What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-03-02 compared with 2022-03-03 · 128 added, 106 removed, 186 unchanged (56% of the section changed)

Unless the context otherwise requires, all references in this subsection to the “Company,” “we,” “us” or "our” refer to Utz Brands, Inc.

and its consolidated subsidiaries following the Business Combination, other than certain historical information which refers to the business of Utz Brands Holdings and its consolidated subsidiaries prior to the consummation of the Business Combination.

and its consolidated subsidiaries following the Business Combination, other than certain historical information which refers to the business of UBH and its consolidated subsidiaries prior to the consummation of the Business Combination.

Our core geographies consist of Alabama, Connecticut, Delaware, Louisiana, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia, West Virginia, Washington, and Washington D.C.

2 unchanged sentences

Our Emerging geographies consist of Alaska, Arizona, California, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Wisconsin, and Wyoming (our "Emerging Geographies”).

We are a leading United States manufacture of branded salty snacks.

We are a leading United States manufacturer of branded salty snacks.

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

Our iconic portfolio of authentic, craft, and “better-for-you” (“BFY”) brands, which includes Utz, Zapp’s, On The Border, Golden Flake, Good Health and Boulder Canyon , among others, enjoys strong household penetration in the United States, where our products can be found in approximately half of U.S.

As of January 2, 2022, we operate 17 manufacturing facilities with a broad range of capabilities, and our products are distributed nationally to grocery, mass, club, convenience, drug and other retailers through direct shipments, distributors, and more than 1,850 direct store delivery (“DSD”) routes.

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

We are the second-largest producer of branded salty snacks in our Core Geographies, based on retail sales and we have historically expanded our geographic reach and product portfolio organically and through acquisitions.

We believe our enhanced access to capital as a public company following our August 2020 business combination with Collier Creek Holdings (“CCH”) best positions us to realize our objective of becoming the fastest-growing pure-play branded snack platform of scale in the United States.

Our long-term goals to build greater shareholder value include delivering consistent organic revenue growth, expanding margins, and leveraging our competitively advantaged route-to-market and scalable operating platform to make periodic value-enhancing strategic acquisitions.

households as of January 1, 2023.

We are the second-largest producer of branded salty snacks in our Core Geographies as of January 1, 2023, based on retail sales and we have historically expanded our geographic/distribution reach and product portfolio organically and through acquisitions.

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

As of January 1, 2023, we operate 16 manufacturing facilities with a broad range of capabilities, and our products are distributed nationally to grocery, mass, club, convenience, drug and other retailers through direct shipments, distributors, and approximately 2,100 direct store delivery (“DSD”) routes.

Our business benefits from multiple opportunities to deliver attractive long-term profitable growth.

Our value creation strategies are focused on driving productivity to enhance margins, reinvesting in marketing and innovation to accelerate revenue growth and continuing to make strategic acquisitions.

We believe we are well-positioned for long-term growth as we (a) gained a significant amount of new buyers in the salty snack category in 2020 and repeat rates are increasing, (b) have significant opportunity in our Emerging and Growth Geographies and under-penetrated channels, (c) continue to execute productivity efforts that will help to fuel incremental marketing and innovation to accelerate growth in sales, (d) continue to make infrastructure improvements to enable us to continue to scale to greater heights, and (e) continue to make strategic acquisitions that deliver strong synergies and that enhance our competitive positioning.

We believe we are well-positioned for long-term growth as we (a) gained a significant amount of new buyers during 2020 and have continued to add even more buyers through 2022, (b) have significant opportunity in our Emerging and Expansion Geographies and under-penetrated channels, (c) continue to execute productivity efforts that will help to fuel incremental marketing and innovation to accelerate growth in sales, (d) continue to make infrastructure improvements to enable us to continue to scale to greater heights, and (e) continue to make strategic acquisitions that deliver strong synergies and that enhance our competitive positioning.

We believe each of these growth avenues represents a sizeable opportunity to expand our Net Sales.

In addition, we further anticipate expanding our margins over the long term through supply chain productivity, revenue management, a higher-margin product mix, and higher margins on incremental sales as we leverage our scalable existing platform.

We also maintain a highly-disciplined approach to M&A and have substantial experience sourcing, executing, and integrating value-enhancing acquisitions.

Since 2010, we have successfully integrated 17 acquisitions.

Given our highly-scalable operating platform, we have been able to quickly and efficiently integrate acquired businesses into our infrastructure and realize attractive cost savings as well as revenue and distribution increases.

We believe these initiatives should generate attractive earnings growth as well as strong and stable free cash flow, enabling us to reinvest in our existing brands, reduce debt, and pay regular dividends to our stockholders.

Recent Developments

Chief Executive Officer and Board Leadership Transition.

Effective December 15, 2022, our Board of Directors (the “Company Board”) appointed Howard A.

Friedman as Chief Executive Officer of the Company and appointed Mr.

Friedman as a Class I director on the Company Board (the “CEO Commencement Date”).

Prior to joining the Company, Mr.

Friedman served as Executive Vice President and Chief Operations Officer of Post Holdings, Inc., a consumer packaged goods holding company, from September 2021 to December 2022.

Previously, Mr.

Friedman served as President and Chief Executive Officer, Post Consumer Brands from July 2018 to September 2021.

Prior to joining Post, Mr.

Friedman served as the Executive Vice President and President of the refrigerated meat and dairy business at The Kraft Heinz Company, a global food and beverage company, where he spent the majority of his more than twenty-year career.

Friedman received a Bachelor of Arts in economics from Dickinson College and a Master of Business Administration from the Stern School of Business at New York University.

In connection with the appointment of Mr.

Friedman to the office of Chief Executive Officer, Dylan B.

Lissette, transitioned from his role as Chief Executive Officer of the Company to the role of Executive Chairman.

Lissette will serve in the role of Executive Chairman until the second quarter of 2023, when he will transition to the role of non-executive Chairman of the Board.

On the CEO Commencement Date, Roger K.

Deromedi retired as Chairman of the Board and was elected Lead Director.

Effects of COVID-19.

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.

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

After initial increases in demand in fiscal year 2020, we experienced more modest growth in fiscal year 2021, as reflected by a compound annual growth rate (“CAGR”) for the 52-week period ended December 27, 2020 and January 2, 2022 of 15.1% and 1.7%, respectively, based on U.S.

retail sales for salty snacks based on data from Information Resources, Inc.

As restrictions imposed in response eased in fiscal year 2022, our 52-week CAGR was 16.6% for the 52-week period ended January 1, 2023, based on U.S.

retail sales for salty snacks based on IRI data driven by pricing actions and new distribution.

During period in which restrictions imposed in response to COVID-19 have been in place, 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.

Notwithstanding that our operations are exempt from certain restrictions, we have taken preventive actions and implemented additional measures to protect our associates that work on site.

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.

We continue to monitor customer and consumer demands, and intend to adapt our plans as needed to continue to meet these demands.

Recent Acquisitions

Recent Acquisitions and Vertical Integrations

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

to acquire certain assets of the C.J.

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

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

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

7 unchanged sentences

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

At the closing of the transaction on December 6, 2021, the Company paid the purchase price of approximately $58.3 million which was funded in part from a draw on the Company's line of credit and cash on hand.

In addition to this acquisition on December 6, 2021, the Company closed on an acquisition of a manufacturing facility of which RW Garcia was a tenant.

At the closing of the RW Garcia acquisition on December 6, 2021, the Company paid the purchase price of approximately $57.9 million which was funded in part from a draw on the Company's line of credit and cash on hand.

In addition to the RW Garcia acquisition on December 6, 2021, the Company closed on an acquisition of a manufacturing facility of which RW Garcia was a tenant.

The cost of the manufacturing facility was approximately $6.0 million.

During fiscal year 2022 the Company focused on increasing manufacturing and streamlining distribution.

In April 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 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.

During fiscal year 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 asset purchases and resulted in expense of $23.0 million for the 52 weeks ended January 1, 2023.

Our business is managed and reported in one operating segment.

2 unchanged sentences

As a result, we focus our investment spending and brand-building activities on Power Brands while managing Foundation Brands for cash flow generation to support investment in Power Brands and fund other corporate priorities.

Our Power Brands are comprised of Utz, ON THE BORDER, Good Health, Boulder Canyon, Zapp’s, Hawaiian, Golden Flake pork skins , TGIF , and TORTIYAHS!.

Our flagship Utz brand generated retail sales in excess of $670 million in 2021, representing approximately 5.5% compound annual growth rate (“CAGR”) (2017-2021) and making it one of the 10 largest salty snack brands in the United States by retail sales as of January 2, 2022.

Recognized for its iconic logo featuring the “Little Utz Girl” since the 1920s, the Utz brand currently utilizes the slogan “Family Crafted Flavor Since 1921”.

Our Power Brands are comprised of our iconic heritage Utz brand and iconic On The Border® brand;

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

BFY brands such as Good Health ® and Boulder Canyon ®;

and selected licensed brands such as TGI Fridays ®.

Our flagship Utz brand generated retail sales in excess of $807 million in 2022, representing an approximate 10.3% CAGR (during 2019 through 2022) and making it one of the 10 largest salty snack brands in the United States by retail sales as of January 1, 2023.

Recognized for its iconic logo featuring the “Little Utz Girl” since the 1920s, the Utz brand currently use the slogan "Family Crafted Flavor Since 1921”.

We sell a variety of salty snacks under the Utz brand, including potato chips, pretzels, cheese snacks, pub/party mixes, and others.

Our ON THE BORDER brand ("OTB"), which was acquired on December 14, 2020 as part of the acquisition of Truco, is a national brand of tortilla chips, salsa and queso.

Our On The Border brand ("OTB"), which was acquired in December 2020, is a national brand of tortilla chips, salsa and queso.

OTB is the #2 unflavored tortilla chip brand as of January 1, 2023.

1 unchanged sentence

Our Good Health and Boulder Canyon Power Brands anchor our position in the BFY category of salty snacking, which has been a high-growth category in recent years.

Good Health , which we acquired in 2014, is positioned as a positive way to snack because its products have cleaner ingredients and are certified non-GMO and gluten-free.

Boulder Canyon , which we acquired as part of the Inventure Foods, Inc.

(“Inventure Foods”) acquisition in 2017, offers a line of premium BFY potato chips, including those made with olive or avocado oils.

In the Natural channel, Boulder Canyon is the #2 potato chip brand while growing nearly 5% within the channel in 2021 and its “Canyon Cut” rippled avocado oil-based chip is the #1 selling potato chip item as of January 2, 2022.

Good Health , which we acquired in 2014, is positioned well with fun forms and flavors that appeal to the whole family.

Boulder Canyon offers a line of premium BFY potato chips, including those made with olive or avocado oils.

In the Natural channel as defined by SPINS, LLC, Boulder Canyon is the #2 potato chip brand, growing 23% within the channel in 2022 and its “Canyon Cut” rippled avocado oil-based chip is the #1 selling potato chip item as of January 1, 2023.

Our Power Brands also include a number of our authentic craft brands including Zapp’s, Hawaiian , and Golden Flake pork skins.

For example, Zapp’s , which we acquired in 2011, offers a line of premium kettle-cooked potato chips with bold, authentic flavors steeped in its New Orleans roots, including “Voodoo,” “Hotter ‘N’ Hot Jalapeño,” “Spicy Cajun Crawtators,” and "Cajun Dill Gator-tators,” among others.

Hawaiian is a premium kettle chip brand that was acquired with the acquisition of Kennedy Endeavors, LLC (“Kennedy”), the DSD snacks business of Conagra Brands, Inc.

(the “Kennedy Acquisition”).

It evokes the feel of the Pacific islands, with exotic flavors like “Sweet Maui Onion,” “Luau BBQ,” “Mango Habanero,” and “Hulapeño.” Our Golden Flake brand, a part of Southern culture since 1923, has a full line of Southern-style pork skins with flavors like “Louisiana Hot Sauce” and “Sweet Heat Barbecue,” which offer great taste and crunch with low carbohydrates.

Our Foundation Brands include strong regional snacking brands, such as Golden Flake (excluding pork skins), Tim’s Cascade , Snyder of Berlin , “Dirty”, Herdez, Kitchen Cooked , Bachman , Jax and R.W.

Garcia as well as our partner and private label brands.

Hawaiian is a premium kettle chip brand that evokes the feel of the Pacific islands, with exotic flavors like “Sweet Maui Onion,” "Luau BBQ,” "Mango Habanero,” and "Hulapeño.” Our Golden Flake brand, a part of Southern culture since 1923, has a full line of Southern-style pork skins with flavors like “Louisiana Hot Sauce” and "Sweet Heat Barbecue,” which offer great taste and crunch with low carbohydrates.

Our Foundation Brands include strong regional snacking brands, such as Bachman ®, Golden Flake ® Chips and Cheese, Tim’s Cascade ® Snacks , Snyder of Berlin ®, " Dirty" Potato Chips®, and R.W.

Garcia®, as well as other partner and private label brands.

We have historically utilized the strong regional positions and relevance of our Foundation Brands to drive increased distribution for our Power Brands.

2 unchanged sentences

We also sell certain third-party branded products through our distribution network.

We believe our ability to produce a wide range of products differentiates us from some of our competitors whose businesses focus on a particular product type.

We believe our broad product assortment enables us to gain greater distribution and shelf space with our customers.

We believe our ability to produce a wide range of products differentiates us from some of our competitors whose businesses focus on a particular product type because our broad product assortment enables us to gain greater distribution and shelf space with our customers.

Our in-house production capabilities across a range of products also enable us to rapidly respond to evolving consumer needs and preferences and to better create new innovative products to delight consumers.

3 unchanged sentences

In particular, our brands have strong competitive positions across an assortment of popular salty snacks, including potato chips, tortilla chips, pretzels, cheese snacks, pub/party mixes, veggie snacks, and pork skins.

Given our long-standing customer relationships, broad production capabilities, and scalable distribution platform, we plan to strengthen our presence in certain salty snack sub-categories that we believe are highly synergistic to our existing business.

Over the past several years, we have focused on strengthening our presence in certain salty snack sub-categories that we believe are highly synergistic to our existing business.

In particular, Utz Peanut Butter Filled Pretzel Bites is proving to be a large and sustaining offering, with strong velocities and repeat rates.

Utz Peanut Butter Filled Pretzel Bites is the #1 branded peanut butter filled pretzel item at retail as of January 1, 2023, based on IRI Data.

The Utz brand also delivered flavor innovation on its core potato chips line with a very successful partnership with Grillo’s Pickles.

Joining the two brands created a delicious limited time offering that is having success in all channels, including Club.

On The Border Chips and Dips extended their famous Café Style tortilla chip into the seasoned tortilla chip category.

The On The Border Flavored Chips line is rooted in Mexican culinary flavor profiles including salsa, queso and jalapeno ranch, with limited time only flavors expected to launch in the Club channel in 2023.

Zapp’s recently commenced its offering of flavored pretzels with the launch of Zapp’s Sinfully Seasoned pretzels in two flavors;

Voodoo and Jazzy Honey Mustard.

Seeing category leading repeat purchase rates in the 16 and 20 week launch data implies that they have been well received by customers and consumers as of January 1, 2023, based on IRI Data.

Utz also added a new flavor to its iconic Cheese Balls business with "Red Hot Cheddar”.

In the BFY space Utz continues to innovate.

“Good Health ABC Bites” is a fun new letter-shaped snack that we expanded into multipack and seasonal offerings for a fun and educational treat for every occasion.

Boulder Canyon known for BFY oils, such as avocado oil, partnered with Yellowbird Hot Sauce for its second flavor limited-time offering under the Boulder Batch line, bringing spice to a new level.

Given our long-standing customer relationships, broad production capabilities, and scalable distribution platform, we plan to continue expanding our presence in certain salty snack sub-categories that we believe are highly synergistic to our existing business.

We intend to expand our presence in key salty snack sub-categories through a combination of line extensions of our existing brands, new brand introductions, licensing partnerships with established brands, and/or acquisitions.

10 unchanged sentences

Finally, given the importance of in-store presence, we have a dedicated graphics team that is able to quickly develop and implement new packaging designs, impactful point-of-sale materials, and retail-ready displays.

Utz innovation is gaining momentum, contributing more to growth and remains a key focus area.

Utz Peanut Butter Filled Pretzel Bites is proving to be a large and sustaining offering, with strong velocities and repeat rates.

In just over a year Utz Peanut Butter Filled Pretzel Bites became the #1 branded peanut butter filled pretzel barrel at retail.

On The Border Chips and Dips extended their famous Café Style tortilla chip with a “Lightly-Salted” offering, and launched two delicious new dips – “Jalapeno Ranch and Southwest Bean dip”.

“Zapp’s Thinz” is an exciting extension of Zapp's irresistible flavors such as Voodoo and Spicy Cajun to thin and crispy chips where 40% of consumers are exclusive to that form.

Similarly the Hawaiian brand with its island-inspired flavors like "Sweet Maui Onion" and "Luau Barbeque" launched a wavy textured chip called “Big Waves”.

Hot and spicy flavors remain a high growth and an area of future innovation.

Utz iconic Cheese Balls business got a new flavor with “Red Hot Cheddar”.

In the better for you space Utz continues to innovate.

“Good Health ABCs” is a fun new letter-shaped snack sure to engage more than just your taste buds.

Boulder Canyon known for better for you oils such as avocado oil launched Spicy Green Chili as its first "Boulder Batch" an exciting new series of limited time offerings.

Marketing, Advertising, and Consumer Engagement

Our marketing strategy remains focused on driving stronger consumer pull for and building brand equity of our Power Brands.

Our marketing strategy is focused on driving stronger consumer pull for, and building brand equity of, our Power Brands.

We conduct marketing efforts through three principal sets of activities:

(i) consumer marketing and advertising, including sponsorships, print, digital, eCommerce and social media, and other product promotions;

(i) consumer marketing and advertising, including digital and eCommerce, social media, sponsorships, and other consumer promotions;

(ii) consumer sales incentives including coupons and rebates;

and (iii) trade promotions to support features, displays and other merchandising of our products by our customers.

Historically we have relied more heavily on sponsorships, trade promotions, and in-store merchandising for consumer engagement, however, we are making shifts of spending into more consumer awareness and brand building advertising.

In fiscal 2021, we spent approximately $11.8 million r elated to consumer marketing and advertising expenses.

We expanded our marketing capabilities and have seen significant increases in key conversion funnel metrics – brand awareness, consideration and loyalty.

Going forward, consistent with our value creation strategies, we intend to meaningfully increase our investments in digital and social consumer marketing and advertising focused on our Power Brands as well as reallocate our current mix of media spending toward activities with the highest return on investment.

Historically we have relied more heavily on sponsorships, trade promotions, and in-store merchandising for consumer engagement;

however, we are making shifts of spending into more consumer awareness and brand-building advertising.

In fiscal year 2022, we spent approximately $9.9 million related to consumer marketing and advertising expenses.

Consistent with our value creation strategies, we intend to continue to increase our investments in digital and social consumer marketing and advertising focused on our Power Brands as well as continue to allocate our current mix of media spending toward activities with the highest return on investment.

We will continue to expand our investments in digital and social media, including as part of our strategy to grow our eCommerce and retailer marketing investments.

We believe these marketing strategies will drive long term Net Sales growth by increasing brand equity, supporting geographic expansion and reducing the pressures of pricing.

Digital and Social Media .

In recent years we have shifted our media efforts toward digital advertising, and increased our investments in engaging with consumers directly via social media platforms.

In mid-2019, we appointed a VP of Digital Marketing and eCommerce to focus on expanding and integrating our e-commerce and social media platforms.

These efforts have resulted in significant increases in household reach, expanded community sizes, and increased social media engagement in 2020 and 2021.

We expect to continue to expand our investments in digital and social media in the future, including as part of our strategy to grow our eCommerce marketing investments.

We believe these marketing strategies will drive long term Net Sales growth by increasing brand equity, supporting geographic expansion.

In fiscal year 2022, our top 10 customers, all of which are retailers, represented approximately 40% of our invoiced sales, and no customer accounted for more than 15% of our invoiced sales in fiscal year 2022.

We have historically benefited from long-term relationships with our key customers, having a sales relationship for more than 20 years on average across our top 15 retail customers.

Our strong brand equities, enhanced innovation, and optimized consumer marketing spend should enable us to continue to expand distribution of our products both within existing customers and in under-penetrated retail channels.

We believe there is an opportunity to expand our distribution in mass merchants and convenience stores, where our retail sales as a percentage of the salty snack category are lower than in other channels such as grocery or club stores.

Although orders are processed through purchase orders, as opposed to volume commitments, we have historically benefited from long-term relationships with our key customers, having a sales relationship for more than 20 years on average across our top 15 retail customers.

International

More than 99% of our invoiced sales occurred in the United States in fiscal 2021, and we are focused on growing our business in the United States.

Substantially all of our invoiced sales occurred in the United States in fiscal year 2022, and we are focused on growing our business in the United States.

Since substantially all of our business is in the United States, we believe we have more limited exposure to global economic conditions and foreign exchange fluctuations than companies with more substantial international sales and operations.

5 unchanged sentences

Our products also compete with private label or retailer-branded salty snacks.

However, private label represented only approximately 5% of category retail sales in 2021, which was about flat compared to its share of retail sales in 2016.

However, private label represented only approximately 4.5% of category retail sales for the 52 weeks ended January 1, 2023, which has been about flat compared to its share of retail sales since 2016.

Historically, the salty snacks category has benefited from favorable competitive dynamics, including low private label penetration and category leaders who compete primarily via marketing and innovation.

Importantly, as of January 2, 2022, we are the #2 brand platform in our Core Geographies representing nearly 9% of total salty snacks category retail sales.

As of January 2, 2022 in our Core Geographies, we have the #1 position in pork skins with 24% of sub-category retail sales and the #2 positions in potato chips, pretzels and cheese snacks with 14%, 20% and 9% of sub-category retail sales, respectively.

As of January 2, 2022, we hold the #3 company position with Tortillas, with a 4% share, primarily driven by OTB.

Importantly, as of January 1, 2023, we are the #2 brand platform in our Core Geographies, representing nearly 8% of total salty snacks category retail sales based on IRI data.

As of January 1, 2023, in our Core Geographies, we have the #2 position in pork skins and in pretzels with 18% and 16% of sub-category retail sales, respectively.

We have the #3 position in potato chips, cheese snacks and tortilla chips with 12%, 7% and 4% of sub-category retail sales, respectively.

As of January 1, 2023, we hold the #3 company position with in tortilla chips, with a 4% share, primarily driven by sales of our OTB-branded tortilla chips.

We believe we have a strong and defensible position in our Core Geographies with a significant opportunity to enhance our national position by expanding sales in Expansion Geographies (where we represent 3.6% of category retail sales) and Emerging Geographies (where we represent 2.3% of category retail sales).

4 unchanged sentences

All of our core ingredients are purchased according to rigorous standards to assure food quality and safety.

Our principal ingredients are generally available from multiple suppliers, but became more difficult to source beginning in 2021 due to ongoing supply chain constraints.

Our principal ingredients are generally available from multiple suppliers, but became more difficult to source beginning in 2021 and continuing into 2022 due to ongoing supply chain constraints.

We do not source any of our top 10 inputs under any single-source arrangements.

8 unchanged sentences

We manufacture our products primarily through 16 company-operated manufacturing facilities across the United States.

These include four legacy Utz facilities and thirteen facilities that were added over the last ten years from acquisitions (for more details see Item 2 “Properties” in this Annual Report on Form 10-K for more details).

Our facilities had capacity to produce approximately 450 million pounds of salty snacks annually in 2021 based on management’s estimate of available capacity, excluding weekly sanitation, over a seven-day work schedule, providing us with significant available capacity to accommodate increased sales.

These include four legacy Utz facilities and twelve facilities that were added over the last ten years from acquisitions (for more details see Item 2 “Properties” in this Annual Report on Form 10-K for more details).

Our facilities had the capacity to produce approximately 500 million pounds of salty snacks annually in 2022 based on management’s estimate of available capacity, excluding weekly sanitation, over a seven-day work schedule, providing us with significant available capacity to accommodate increased sales.

We believe this available capacity across our manufacturing footprint will enable us to leverage existing fixed costs to generate higher margins on incremental organic sales or acquired brands as well as generate potential future cost savings through consolidating our manufacturing footprint.

For example, in 2018 we consolidated production from our Denver, Colorado, manufacturing facility into our Goodyear, Arizona, facility, enabling us to realize cost savings and proceeds from the sale of the Colorado facility.

Our manufacturing facilities are well-maintained, and we have a program to ensure appropriate maintenance capital expenditures are undertaken.

We also utilize several co-manufacturers for certain products, with the most significant being our OTB branded tortilla chips as well as branded salsa and queso.

During fiscal 2022, we began investing in talent and process improvements, associated with standing up our Integrated Business Management ("IBM") process, which uses supply and demand planning to optimize manufacturing and other supply chain and logistics processes.

Distribution.

1 unchanged sentence

We believe this hybrid system, which we have built and enhanced over nearly a century, offers us flexibility to cost-effectively distribute our products to a wide range of retail locations where salty snacks are sold.

Additionally, we believe our distribution system is highly scalable, resulting in the ability to drive higher margins on incremental revenues and enabling us to realize significant cost savings when integrating acquired brands into our established platform.

We benefit from strong brand awareness and heritage in our Core Geographies, where we are the second largest provider of branded salty snacks based on retail sales.

We have historically expanded our geographic reach, both organically and through acquisitions, in our Expansion and Emerging Geographies.

We have historically expanded the geographic reach of our distribution network from our Core Geographies, where we benefit from strong brand awareness and heritage to our Expansion and Emerging Geographies, where we have expanded both organically and through acquisitions.

During the 52 weeks ended January 2, 2022, we were able to expand our market share in our Core Geographies and our Emerging Geographies, led by significant market share gains in our grocery channel according to IRI data of U.S.

retail sales in the salty snacks category.

We plan to continue to expand our distribution and sales of Power Brands in these geographies, supported by our increased brand investments, expansion of our direct-to-customer and DSD distribution capabilities, and potentially through strategic acquisitions.

2 unchanged sentences

These customers are then responsible for fulfilling shipments to their own retail stores.

The direct-to-warehouse (“DTW”) model is often preferred by some of our national mass, club, and grocery customers that have sufficient scale and capabilities to efficiently manage distribution and replenishment for their own retail stores.

The DTW model is often preferred by some of our national mass, club, and grocery customers that have sufficient scale and capabilities to efficiently manage distribution and replenishment for their own retail stores.

Direct-Store-Delivery:

7 unchanged sentences

We believe this transition benefits us by creating motivated independent owner-operators and a more variable cost structure for our company.

We expect to substantially complete our ongoing transition from RSPs toward IOs during the fiscal year 2022 (See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations of Utz Brands Holdings — Recent Developments and Significant Items Affecting Comparability — Independent Operator Conversions ” for more details).

We expect to continue working on our ongoing transition from RSPs toward IOs in 2023 (See “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations of Utz Brands Holdings — Recent Developments and Significant Items Affecting Comparability — Independent Operator Conversions ” for more details).

Third Party Distributors:

6 unchanged sentences

Our direct-to-consumer shipments primarily originate from orders received via our company website (www.utzsnacks.com) or select third party retailer sites, including Amazon and Sam’s Club, which extend our reach to virtually every household in America.

Our direct-to-consumer shipments are delivered from our central warehouse facility to consumers using FedEx, UPS, or other third-party carriers.

E-Commerce represented approximately 7% of our retail sales in fiscal 2021 and is an accelerating part of our business, with the channel having grown significantly since 2019.

Our direct-to-consumer shipments are delivered from our central warehouse facility to consumers using FedEx, U.S.

Postal Service, or other third-party carriers.

E-Commerce represented approximately 6.6% of our retail sales in fiscal year 2022 and is an accelerating part of our business, with the channel having grown significantly since 2019.

Food Safety and Quality.

6 unchanged sentences

Supporting our people is a foundational value for Utz.

We believe company success depends on our ability to attract, develop, and retain key personnel whose skills, experience and industry knowledge benefit our operations and performance.

The Company’s Board, Board committees, and management oversee various associate initiatives including compensation and benefits programs, succession planning, leadership development, diversity and inclusion.

We believe our success depends on our ability to attract, develop, and retain key personnel whose skills, experience and industry knowledge benefit our operations and performance.

Our Board, Board committees, and management oversee various associate initiatives including compensation and benefits programs, succession planning, leadership development, diversity and inclusion.

Utz aims to both attract and retain a qualified workforce through an inclusive and accessible recruiting process and online platform, as well as by offering competitive wages, benefits, and training opportunities.

1 unchanged sentence

Diversity, Equity and Inclusion

Utz recognizes that it’s vital for our performance as a world class company to ensure dignity and respect in the workplace for all associates.

By continuing to embrace the diverse perspectives and backgrounds of our associates, we will ensure that we have a workplace where every associate feels that they are valued and that they can contribute not only to our success, but theirs as well.

To ensure we are continuing to foster a work environment that values all people, Utz has partnered with a nationally recognized consulting firm to aid in the development of a comprehensive diversity, equity, and inclusion strategy.

Efforts will include recruiting, training, and leadership development focus area.

Utz recognizes that it is vital for our performance as a world-class company to demonstrate dignity and respect in the workplace for all associates.

By embracing the diverse perspectives and backgrounds of our associates, we strive to ensure that we have a workplace where every associate feels that they are valued and that they can contribute not only to our success, but their success, as well.

To foster a work environment that values all people, Utz partnered with a nationally recognized consulting firm to help develop a comprehensive diversity, equity, and inclusion strategy, which includes various aspects of human capital management, including recruiting, training, and leadership development.

As of our latest ESG report, our associate demographics in the U.S.

(based on self-reported data from our associates) were:

Health and Safety

The safety of our team members is a top priority.

We strive to provide a safe working environment by having policies, procedures, and training programs in place to ensure associates understand and meet safety guidelines.

We strive to provide a safe working environment by having policies, procedures, and training programs in place to ensure that our associates understand and meet safety guidelines.

Utz and our associates are dedicated to providing a safe environment by continuously improving our Safety Culture and Performance through commitment, investment, and training.

14 unchanged sentences

• Wellness and disease management programs, health advocacy partner, and associates assistance programs;

• Tuition reimbursement program;

• Health & Wellness Center – free to all Hanover-based associates and dependents covered under the health plan;

• 401(k) plan with generous company match and profit sharing.

Employee Headcount

As of January 2, 2022, we employed 3,469 full-time associates and 272 part-time associates.

Over the last several years, we have meaningfully reduced our number of full time associates and our selling, general and administrative expenses through our business transformation initiatives, particularly our DSD shift from RSPs to IOs and the associated restructuring of our sales management and corporate organization structure (see “— Supply Chain — Distribution” and “ Management’s Discussion and Analysis of Financial Condition and Results of Operations of Utz Brands Holdings — Recent Developments and Significant Items Affecting Comparability —Independent Operator Conversions ” for more information).

We expect the ongoing shift from RSPs toward IOs to be substantially completed during fiscal year 2022.

Additionally, we historically have reduced associate count and operating expenses in relation to integration initiatives associated with our recent acquisitions.

As of January 1, 2023, we employed approximately 3,550 full-time associates and 250 part-time associates.

Over the last several years, we have meaningfully reduced our number of full-time associates and our selling, distribution and administrative expenses through our business transformation initiatives, particularly our DSD shift from RSPs to IOs and the associated restructuring of our sales management and corporate organization structure (see “— Supply Chain — Distribution” and "Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations of Utz Brands Holdings — Recent Developments and Significant Items Affecting Comparability —Independent Operator Conversions ” for more information).

We expect to continue working on our ongoing transition from RSPs toward IOs in 2023.

Additionally, we historically have reduced associate count and operating expenses in relation to integration initiatives associated with our acquisitions.

Sustainability

2 unchanged sentences

Sustainable Development Goals (SDGs), as well as stakeholder engagement to inform our ESG program.

In fiscal year 2022 we plan to release a summary of our preliminary ESG efforts aligned to industry-recognized ESG standards.

Cross-functional working groups and an ESG committee comprised of subject matter experts across Utz’s operations, including but not limited to, facilities management, packaging and shipping, health and safety, human resources, customer advocacy, and legal and corporate governance functions have been formed that report to the executive team and the Board.

We recognize our responsibility to uphold the Company’s founding values, which for more than 100 years, have centered on working ethically, responsibly, and with integrity to benefit all of our stakeholders.

We consistently look for ways to make a positive difference for our employees, customers and in the communities in which we operate.

We consistently look for ways to make a positive difference for our associates, customers and in the communities in which we operate.

By collaborating with stakeholders, including associates, consumers, business partners, suppliers, stockholders and customers, we are taking the necessary steps to become a more sustainable company.

We believe that in our stakeholders’ best interests, we place safety-focused, sustainability-minded, and transparent best practices at the heart of our operations.

With this stakeholder framework, in 2020 we formed Utz’s inaugural ESG Committee, composed of subject matter experts from across our operations, including facilities management, packaging innovation, human resources, corporate governance, legal affairs, and communications.

We released our inaugural 2021 Environment, Social, and Governance (ESG) Report in July 2022, which outlines Utz’s strategic priorities for ESG matters and the continued growth of our sustainability program.

To learn more about our sustainability goals, progress and initiatives, access the ESG Report by clicking “ESG” on our Investor Relations website at www.investors.utzsnacks.com.

See “Available Information” below for additional information regarding our website.

Intellectual Property

4 unchanged sentences

Garcia , among others.

We also recently unveiled a modernization of our well known Little Utz Girl, and procured a trademark registration for her.

Depending upon the jurisdiction, trademarks are valid as long as they are used in the regular course of trade and/or their registrations are properly maintained.

We also maintain rights to the domain name www.utzsnacks.com and www.getutz.com, among others.

We also maintain rights to the domain names www.utzsnacks.com and www.getutz.com, among others.

We believe the protection of our intellectual property, particularly our trademarks, trade dress, trade secrets, copyrights and domain names, is important to our success.

7 unchanged sentences

” Moreover, future litigation may be necessary to defend ourselves, our partners, and our customers by determining the scope, enforceability, and validity of third-party proprietary rights or to establish our proprietary rights.

We also license certain third-party brand names for use on our products, including the TGI Friday’s and Herdez trademarks.

We use these trademarks in connection with the manufacturing, production, and distribution of snack products to be sold under the trademarked labels.

Under the agreements governing our use of such trademarks, we are required to make guaranteed annual royalty payments.

Sales under the TGI Fridays and Herdez agreements represent approximately 3% of our 2021 invoice sales.

We also license certain of our owned brands, including Utz, for use by third parties in certain food categories (such as frozen foods);

however, licensing revenues from these arrangements represent less than 1% of fiscal year 2021 Net Sales and are not material to our business or growth strategy.

We also license certain third-party brand names for use on our products, including the TGI Friday’s, HeluvaGood, Grillo’s Pickles, Yellowbird, and Mike's Hot Honey.

We use these trademarks in connection with production and distribution of snack products to be sold under the trademarked labels.

Under some of the agreements governing our use of such trademarks, we are required to make guaranteed annual royalty payments.

Sales under our trademark licensing agreements represent approximately 2.3% of our 2022 invoice sales.

In addition, we license certain of our owned brands, including Utz, for use by third parties in certain food categories (such as frozen foods), however these arrangements do not materially impact our financial position.

Finally, we have historically engaged in certain cross-marketing and/or promotional activities with third parties, thereby increasing the visibility of our brands.

Although the demand for our products is relatively stable throughout the year as compared to other consumer goods, we have experienced in the past, and expect to continue to experience, seasonal fluctuations in our retail sales as a result of consumer and customer spending patterns.

Historically, the months of April-September and December have resulted in higher retail sales than average due to increased consumer demand during the spring and summer months and holiday season, as well as significant retailer merchandising and promotions around those times.

Historically, the months of April to September, as well as December have resulted in higher retail sales than average due to increased consumer demand during the spring and summer months and holiday season, as well as significant retailer merchandising and promotions around those times.

Additionally, we have historically generated seasonal cash flow from decreases in working capital levels in the fourth quarter and invested cash flow in working capital increases in the first quarter.

2 unchanged sentences

We are subject to various laws and regulations in the United States by federal, state and local government authorities.

In the United States, the federal agencies governing the manufacture, distribution and advertising of our products include, among others, the FTC;

the United States Department of Agriculture, or USDA;

Environmental Protection Agency;

and the Occupational Safety and Health Administration and similar state and local agencies.

In the United States, the federal agencies governing the manufacture, distribution and advertising of our products include, among others, the Federal Trade Commission (“FTC”);

Food and Drug Administration (“FDA”);

the United States Department of Agriculture (“USDA”);

Environmental Protection Agency ("EPA");

and the Occupational Safety and Health Administration ("OSHA") and similar state and local agencies.

Under various statutes, these agencies, among other things, prescribe the requirements and establish the standards for quality and safety and regulate marketing and advertising to consumers.

10 unchanged sentences

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-K

Item 1. Business