What changed in this filing

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Item 1. Financial Statements

2023-08-10 compared with 2023-05-11 · 161 added, 126 removed, 509 unchanged (36% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

April 2, 2023 and January 1, 2023

July 2, 2023 and January 1, 2023

(In thousands)

April 2, 2023

As of January 1, 2023

32 unchanged sentences

1,000,000,000 shares authorized;

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

81,141,417 and 80,882,334 shares issued and outstanding as of July 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 April 2, 2023 and January 1, 2023.

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

Additional paid-in capital 935,269 926,919

7 unchanged sentences

Utz Brands, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the thirteen and twenty-six weeks ended July 2, 2023 and July 3, 2022

(In thousands, except share information)

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

(in thousands) Thirteen weeks ended July 2, 2023 Thirteen weeks ended July 3, 2022 Twenty-six weeks ended July 2, 2023 Twenty-six weeks ended July 3, 2022

Net sales $ 362,853 $ 350,147 $ 714,286 $ 690,914

6 unchanged sentences

(Loss) gain on sale of assets, net ( 279 ) 1,375 ( 787 ) 1,742

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

Income (loss) from operations 2,661 5,292 563 ( 17,195 )

Other (expense) income

Interest expense ( 15,019 ) ( 10,727 ) ( 29,397 ) ( 19,830 )

Other income 1,615 520

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

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

Other income (expense) 272 ( 645 ) 1,887 ( 125 )

Gain on remeasurement of warrant liability 2,808 5,760 576 7,704

Other (expense) income, net ( 11,939 ) ( 5,612 ) ( 26,934 ) ( 12,251 )

Loss before taxes ( 9,278 ) ( 320 ) ( 26,371 ) ( 29,446 )

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

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

Income tax benefit ( 725 ) ( 2,865 ) ( 3,336 ) ( 93 )

Net (loss) income ( 8,553 ) 2,545 ( 23,035 ) ( 29,353 )

Net loss attributable to noncontrolling interest 4,429 634 9,784 14,962

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

Net (loss) income attributable to controlling interest $ ( 4,124 ) $ 3,179 $ ( 13,251 ) $ ( 14,391 )

Earnings (loss) per Class A Common stock:

Basic & diluted $ ( 0.11 ) $ ( 0.22 )

Basic $ ( 0.05 ) $ 0.04 $ ( 0.16 ) $ ( 0.18 )

Diluted $ ( 0.05 ) $ 0.04 $ ( 0.16 ) $ ( 0.18 )

Weighted-average shares of Class A Common stock outstanding

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

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

Other comprehensive (loss) income:

Basic 81,063,457 80,171,174 81,020,732 79,371,789

Diluted 81,063,457 81,510,936 81,020,732 79,371,789

Net (loss) income $ ( 8,553 ) $ 2,545 $ ( 23,035 ) $ ( 29,353 )

Other comprehensive income:

Change in fair value of interest rate swap 9,572 3,011 ( 753 ) 30,820

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 )

Comprehensive income (loss) 1,019 5,556 ( 23,788 ) 1,467

Net comprehensive loss (income) attributable to noncontrolling interest 383 ( 647 ) 10,105 1,715

Net comprehensive income (loss) attributable to controlling interest $ 1,402 $ 4,909 $ ( 13,683 ) $ 3,182

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF EQUITY

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

(In thousands, except share data)

For the thirteen and twenty-six weeks ended July 2, 2023 and July 3, 2022

(In thousands, except share data) (Unaudited)

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

7 unchanged sentences

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

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

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

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

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

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

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

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

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

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

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

5 unchanged sentences

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

Stock-based compensation 128,549 — — 4,305 — — 4,305 — 4,305

Net loss — — — ( 4,124 ) — ( 4,124 ) ( 4,429 ) ( 8,553 )

Other comprehensive income — — — — 5,526 5,526 4,046 9,572

Cash dividends declared ($ 0.114 per share of Class A Common Stock)

— — — ( 9,240 ) — ( 9,240 ) — ( 9,240 )

Distribution to noncontrolling interest — — — — — — ( 6,766 ) ( 6,766 )

Balance at July 2, 2023 81,141,417 $ 8 59,349,000 $ 6 $ 935,269 $ ( 277,111 ) $ 30,345 $ 688,517 $ 731,667 $ 1,420,184

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

For the twenty-six weeks ended July 2, 2023 and July 3, 2022

(In thousands)

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

Twenty-six weeks ended July 2, 2023 Twenty-six weeks ended July 3, 2022

Cash flows from operating activities

3 unchanged sentences

Depreciation and amortization 40,405 44,564

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

Gain on remeasurement of warrant liability ( 576 ) ( 7,704 )

Loss (gain) on sale of assets 787 ( 1,742 )

21 unchanged sentences

Repayments on term debt and notes payable ( 11,785 ) ( 13,618 )

Payment of debt issuance cost — ( 265 )

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

Proceeds from issuance of shares — 28,000

Dividends ( 9,281 ) ( 8,433 )

1 unchanged sentence

Net cash provided by financing activities 35,825 51,754

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

Net increase (decrease) in cash and cash equivalents 727 ( 21,765 )

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

15 unchanged sentences

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

The consolidated interim financial statements, including our significant accounting policies, should be read in conjunction with the audited combined financial statements and notes thereto for the year ended January 1, 2023.

The consolidated interim financial statements, including the Company's significant accounting policies, should be read in conjunction with the audited combined financial statements and notes thereto for the year ended January 1, 2023.

All intercompany transactions and balances have been eliminated in consolidation.

34 unchanged sentences

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

As of April 2, 2023 and January 1, 2023, no liability for unrecognized tax benefits was required to be reported.

As of July 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.

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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 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.

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

The Company determined that there was no significant impact that affected the fair value of the reporting unit through July 2, 2023.

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

Fair Value of Financial Instruments – Financial instruments held by the Company include cash and cash equivalents, accounts receivable, hedging instruments, purchase commitments on commodities, accounts payable and debt.

1 unchanged sentence

The carrying value of the debt is also estimated to approximate its fair value based upon current market conditions and interest rates.

The fair value of the hedging instruments are revalued at each reporting period.

The fair values of the hedging instruments are revalued at each reporting period.

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

13 unchanged sentences

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

The Company has reserves in place of $ 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.

The Company has reserves in place of $ 32.0 million as of July 2, 2023, which include adjustments taken by customers of $ 16.6 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.

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

Distributor Buyouts - During the first fiscal quarter of 2022, 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.

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 twenty-six weeks ended July 3, 2022, and are included within selling and distribution expense on the Consolidated Statement of Operations and Comprehensive Income (Loss).

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

2 unchanged sentences

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

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

2016-13, Financial Instruments-Credit Losses:

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

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 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

April 2, 2023

As of January 1, 2023

6 unchanged sentences

(in thousands) As of

April 2, 2023

As of January 1, 2023

8 unchanged sentences

Property, plant and equipment, net $ 345,664 $ 345,198

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.

Depreciation expense was $ 10.6 million and $ 12.7 million for the thirteen weeks ended July 2, 2023 and July 3, 2022, respectively, and $ 20.9 million and $ 25.1 million for the twenty-six weeks ended July 2, 2023 and July 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 Income (Loss).

During the thirteen weeks ended July 2, 2023, the Company made the decision to permanently cease operations at the Company’s manufacturing facility located in Birmingham, Alabama (the “Birmingham Facility”) effective in June 2023 (the “Manufacturing Closure”).

Golden Flake ® and other products that were produced at the Birmingham Facility have continued to be produced at other manufacturing facilities.

The Manufacturing Closure reduced the Company's workforce by approximately 130 employees and the Company maintains its distribution center in Birmingham.

The Company has recorded expense of $ 8.9 million in connection with the Manufacturing Closure, which includes $ 1.3 million in severance and related costs and $ 7.6 million of asset impairments related to fixed assets.

The severance and related expenses are recorded in the cost of goods sold line on the Consolidated Statement of Operations and Comprehensive Income (Loss) for

the thirteen weeks ended July 2, 2023.

The fixed asset impairments are recorded in the administrative expenses line on the Consolidated Statement of Operations and Comprehensive Income (Loss).

In addition, during the twenty-six weeks ended July 2, 2023, the Company recognized expense of $ 1.9 million related to the impairment of property, plant, and equipment unrelated to the Manufacturing Closure.

GOODWILL AND INTANGIBLE ASSETS, NET

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

There were no changes to goodwill during the twenty-six weeks ended July 2, 2023.

Intangible assets, net, consisted of the following:

(in thousands) As of

April 2, 2023

As of January 1, 2023

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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 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.

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 twenty-six weeks ended July 3, 2022.

There were no significant changes to intangible assets during the twenty-six weeks ended July 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 July 2, 2023 and July 3, 2022, respectively, and $ 18.8 million and $ 18.8 million for the twenty-six weeks ended July 2, 2023 and July 3, 2022, respectively.

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

NOTES RECEIVABLE

2 unchanged sentences

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 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 notes receivable balances due from IOs at July 2, 2023 and January 1, 2023 totaled $ 19.6 million and $ 22.0 million, respectively, and are collateralized by the routes for which the loans are made.

During the twenty-six weeks ended July 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 $ 19.0 million and $ 21.1 million at July 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 $ 0.1 million and $ 0.1 million as of April 2, 2023 and January 1, 2023, respectively.

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

ACCRUED EXPENSES AND OTHER

Current accrued expenses and other consisted of the following:

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

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

Accrued compensation and benefits $ 14,601 $ 38,974

1 unchanged sentence

Insurance liabilities 6,259 6,701

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

Accrued manufacturing related costs 3,622 10,817

Acquisition tax consideration 854 1,131

4 unchanged sentences

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

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

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

Operating right of use liability $ 40,435 $ 35,331

Tax Receivable Agreement liability 24,488 25,426

24,184 25,426

Supplemental retirement and salary continuation plans 6,946 6,512

5 unchanged sentences

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 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 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.

As of July 2, 2023 and January 1, 2023, $ 96.6 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 July 2, 2023) and other fees and expenses and was set to mature on August 22, 2024 as of July 2, 2023.

On July 20, 2023 the ABL facility was further amended to increase the credit limit to $ 225.0 million and extend the maturity through the earlier of July 20, 2028, or 90 days prior to the maturity of the Term Loan B, as described further with Note 7.

"Long-Term" Debt, which would be October 22, 2027.

See Note 17." Subsequent Events" for additional details regarding this amendment.

Standby letters of credit in the amount of $ 14.3 million and $ 12.0 million have been issued as of July 2, 2023 and January 1, 2023, respectively.

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

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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 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 the Company's 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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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 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 and 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.

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

Debt (in thousands)

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

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

Term loan B (1)

4 unchanged sentences

ABL facility (3)

October-27 61,000 —

Net impact of debt issuance costs and original issue discounts ( 9,221 ) ( 9,672 )

5 unchanged sentences

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 April 2, 2023 was 7.61 %.

The weighted average interest rate on the Term Loan B debt, without consideration of the hedge, was 8.10 % for the thirteen weeks ended July 2, 2023.

(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.

3 unchanged sentences

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 facility as of July 2, 2023

would have been 8.75 %, 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 April 2, 2023 was 6.26 %.

Other Notes Payable and Capital Leases

The interest rate on the ABL facility as of July 2, 2023 was 6.75 %.

Other Notes Payable and Finance 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 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.

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

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

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

Amounts outstanding under notes payable consisted of the following:

(in thousands) As of

April 2, 2023

As of January 1, 2023

6 unchanged sentences

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.

During the twenty-six weeks ended July 2, 2023, the Company sold an additional $ 2.2 million of notes receivable from IOs on its books for $ 2.2 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;

7 unchanged sentences

Interest expense consisted of the following:

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

(in thousands) Thirteen weeks ended July 2, 2023 Thirteen weeks ended July 3, 2022 Twenty-six weeks ended July 2, 2023 Twenty-six weeks ended July 3, 2022

Company’s term loans, ABL facility, and other long-term debt $ 14,247 $ 10,073 $ 28,389 $ 18,404

11 unchanged sentences

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.

The agreement covers $ 86.4 million as of July 2, 2023.

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

1 unchanged sentence

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 %.

At July 2, 2023, the effective fixed interest rate on the long-term debt hedged by these contracts was 5.72 %.

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

3 unchanged sentences

The Company has outstanding warrants which are accounted for as derivative liabilities pursuant to ASC 815-40.

"Warrants" for additional information on our warrant liabilities.

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

"Warrants" for additional information on the Company's warrant liabilities.

A reconciliation of the changes in the warrant liability during the twenty-six weeks ended July 2, 2023 is as follows:

(in thousands)

1 unchanged sentence

Loss on remeasurement of warrant liability 2,232

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

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

Gain on remeasurement of warrant liability ( 2,808 )

Fair value of warrant liabilities as of July 3, 2023 $ 44,928

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 $ 73.1 million as of April 2, 2023.

These purchase commitments totaled $ 110.4 million as of July 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 (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 .

The Company has recorded purchase commitment gains (losses) totaling $ 2.4 million and $ 1.1 million for the thirteen weeks ended July 2, 2023 and July 3, 2022, respectively, and $( 0.3 ) million and $ 1.0 million for the twenty-six weeks ended July 2, 2023 and July 3, 2022, respectively.

FAIR VALUE MEASUREMENTS

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Financial asset or liabilities which are included in this category are securities where all significant inputs are observable, either directly or indirectly;

Level III - Prices or valuations that are unobservable and where there is little, if any, market activity for these financial assets or liabilities.

Level III - Financial asset or liabilities which are included in this category have prices or valuations that are unobservable or there is little, if any, market activity for these financial assets or liabilities.

The inputs into the determination of fair value inputs for these investments require significant management judgment or estimation.

3 unchanged sentences

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

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of April 2, 2023:

(in thousands) Level 1 Level 2 Level 3 Total

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Commodity contracts $ — $ 418 $ — $ 418

Interest rate swaps — 244 — 244

Private placement warrants — 44,928 — 44,928

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

The outstanding balance of loans guaranteed was $ 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 outstanding balance of loans guaranteed was $ 0.9 million and $ 1.5 million at July 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.

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

The outstanding balance of loans guaranteed that were issued by Bank of America was $ 40.2 million and $ 36.0 million at April 2, 2023 and January 1, 2023, respectively, which are off balance sheet arrangements.

The outstanding balance of loans guaranteed that were issued by Bank of America was $ 42.9 million and $ 36.0 million at July 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 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.

"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 guarantees.

The outstanding balance of notes purchased by Bank of America at July 2, 2023 and January 1, 2023 was $ 16.6 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 $ 3.1 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.

The outstanding balance of loans guaranteed was $ 2.7 million and $ 3.4 million at July 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.

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ACCUMULATED OTHER COMPREHENSIVE INCOME

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 was $ 50.2 million as of July 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.

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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 3,011

Balance as of July 3, 2022 $ 34,535

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

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

Balance as of January 1, 2023 $ 50,994

Unrealized loss on cash flow hedges ( 10,325 )

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

Unrealized gain on cash flow hedges 9,572

Balance as of July 2, 2023 $ 50,241

Less balance attributable to noncontrolling interest as of July 2, 2023 19,896

Balance attributable to controlling interest as of July 2, 2023 $ 30,345

SUPPLEMENTARY CASH FLOW INFORMATION

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

(in thousands) Twenty-six weeks ended July 2, 2023 Twenty-six weeks ended July 3, 2022

Cash paid for interest $ 28,613 $ 18,515

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

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 recorded income tax benefit for the thirteen and twenty-six weeks ended July 2, 2023 of $( 0.7 ) million and $( 3.3 ) million, respectively.

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

The effective tax rates for the thirteen and twenty-six weeks ended July 2, 2023 were 7.8 % and 12.7 %, respectively.

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

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

The Company’s effective tax rate for the thirteen weeks ended April 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’s effective tax rate for the thirteen and twenty-six weeks ended July 2, 2023 are 6.5 % and 12.8 %, respectively, before consideration of any discrete items.

During the thirteen and twenty-six weeks ended July 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 April 2, 2023, a significant piece of objective negative evidence evaluated was the twelve-quarter cumulative loss before taxes.

As of July 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.

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

As of April 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.

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

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

Tax receivable agreement liability

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

As of April 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 of July 2, 2023 and January 1, 2023, the Company had a liability of $ 24.5 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 at the closing of the Business Combination (“Forward Purchase Warrants”) 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"), 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 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).

As of July 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 Loss.

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 $( 2.2 ) million and $ 1.9 million for the thirteen weeks ended April 2, 2023 and April 3, 2022, respectively.

The remeasurement of the warrant liability resulted in a gain (loss) of $ 2.8 million and $ 5.8 million for the thirteen weeks ended July 2, 2023 and July 3, 2022, respectively, and of $ 0.6 million and $ 7.7 million for the twenty-six weeks ended July 2, 2023 and July 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 81,012,868 and 80,882,334 shares of UBI were issued and outstanding on April 2, 2023 and January 1, 2023, respectively.

The Company is authorized to issue 1,000,000,000 shares of Class A Common Stock, par value $ 0.0001 per share, of which 81,141,417 and 80,882,334 shares of UBI were issued and outstanding on July 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 April 2, 2023 and January 1, 2023, there were 59,349,000 shares of Class V Common Stock outstanding.

As of July 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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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

(in thousands, except share data) Thirteen weeks ended July 2, 2023 Twenty-six weeks ended July 2, 2023 Twenty-six weeks ended July 3, 2022

Basic and diluted earnings per share:

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Net loss attributable to noncontrolling interest $ ( 4,429 ) $ ( 9,784 ) $ ( 14,962 )

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

Basic and diluted earnings per share:

Net income attributable to common stockholders $ 3,179

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

Basic earnings per share $ 0.04

Diluted earnings per share:

Net income attributable to common stockholders $ 3,179

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

Dilutive securities included in diluted earnings per share calculation:

Warrants 1,237,761

Stock options —

Total 81,510,936

Diluted earnings per share $ 0.04

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

Net loss attributable to noncontrolling interest $ 634

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 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.

As of July 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

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.

On July 20, 2023, the Company amended the ABL Facility to increase the credit limit up to $ 225.0 million and extend the maturity until October 2027 at the earliest.

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