What changed in this filing

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Item 1. Financial Statements

2023-05-11 compared with 2022-11-10 · 175 added, 311 removed, 460 unchanged (51% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

October 2, 2022 and January 2, 2022

April 2, 2023 and January 1, 2023

(In thousands)

October 2, 2022

April 2, 2023

As of January 1, 2023

32 unchanged sentences

1,000,000,000 shares authorized;

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

81,012,868 and 80,882,334 shares issued and outstanding as of April 2, 2023 and January 1, 2023, 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 October 2, 2022 and January 2, 2022.

59,349,000 shares issued and outstanding as of April 2, 2023 and January 1, 2023.

Additional paid-in capital 930,964 926,919

7 unchanged sentences

Utz Brands, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the thirteen weeks ended April 2, 2023 and April 3, 2022

(In thousands, except share information)

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

Thirteen weeks ended April 2, 2023 Thirteen weeks ended April 3, 2022

Net sales $ 351,433 $ 340,767

6 unchanged sentences

(Loss) gain on sale of assets, net ( 508 ) 367

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

Loss from operations ( 2,098 ) ( 22,487 )

Other (expense) income

2 unchanged sentences

(Loss) gain on remeasurement of warrant liability ( 2,232 ) 1,944

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

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

Other expense, net ( 14,995 ) ( 6,639 )

Loss before taxes ( 17,093 ) ( 29,126 )

Income tax (benefit) expense ( 2,611 ) 2,772

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

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

Net loss ( 14,482 ) ( 31,898 )

Net loss attributable to noncontrolling interest 5,355 14,328

Net loss attributable to controlling interest $ ( 9,127 ) $ ( 17,570 )

Earnings (loss) per Class A Common stock:

Basic $ ( 0.01 ) $ 0.43 $ ( 0.19 ) $ 0.36

Diluted $ ( 0.01 ) $ 0.40 $ ( 0.19 ) $ 0.34

Basic & diluted $ ( 0.11 ) $ ( 0.22 )

Weighted-average shares of Class A Common stock outstanding

Basic 80,812,835 76,713,241 79,852,137 76,380,244

Diluted 80,812,835 80,906,618 79,852,137 81,082,177

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

Other comprehensive income:

Basic & diluted 80,978,008 78,572,404

Net loss $ ( 14,482 ) $ ( 31,898 )

Other comprehensive (loss) income:

Change in fair value of interest rate swap ( 10,325 ) 27,809

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

Comprehensive loss ( 24,807 ) ( 4,089 )

Net comprehensive loss attributable to noncontrolling interest 9,722 2,362

Net comprehensive loss attributable to controlling interest $ ( 15,085 ) $ ( 1,727 )

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF EQUITY

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

In thousands, except share data) (Unaudited)

For the thirteen weeks ended April 2, 2023 and April 3, 2022

(In thousands, except share data)

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

1 unchanged sentence

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

Conversion of warrants 4,976,717 — — 144,659 — — 144,659 ( 32,714 ) 111,945

Payments of tax withholding requirements for employee stock awards — — ( 6,217 ) — — ( 6,217 ) — ( 6,217 )

Share-based compensation 952,530 — — 1,379 — — 1,379 — 1,379

Tax impact arising from share issuance — — 1,408 — — 1,408 — 1,408

Net loss — — — ( 17,570 ) — ( 17,570 ) ( 14,328 ) ( 31,898 )

Other comprehensive income — — — — 15,843 15,843 11,966 27,809

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

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

Cash dividends declared ($ 0.05 per share of Class A Common Stock)

— — — ( 3,829 ) — ( 3,829 ) — ( 3,829 )

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

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

Balance at January 1, 2023 80,882,334 $ 8 59,349,000 $ 6 $ 926,919 $ ( 254,564 ) $ 30,777 $ 703,146 $ 748,538 $ 1,451,684

Payments of tax withholding requirements for employee stock awards — — ( 6,217 ) — — ( 6,217 ) — ( 6,217 )

Share-based compensation 130,534 — — 4,634 — — 4,634 — 4,634

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 )

Payments of tax withholding requirements for employee stock awards — — ( 589 ) — — ( 589 ) — ( 589 )

Net loss — — — ( 9,127 ) — ( 9,127 ) ( 5,355 ) ( 14,482 )

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

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

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

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

Cash dividends declared ($ 0.054 per share of Class A Common Stock)

— — — ( 4,364 ) — ( 4,364 ) — ( 4,364 )

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

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

Cash dividends declared — — — ( 56 ) — ( 56 ) — ( 56 )

Other comprehensive loss — — — — ( 5,958 ) ( 5,958 ) ( 4,367 ) ( 10,325 )

Balance at April 2, 2023 81,012,868 $ 8 59,349,000 $ 6 $ 930,964 $ ( 263,747 ) $ 24,819 $ 692,050 $ 738,816 $ 1,430,866

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

For the thirteen weeks ended April 2, 2023 and April 3, 2022

(In thousands)

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

Thirteen weeks ended April 2, 2023 Thirteen weeks ended April 3, 2022

Cash flows from operating activities

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

Net loss $ ( 14,482 ) $ ( 31,898 )

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

1 unchanged sentence

Depreciation and amortization 20,094 22,121

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

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

Loss (gain) on remeasurement of warrant liability 2,232 ( 1,944 )

Loss (gain) on sale of assets 508 ( 367 )

Share-based compensation 4,634 1,379

6 unchanged sentences

Accounts payable and accrued expenses and other ( 16,092 ) 464

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

Net cash used in operating activities ( 8,443 ) ( 36,004 )

Cash flows from investing activities

1 unchanged sentence

Purchases of property and equipment ( 13,906 ) ( 8,137 )

Purchases of intangibles — ( 1,757 )

Proceeds from sale of property and equipment 451 1,138

8 unchanged sentences

Repayments on term debt and notes payable ( 6,244 ) ( 4,212 )

Payment of debt issuance cost ( 1,471 ) ( 9,210 )

Payments of tax withholding requirements for employee stock awards ( 589 ) ( 6,217 )

Exercised warrants — 57,232

Proceeds from issuance of shares 28,000 —

Dividends ( 4,663 ) ( 4,189 )

1 unchanged sentence

Net cash provided by financing activities 7,452 14,108

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

Net decrease in cash and cash equivalents ( 15,009 ) ( 26,999 )

Cash and cash equivalents at beginning of period 72,930 41,898

18 unchanged sentences

Reclassification – Certain prior year amounts have been reclassified for consistency with the current year 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"), has been a premier producer, marketer and distributor of snack food products since 1921.

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

Accounts are written off when management determines the account is uncollectible.

Finance charges are not usually assessed on past-due accounts.

The Company’s methodology to measure the provision for credit losses requires an estimation of loss rates based upon historical loss experience adjusted for factors that are relevant to determining the expected collectability of accounts receivable.

Some of these factors include current market conditions, delinquency trends, aging behavior of receivables, and customer classes or individual customers.

The Company’s estimates are reviewed and revised periodically based on the ongoing evaluation of credit quality indicators.

Historically, actual write-offs for uncollectible accounts have not significantly differed from prior estimates.

Inventories – Inventories are stated at the lower of cost (first-in, first-out) or net realizable value.

15 unchanged sentences

Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as "unrecognized benefits".

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

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

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

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

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

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.

As of April 2, 2023 and January 1, 2023, 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.

15 unchanged sentences

If an entity believes, as a result of each qualitative assessment, it is more likely than not that the fair value of goodwill or an indefinite-lived intangible asset exceeds its carrying value then a quantitative impairment test is not required.

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 October 2, 2022.

For the latest qualitative analysis performed, which took place on the first day of the fourth quarter of 2022, we had taken into consideration all the events and circumstances listed in Topic 350, Intangibles—Goodwill and Other, in addition to other entity-specific factors that had taken place.

We have determined that there was no significant impact that affected the fair value of the reporting unit through April 2, 2023.

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

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

The Company has reserves in place of $ 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.

The Company has reserves in place of $ 39.7 million as of April 2, 2023, which include adjustments taken by customers of $ 28.9 million that are awaiting final processing, and reserves of $ 46.3 million as of January 1, 2023, which include adjustments taken by customers of $ 32.8 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.

7 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, 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.

Distributor Buyouts - During the first fiscal quarter 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 thirteen weeks ended April 3, 2022, and are included within selling and distribution expense on the Consolidated Statement of Operations and Comprehensive Loss.

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

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

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

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

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

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

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

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

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.

Recently Issued Accounting Standards – In June 2016, ASU No.

2016-13, Financial Instruments-Credit Losses:

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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.

On January 11, 2021, the Company announced that its subsidiary, UQF, entered into a definitive agreement with Snak-King Corp.

to acquire certain assets of the C.J.

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.

The provisional fair values to which the purchase price was allocated were $ 2.9 million to trademarks, $ 0.8 million to customer relationships, $ 1.7 million to DSD routes, $ 1.9 million of other net assets, and $ 17.9 million to goodwill.

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

As of February 8, 2022, the purchase price allocation had been finalized.

Festida Foods

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

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

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

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

Garcia Co., Inc.

(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.

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.

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

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

(in thousands)

Purchase consideration $ 56,430

Tax consideration 1,458

Total consideration 57,888

Assets acquired:

Accounts receivable 4,660

Inventory 5,674

Prepaid expenses and other assets 2,102

Property, plant and equipment 20,210

Trade name 3,100

Customer relationships 4,720

Total assets acquired:

Liabilities assumed:

Accounts payable 6,017

Accrued expenses 1,838

Deferred tax liability 5,898

Total liabilities assumed:

Net identifiable assets acquired 32,114

Goodwill $ 25,774

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

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.

Topic 326 is effective for the Company for fiscal years beginning after December 15, 2022, with early adoption permitted, and was adopted by the Company on January 2, 2023 under the modified retrospective transition method, which resulted in no cumulative-effect adjustment to retained earnings.

Inventories consisted of the following:

(in thousands) As of

October 2, 2022

April 2, 2023

As of January 1, 2023

6 unchanged sentences

(in thousands) As of

October 2, 2022

April 2, 2023

As of January 1, 2023

8 unchanged sentences

Property, plant and equipment, net $ 346,976 $ 345,198

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

d/b/a Benestar Brands and related affiliates.

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

The Company 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.

Depreciation expense was $ 10.4 million and $ 12.4 million for the thirteen weeks ended April 2, 2023 and April 3, 2022, respectively.

Depreciation expense is classified in cost of goods sold, selling, distribution, and administrative expenses on the

Consolidated Statements of Operations and Comprehensive Loss.

During the thirteen weeks ended April 2, 2023 the Company recognized expense of $ 1.9 million related to the impairment of equipment.

GOODWILL AND INTANGIBLE ASSETS, NET

A rollforward of goodwill is as follows:

(in thousands)

Balance as of January 2, 2022 $ 915,438

RW Garcia acquisition adjustment ( 143 )

Balance as of October 2, 2022 $ 915,295

There were no changes to goodwill during the thirteen weeks ended April 2, 2023.

Intangible assets, net, consisted of the following:

(in thousands) As of

October 2, 2022

April 2, 2023

As of January 1, 2023

1 unchanged sentence

Distributor/customer relationships $ 677,930 $ 677,930

Technology — 43

Trademarks 63,850 63,850

Master distribution rights — 2,221

Amortizable assets, gross 741,780 741,780

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

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

There were no other significant changes to intangible assets during the 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.

As a result, the Company recorded impairment expense of $ 2.0 million and the amortizable master distribution rights decreased by $ 2.2 million during the thirteen weeks ended April 3, 2022.

There were no significant changes to intangible assets during the thirteen weeks ended April 2, 2023 other than those which arise from the normal course of business of buying and selling of Company-owned route assets and amortization.

Amortization of the distributor/customer relationships, technology, and trade names amounted to $ 9.4 million and $ 9.4 million for the thirteen weeks ended April 2, 2023 and April 3, 2022, respectively.

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

NOTES RECEIVABLE

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The notes bear interest at rates ranging from 0.00 % to 10.40 % with terms ranging generally from one to ten years .

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 notes receivable balances due from IOs at April 2, 2023 and January 1, 2023 totaled $ 20.4 million and $ 22.0 million, respectively, and are collateralized by the routes for which the loans are made.

During the thirteen weeks ended April 2, 2023, the loss recorded by the Company on note receivables for which the Company reclaimed the collateral due to credit losses was less than $ 0.1 million.

The Company has a corresponding notes payable liability, related to the IOs notes receivables, of $ 19.5 million and $ 21.1 million at April 2, 2023 and January 1, 2023, respectively.

The related notes payable liability is discussed in further detail within Note 7.

"Long-Term Debt."

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

Other notes receivable totaled $ 0.1 million and $ 0.1 million as of April 2, 2023 and January 1, 2023, respectively.

ACCRUED EXPENSES AND OTHER

Current accrued expenses and other consisted of the following:

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

(in thousands) As of April 2, 2023 As of January 1, 2023

Accrued compensation and benefits $ 28,079 $ 38,974

Right-of-use liability 11,962 9,152

Accrued freight and manufacturing related costs 10,116 8,928

Operating right of use liability 12,485 12,389

Insurance liabilities 5,888 6,701

Accrued freight and manufacturing related costs 12,590 10,817

Acquisition tax consideration 1,131 1,131

Accrued interest 1,120 371

Short term interest rate hedge liability — 4,548

Accrued dividends and distributions — 7,989

Accrued sales tax — 1,300

Accrued interest 1,116 1,151

Other accrued expenses 10,068 12,860

1 unchanged sentence

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

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

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

(in thousands) As of April 2, 2023 As of January 1, 2023

Operating right of use liability $ 36,634 $ 35,331

Tax Receivable Agreement liability

1 unchanged sentence

Supplemental retirement and salary continuation plans 6,372 6,512

Other long term accrued expenses 84 52

Long term hedge 3,176 —

Total accrued expenses and other $ 70,366 $ 67,269

2 unchanged sentences

On November 21, 2017, UBH entered into an asset based revolving credit facility (as amended, the "ABL facility"), pursuant to the terms of that certain First Lien Term Loan Credit Agreement, dated November 21, 2017 (the "Credit Agreement").

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 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.

As of April 2, 2023 and January 1, 2023, $ 20.0 million and $ 0.0 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 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.

As of April 2, 2023 and January 1, 2023, $ 140.8 million and $ 163.0 million, respectively, was available for borrowing, net of letters of credit.

The ABL facility is also subject to unused line fees ( 0.5 % at April 2, 2023) and other fees and expenses.

Standby letters of credit in the amount of $ 12.0 million have been issued as of April 2, 2023 and January 1, 2023.

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

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(the "Bridge Credit Agreement").

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

The proceeds of the Bridge Credit Agreement were used to fund the Company’s acquisition of Truco and the IP Purchase (each 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 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 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 (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.

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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.

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

The refinancing was accounted for as an extinguishment.

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The Company incurred additional debt issuance costs and original issuance discounts of $ 0.7 million related to the incremental funding.

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

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

The Company was in compliance with its financial covenant as of 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.

On October 12, 2022, the Company, through its subsidiaries UQF, 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 principal 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 5.929 %, as discussed in further detail within "Note 8.

Derivative Financial Instruments and Purchase Commitments”.

The Term Loan B and the ABL facility are collateralized by substantially all of the assets and liabilities of UBH and its subsidiaries excluding the real estate assets secured by the Real Estate Term Loan, including equity interests in certain of UBH’s subsidiaries.

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

UBH and its subsidiaries were in compliance with its financial covenants as of April 2, 2023.

Debt (in thousands)

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

Issue Date Principal Balance Maturity Date April 2, 2023 January 1, 2023

Term loan B (1)

June-21 $ 795,000 January-28 $ 777,298 $ 779,286

Real Estate Loan October-22 $ 88,140 October-32 87,259 88,140

Equipment loans (2)

Various 53,068 26,655

ABL facility (3)

54,400 54,053

ABL facility (3)

Net impact of debt issuance costs and original issue discounts ( 9,667 ) ( 9,672 )

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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 %.

The weighted average interest rate on the Term Loan B debt for the thirteen weeks ended April 2, 2023 was 7.61 %.

(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 throughout fiscal year 2021 and has drawn a total of $ 29.9 million in fiscal year 2022.

The Company made a series of draws upon these agreements throughout fiscal year 2021 totaling $ 26.5 million and has drawn a total of $ 32.4 million in fiscal year 2022 and $ 2.3 million in fiscal year 2023.

These draws bear interest ranging from 3.26 % through 6.73 % 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 %.

(3) The facility bore interest at an annual rate based on LIBOR, or SOFR plus a 0.10 % credit spread adjustment after the amendment on September 22, 2022, plus an applicable margin of 1.50 % (ranging from 1.50 % to 2.00 % based on availability) or the prime rate plus an applicable margin of 0.50 % (ranging from 0.50 % to 1.00 %).

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 April 2, 2023 was 8.50 %, under the prime rate.

The interest rate on the ABL facility as of April 2, 2023 was 6.26 %.

Other Notes Payable and Capital Leases

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 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 October 2, 2022 and January 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.

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

The outstanding balance of these transactions was $ 0.5 million as of January 1, 2023, and was paid off during the thirteen weeks ended April 2, 2023.

During the first fiscal quarter of 2020, the Company purchased intellectual property that include a deferred purchase price of $ 0.5 million, of which $ 0.2 million and $ 0.3 million was outstanding as of April 2, 2023 and January 1, 2023, respectively.

Amounts outstanding under notes payable consisted of the following:

(in thousands) As of

October 2, 2022

April 2, 2023

As of January 1, 2023

Note payable – IO notes $ 19,508 $ 21,098

Capital lease 9,203 8,166

Finance lease obligations 10,547 10,995

Other 200 835

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Long term portion of notes payable $ 18,362 $ 20,339

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.

From time to time, the Company sells notes receivable from IOs to a financial institution.

During the thirteen weeks ended April 2, 2023, the Company sold an additional $ 1.0 million of notes receivable from IOs on its books for $ 0.9 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;

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"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.

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

Interest Expense

Interest expense consisted of the following:

(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

(in thousands) Thirteen weeks ended April 2, 2023 Thirteen weeks ended April 3, 2022

Company’s term loans, ABL facility, and other long-term debt $ 14,142 $ 8,331

Amortization of deferred financing fees 5 341

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To reduce the effect of interest rate fluctuations, the Company entered into a three-year interest rate swap contract on September 6, 2019, with an effective date of September 30, 2019, with a counter-party to make a series of payments based on a fixed interest rate of 1.339 % 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.

Both the fixed and floating payment streams were based on a notional amount of $ 250 million.

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 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 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 %.

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

Effective on September 30, 2022 the Company amended the swap contract to reference the 1-month SOFR plus a credit spread adjustment (“CSA”) of 11.448 basis points, as well as setting the new fixed rate to 1.408 %;

under this amended swap agreement the Company will receive a series of payments based on the greater of SOFR plus CSA, or 0.00 %.

On October 12, 2022 and effective on November 1, 2022, the Company entered into a 10-year swap contract, with an effective date of November 1, 2022, with a counter-party to make a series of payments based on a fixed interest rate of 3.83 % and receive a series of payments based on the greater of the 1-month SOFR or 0.00 %.

The agreement covers $ 87.3 million as of April 2, 2023.

This swap effectively fixes the rate of the Real Estate Term Loan to 5.93 %.

The balance that the hedge covers is designed to abate as principal payments on the Real Estate Term Loan are made.

The Company entered into these transactions to reduce its exposure to changes in cash flows associated with the Real Estate Term Loan and has designated this derivative as a cash flow hedge.

At April 2, 2023, the effective fixed interest rate on the long-term debt hedged by these contracts was 5.56 %.

For further treatment of the Company’s interest rate swap, refer to "Note 9.

Fair Value Measurements” and "Note 11.

"Accumulated Other Comprehensive Income."

Accumulated Other Comprehensive (Loss) Income.”

Warrant Liabilities

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"Warrants" for additional information on our warrant liabilities.

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

A reconciliation of the changes in the warrant liability during the thirteen weeks ended April 2, 2023 is as follows:

(in thousands)

Fair value of warrant liabilities as of January 1, 2023 $ 45,504

Gain on remeasurement of warrant liability ( 7,704 )

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

Loss on remeasurement of warrant liability 2,232

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

Fair value of warrant liabilities as of as of April 2, 2023 $ 47,736

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 $ 65.7 million as of October 2, 2022.

These purchase commitments totaled $ 73.1 million as of April 2, 2023.

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 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.

The Company has recorded purchase commitment (losses) gains totaling $( 2.7 ) million for the thirteen weeks ended April 2, 2023 and $ 0.0 million for the thirteen weeks ended April 3, 2022, 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 October 2, 2022:

(in thousands) Level I Level II Level III Total

(in thousands) Level 1 Level 2 Level 3 Total

Cash and cash equivalents $ 57,921 $ — $ — $ 57,921

Commodity contracts — 759 — 759

Interest rate swaps — 34,829 — 34,829

5 unchanged sentences

(in thousands) Level I Level II Level III Total

(in thousands) Level 1 Level 2 Level 3 Total

Cash and cash equivalents $ 72,930 $ — $ — $ 72,930

Interest rate swaps — 2,208 — 2,208

Total assets $ 41,898 $ 2,208 $ — $ 44,106

Commodity contracts — 1,586 — 1,586

Interest rate swaps — 45,088 — 45,088

Total assets $ 72,930 $ 46,674 $ — $ 119,604

Private placement warrants — 45,504 — 45,504

8 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 $ 1.6 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 outstanding balance of loans guaranteed was $ 1.1 million and $ 1.5 million at April 2, 2023 and January 1, 2023, 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 $ 31.4 million and $ 18.6 million at October 2, 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 $ 40.2 million and $ 36.0 million at April 2, 2023 and January 1, 2023, respectively, which are off balance sheet arrangements.

As discussed in Note 7.

"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.

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

The outstanding balance of notes purchased by Bank of America at April 2, 2023 and January 1, 2023 was $ 16.8 million and $ 17.9 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;

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

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.

The outstanding balance of loans guaranteed was $ 3.1 million and $ 3.4 million at April 2, 2023 and January 1, 2023, 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 $ 54.2 million as of October 2, 2022 and $ 3.7 million as of January 2, 2022.

Total accumulated other comprehensive income was $ 40.7 million as of April 2, 2023 and $ 51.0 million as of January 1, 2023.

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 27,809

Balance as of July 4, 2021 2,353

Unrealized gain on cash flow hedges 686

Balance as of October 3, 2021 $ 3,039

Balance as of April 3, 2022 31,524

Less balance attributable to noncontrolling interest as of April 3, 2022 11,966

Balance attributable to controlling interest as of April 3, 2022 $ 19,558

Balance as of January 1, 2023 $ 50,994

Unrealized gain on cash flow hedges ( 10,325 )

Balance as of July 3, 2022 34,535

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

Balance as of April 2, 2023 40,669

Less balance attributable to noncontrolling interest as of April 2, 2023 15,850

Balance attributable to controlling interest as of April 2, 2023 $ 24,819

SUPPLEMENTARY CASH FLOW INFORMATION

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

(in thousands) Thirteen weeks ended April 2, 2023 Thirteen weeks ended April 3, 2022

Cash paid for interest $ 14,408 $ 9,627

3 unchanged sentences

UBH is treated as a partnership for federal income tax purposes, and for most applicable state and local income tax purposes, and generally does not pay income taxes in most jurisdictions.

Instead, UBH taxable income or loss is passed through to its members, including the Company.

Instead, UBH's taxable income or loss is passed through to its members, including the Company.

Despite its partnership treatment, UBH is liable for income taxes in those states not recognizing its pass-through status and for certain of its subsidiaries not taxed as pass-through entities.

2 unchanged sentences

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

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 recorded income tax benefit of $ 2.6 million and expense of $ 2.8 million for the thirteen weeks ended April 2, 2023 and April 3, 2022, respectively.

The effective tax rates for the thirteen weeks ended April 2, 2023 and April 3, 2022 were 15.3 % and ( 9.5 )%, 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 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’s effective tax rate for the thirteen weeks ended April 2, 2023 was 17.8 % before consideration of any discrete items.

During the thirteen weeks ended April 2, 2023, the effective tax rate was impacted by statutory state tax rate changes which resulted in a nominal discrete tax expense.

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 October 2, 2022, a significant piece of objective negative evidence evaluated was the twelve-quarter cumulative loss before taxes.

As of April 2, 2023, 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.

1 unchanged sentence

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

The Company has DTA’s related to its investment in partnership that are expected to be realized in the ordinary course of operations or generate future net operating losses for which a portion will have an indefinite carryforward period.

The Company has DTA’s related to its investment in the partnership that are expected to be realized in the ordinary course of operations or generate future net operating losses for which a portion will have an indefinite carryforward period.

Additionally, the Company has deferred tax liabilities (“DTL’s”) related to its investment in the partnership that will not reverse in the ordinary course of business and will only reverse when the partnership is sold or liquidated.

The Company has no intention of disposing of or liquidating the partnership and therefore has not considered the indefinite lived DTL as a source of income to offset other DTA’s.

In weighing positive and negative evidence, both objective and subjective, including its twelve-quarter cumulative loss, the Company has recorded a valuation allowance against its DTA’s related to net operating losses and deductible book/tax differences and recorded a DTL primarily related to the book over tax basis in the investment in the partnership that will not reverse in the ordinary course of operations.

The Company considered that an indefinite lived DTL may be considered as a source of taxable income for an indefinite lived DTA;

however, given our indefinite lived DTL will only reverse upon sale or liquidation, the Company determined that it was more appropriate to record a valuation allowance against its DTA’s.

however, given our indefinite lived DTL will only reverse upon sale or liquidation, the Company determined that it was more appropriate to record a valuation allowance against a portion of its DTA’s.

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 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.

As of April 2, 2023, tax years 2019 through 2023 remain open and subject to examination by the Internal Revenue Service and in the majority of the states where the Company has nexus, and tax years 2018 through 2023 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 October 2, 2022 and January 2, 2022.

The Company did not maintain any unrecognized tax benefits as of April 2, 2023 and January 1, 2023.

Tax receivable agreement liability

5 unchanged sentences

They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

Pursuant to the Business Combination Agreement, the Company entered into the Tax Receivable Agreement in connection with the Business Combination (the “Tax Receivable Agreement” or “TRA”) , which provides for the payment by the Company of 85% of the amount of any tax benefits realized as a result of (i) increases in the share of the tax basis in the net assets of UBH resulting from the Business Combination and any future exchanges by the Continuing Members of UBH units for UBI common stock;

Pursuant to the Business Combination Agreement, the Company entered into the Tax Receivable Agreement in connection with the Business Combination (the “TRA”) , which provides for the payment by the Company of 85% of the amount of any tax benefits realized as a result of (i) increases in the share of the tax basis in the net assets of UBH resulting from the Business Combination and any future exchanges by the Continuing Members of UBH units for UBI common stock;

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

2 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 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 of April 2, 2023 and January 1, 2023, the Company had a liability of $ 24.2 million and $ 25.4 million, respectively, related to its projected obligations under the TRA, which is reflected as 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 (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.

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

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

As of April 2, 2023 and January 1, 2023, there were 7,200,000 Private Placement Warrants outstanding and all Public Warrants and Forward Purchase Warrants have been exercised (except for the Public Warrants that were redeemed by the Company on January 14, 2021).

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

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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.

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 $( 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.

The remeasurement of the warrant liability resulted in a gain (loss) of $( 2.2 ) million and $ 1.9 million for the thirteen weeks ended April 2, 2023 and April 3, 2022, 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 October 2, 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 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.

The Company is authorized to issue 1,000,000,000 shares of Class A Common Stock, par value $ 0.0001 per share, of which 81,012,868 and 80,882,334 shares of UBI were issued and outstanding on April 2, 2023 and January 1, 2023, respectively.

Class V Common Stock

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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 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 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.

As of April 2, 2023 and January 1, 2023, there were 59,349,000 shares of Class V Common Stock outstanding.

EARNINGS (LOSS) PER SHARE

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

The following 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 October 2, 2022 Thirty-nine weeks ended October 2, 2022

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

(in thousands, except share data) Thirteen weeks ended April 2, 2023 Thirteen weeks ended April 3, 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 $ ( 9,127 ) $ ( 17,570 )

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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:

Net income attributable to controlling interest $ 33,252 $ 28,302

Dividends and income related to participating stock-based compensation awards ( 601 ) ( 525 )

Net income attributable to common stockholders $ 32,651 $ 27,777

Weighted average Class A Common Stock shares, basic and diluted 76,713,241 76,380,244

Basic earnings per share $ 0.43 $ 0.36

Diluted earnings per share:

Net income attributable to common stockholders $ 33,252 $ 28,302

Dividends and income related to participating stock-based compensation awards ( 601 ) ( 525 )

Net income attributable to common stockholders $ 32,651 $ 27,777

Weighted average Class A Common Stock shares, basic 76,713,241 76,380,244

Dilutive securities included in diluted earnings per share calculation:

Warrants 3,100,280 3,618,794

RSUs 1,058,087 1,024,192

PSUs 33,605 34,247

Stock options 1,405 24,700

Total diluted weighted average shares 80,906,618 81,082,177

Diluted earnings per share $ 0.40 $ 0.34

Class V Common Stock not subject to earnings per share calculation 60,206,143 60,301,381

Net loss attributable to noncontrolling interest $ ( 5,355 ) $ ( 14,328 )

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 or being exercised, as their inclusion would have been anti-dilutive.

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.

The PSUs, RSUs, and 2020 LTIP RSUs were participating securities in the periods because the holders of these stock-based compensation awards are entitled to participate in dividends declared on Class A Common Stock, if and when declared, on a one -to-one per-share basis.

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

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.

The PSUs and RSUs, were not considered participating securities in the Successor period despite the holders of these stock-based compensation awards being entitled to participate in dividends declared on Class A Common Stock, if and when declared, on a one -to-one per-share basis, because the dividends are only payable upon full vesting of the

awards, and as such, the dividend is forfeitable.

As of April 2, 2023 and January 1, 2023, the Continuing Members held all 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

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.

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 %.

On April 24, 2023, as announced in the Form 8-K filed with the SEC on April 26, 2023, the Company made the decision to permanently cease operations at the Company’s manufacturing facility located in Birmingham, Alabama (the “Birmingham Facility”) effective on or around July 3, 2023 (the “Manufacturing Closure”).

Golden Flake ® and other products currently being produced at the Birmingham Facility will continue to be produced at other manufacturing facilities following the ceasing of manufacturing operations at the Birmingham Facility.

The Birmingham Facility employs approximately 275 individuals.

While manufacturing at the Birmingham Facility is being permanently ceased, approximately 100 employees will continue to be employed by the Company and continue working in Birmingham in the Company’s distribution center.

The Company currently expects to incur pre-tax cash charges of approximately $ 3.0 million to $ 5.0 million in connection with the Manufacturing Closure in fiscal year 2023, which is expected to include $ 1.5 million in severance costs and $ 1.5 million to $ 3.5 million in closing and transfer of production costs.

The Company also expects to incur non-cash charges of approximately $ 8.5 million to $ 11.0 million in asset impairments.

The estimates of the charges and expenditures that the Company expects to incur in connection, and the timing thereof, are subject to a number of assumptions, including local law requirements, and actual amounts may differ materially from estimates.

In addition, the Company may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with this decision to permanently cease manufacturing at the Birmingham Facility.

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