82 %.

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 twenty-six weeks ended July 3, 2022.

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

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 July 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 July 3, 2022 and January 2, 2022.

During the first fiscal quarter of 2022, the Company 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 thirty-nine weeks ended October 2, 2022.

The outstanding balance of these transactions was $ 0.5 million as of October 2, 2022.

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 and $ 0.4 million was outstanding as of October 2, 2022 and January 2, 2022, respectively.

Amounts outstanding under notes payable consisted of the following:

(in thousands) As of

October 2, 2022

As of January 2, 2022

5 unchanged sentences

Long term portion of notes payable $ 19,643 $ 24,709

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.

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;

During fiscal year 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.

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

Due to the structure of these 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;

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

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

"Contingencies".

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

"Contingencies." 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.

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Interest expense consisted of the following:

(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

(in thousands) Thirteen weeks ended October 2, 2022 Thirteen weeks ended October 3, 2021 Thirty-nine weeks ended October 2, 2022 Thirty-nine weeks ended October 3, 2021

Company’s ABL facility and other long-term debt $ 10,916 $ 6,995 $ 29,320 $ 21,823

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On December 21, 2021, with an effective date of December 31, 2021, the Company entered into an accreting interest rate swap contract with a counter-party to make a series of payments based on a fixed interest rate of 1.3885 % and receive a series of payments based on the greater of LIBOR or 0.00 %.

Both the fixed and floating payment streams are based on a notional amount of $ 250 million, accreting to $ 500 million and maturing on September 30, 2026.

Both the fixed and floating payment streams were based on a notional amount of $ 250 million and have fully accreted to $ 500 million and mature on September 30, 2026.

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.

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

On September 30, 2022, the Company amended the interest rate swap, entered into on December 21, 2021, to adjust the payments to be based on the 1 month USD-Secured Overnight Financing Rate CME term ("1 mo.

SOFR") instead of the LIBOR, and adjusted the fixed interest rate of the series of payments to be 1.4080 % and receive a series of payments based on the greater of 1 mo.

SOFR or 0.00 %.

The Company amended this contract to match the index change from LIBOR to SOFR that was made to Term loan B as described in Note 8.

"Long-Term Debt" as part of the Company's response to reference rate reform.

For the thirteen weeks ended October 2, 2022, the effective fixed interest rate on the long-term debt hedged by these contracts was 4.69 %.

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

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"Warrants" for additional information on our warrant liabilities.

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

A reconciliation of the changes in the warrant liability during the thirty-nine weeks ended October 2, 2022 is as follows:

(in thousands)

1 unchanged sentence

Gain on remeasurement of warrant liability ( 7,704 )

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

Loss on remeasurement of warrant liability 3,672

Fair value of warrant liabilities as of October 2, 2022 $ 42,192

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 $ 93.2 million as of July 3, 2022.

These purchase commitments totaled $ 65.7 million as of October 2, 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 $ 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.

The Company has recorded purchase commitment gains (losses) totaling $ 1.0 million and $ 0.1 million for the thirteen weeks ended October 2, 2022 and October 3, 2021, respectively, and $ 0.0 million and $( 0.1 ) million for the thirty-nine weeks ended October 2, 2022 and October 3, 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 July 3, 2022:

(in thousands) Level I Level II Level III Total

23 unchanged sentences

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

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 outstanding balance of loans guaranteed was $ 1.6 million and $ 2.2 million at October 2, 2022 and January 2, 2022, respectively, all of which was recorded by the Company as off balance sheet arrangements.

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.

2 unchanged sentences

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 $ 28.6 million and $ 18.6 million at July 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 $ 31.4 million and $ 18.6 million at October 2, 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, 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;

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

The outstanding balance of notes purchased by Bank of America at October 2, 2022 and January 2, 2022 was $ 18.4 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.

4 unchanged sentences

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 1 st of the subject year.

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.

The outstanding balance of loans guaranteed was $ 3.8 million and $ 4.9 million at October 2, 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.

1 unchanged sentence

ACCUMULATED OTHER COMPREHENSIVE INCOME

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 was $ 54.2 million as of October 2, 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.

4 unchanged sentences

Unrealized gain on cash flow hedges 1,429

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

Unrealized gain on cash flow hedges 686

Balance as of April 3, 2022 31,524

Balance as of October 3, 2021 $ 3,039

Balance as of January 2, 2022 $ 3,715

Unrealized gain on cash flow hedges 30,820

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

Unrealized gain on cash flow hedges 19,655

Balance as of October 2, 2022 $ 54,190

Less balance attributable to noncontrolling interest as of October 2, 2022 21,570

Balance attributable to controlling interest as of October 2, 2022 $ 32,620

SUPPLEMENTARY CASH FLOW INFORMATION

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

(in thousands) Thirty-nine weeks ended October 2, 2022 Thirty-nine weeks ended October 3, 2021

Cash paid for interest $ 29,682 $ 23,519

1 unchanged sentence

Payments for income taxes $ 5,463 $ 3,332

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 (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 recorded income tax (benefit) for the thirteen and thirty-nine weeks ended October 2, 2022 of $( 1.6 ) million and $( 1.7 ) million, respectively.

Comparably, the Company recorded income tax expense for the thirteen and thirty-nine weeks ended October 3, 2021 of $ 0.8 million and $ 2.3 million, respectively.

The effective tax rates for the thirteen and thirty-nine weeks ended October 2, 2022 were 1450.0 % and 5.7 %, respectively.

Comparably, the effective tax rates for the thirteen and thirty-nine weeks ended October 3, 2021 were 2.6 % and 8.5 %, 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 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’s effective tax rates for the thirteen and thirty-nine weeks ended October 2, 2022 are ( 83.2 )% and 0.8 %, respectively, before consideration of any discrete items.

During the thirteen and thirty-nine weeks ended October 2, 2022, the effective tax rate was impacted by return to provision items and updated state nexus and apportionment estimates in response to the R.W.

Garcia Co., Inc.

and Truco Holdco., Inc.

business integrations which resulted in a discrete tax expense and (benefit) of $ 0.5 million and $( 1.4 ) 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 July 3, 2022, a significant piece of objective negative evidence evaluated was the twelve-quarter cumulative loss before taxes.

As of October 2, 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.

The Company determined that there is uncertainty regarding the utilization of certain DTA's such as the investment in Utz Brands Holdings, LLC, federal operating losses subject to annual limitations due to "change in ownership" provisions, and state net operating losses where the Company does not expect to continue to have nexus.

The Company determined that there is uncertainty regarding the utilization of certain DTA's such as the investment in UBH, federal operating losses subject to annual limitations due to “change in ownership” provisions, and state net operating losses where the Company does not expect to continue to have nexus.

Therefore, a valuation allowance has been recorded against the DTA's for which it is more-likely-than-not they will not be realized.

6 unchanged sentences

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 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.

As of October 2, 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 July 3, 2022 and January 2, 2022.

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

Tax receivable agreement liability

10 unchanged sentences

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 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").

As of October 2, 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 as current and non-current accrued expenses in 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, CCH's Sponsor (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").

As a result of the Business Combination, the Company assumed the CCH warrants and such warrants are now exercisable for shares of UBI Class A Common Stock instead of Class A ordinary shares of CCH.

1 unchanged sentence

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

As of October 2, 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.

2 unchanged sentences

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.

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 income (loss).

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 Income.

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 $ 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

The novel coronavirus, or COVID-19, outbreak began impacting consumption, distribution and production of our products in March 2020.

We have taken necessary preventive actions and implemented additional measures to protect our employees that work on site.

We continue to experience higher demand for our products compared to historical volumes, and we are servicing that demand by increasing production and distribution activities.

Generally, producers of food products, including salty snacks, have been deemed "essential industries" by federal, state, and local governments and are exempt from certain COVID-19-related restrictions on business operations.

Our strategic manufacturing capabilities and DSD distribution network have allowed us to effectively service increases in demand and be responsive to evolving market dynamics driven by changes in consumer behavior.

During this time we experienced significant inflationary pressures on input and supply chain costs.

We continue to monitor these pressures and have implemented some pricing actions in response.

Additionally, we continue to monitor customer and consumer demands and stand ready to adapt our plans to meet changes in demand.

The remeasurement of the warrant liability resulted in a gain (loss) of $( 3.7 ) million and $ 36.3 million for the thirteen weeks ended October 2, 2022 and October 3, 2021, respectively, and of $ 4.0 million and $ 34.2 million for the thirty-nine weeks ended October 2, 2022 and October 3, 2021, respectively.

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 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.

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 Agreements discussed above and 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

1 unchanged sentence

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.

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

Forward Purchases

In connection with the closing of the Business Combination and pursuant to a Forward Purchase Agreement entered into between CCH, CCH’s Sponsor, and CCH’s independent directors, CCH consummated the sale and issuance of 3,500,000 shares issued pursuant to the Forward Purchase Agreements and Forward Purchase Warrants to acquire up to 1,166,666 Class A ordinary shares of CCH at $ 11.50 per share, for aggregate proceeds of $ 35,000,000 that were used to fund the Business Combination.

In connection with the closing of the Business Combination and pursuant to the Forward Purchase Agreements entered into between CCH, CCH’s sponsor, and CCH’s independent directors, CCH consummated the sale and issuance of 3,500,000 shares issued pursuant to the Forward Purchase Agreements and Forward Purchase Warrants to acquire up to 1,166,666 Class A ordinary shares of CCH at $ 11.50 per share, for aggregate proceeds of $ 35,000,000 that were used to fund the Business Combination.

EARNINGS (LOSS) PER SHARE

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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

(in thousands, except share data) Thirteen weeks ended October 2, 2022 Thirty-nine weeks ended October 2, 2022

Basic and diluted earnings per share:

Net loss attributable to controlling interest $ ( 888 ) $ ( 15,279 )

Dividends related to participating stock-based compensation awards ( 47 ) ( 168 )

Net loss attributable to common stockholders $ ( 935 ) $ ( 15,447 )

Weighted average Class A Common Stock shares, basic 80,812,835 79,852,137

Basic and diluted earnings (loss) per share $ ( 0.01 ) $ ( 0.19 )

Anti-dilutive securities excluded from diluted earnings per share calculation:

Warrants 2,093,271 1,772,271

RSUs 168,081 61,946

PSUs 75,866 53,290

Stock options — —

Total 2,337,218 1,887,507

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

Net income (loss) attributable to noncontrolling interest $ 2,373 $ ( 12,589 )

The diluted earnings (loss) per share computation excludes the effect of certain restricted stock units ("RSUs"), performance stock units ("PSUs"), and stock options granted to Directors and Management which convert to Class A Common Stock upon vesting, as their inclusion would have been anti-dilutive if the Company had positive earnings.

(in thousands, except share data) Thirteen weeks ended October 3, 2021 Thirty-nine weeks ended October 3, 2021

Basic earnings per share:

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Net loss attributable to noncontrolling interest $ 1,902 $ 4,122

(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 )

Weighted average Class A Common Stock shares, basic 79,371,789 76,213,746

Basic and diluted earnings (loss) per share $ ( 0.18 ) $ ( 0.07 )

Anti-dilutive securities excluded from diluted earnings per share calculation:

Warrants 1,591,764 3,955,978

RSUs 56,976 1,348,026

PSUs 42,507 142,541

Stock options — 230,542

Total 1,691,247 5,677,087

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

Net loss attributable to noncontrolling interest $ ( 14,962 ) $ ( 2,220 )

The diluted earnings (loss) per share computation excludes the effect of certain RSUs, PSUs, and stock options granted to Directors and Management which convert to Class A Common Stock upon vesting, as their inclusion would have been anti-dilutive if the Company had positive earnings.

Shares of the Company’s Class V Common Stock do not participate in earnings or losses of the Company and, therefore, are not participating securities.

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

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.

As of October 2, 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.

SUBSEQUENT EVENTS

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.

Real estate secured financing

On October 12, 2022, the Company, through its subsidiaries UQF, Kennedy Endeavors, LLC (“Kennedy”) and Condor Snack Foods, LLC (together with UQF and Kennedy, the “Real Estate Financing Borrowers”), entered into a loan agreement (the “Real Estate Term Loan”) with City National Bank which was secured by a majority of the Real Estate Financing Borrowers’ real estate assets.

The Real Estate Term Loan holds a principle balance of $ 88.1 million, with net proceeds of approximately $ 85.0 million after transaction fees and expenses.

The Real Estate Term Loan has a ten-year maturity and amortizes approximately $ 3.5 million in principal annually, with a balloon payment due at maturity.

The Company used a portion of the proceeds from the Real Estate Term Loan to pay off the ABL facility.

The Real Estate Term Loan contains a single financial maintenance covenant consisting of a fixed charge coverage ratio that is tested quarterly only during a covenant trigger period consistent with the existing ABL facility.

Concurrent with the closing of the Real Estate Term Loan, UQF entered into an interest rate swap transaction to fix the effective interest rate at approximately 6 %.

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