What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-01 compared with 2024-05-02 · 158 added, 83 removed, 164 unchanged (60% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following management's discussion and analysis of our financial condition and results of operations ("MD&A") should be read in conjunction with our unaudited interim consolidated financial statements as of and for the thirteen weeks ended March 31, 2024, together with our audited consolidated financial statements for our most recently completed fiscal year set forth under Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023.

The following management's discussion and analysis of our financial condition and results of operations ("MD&A") should be read in conjunction with our unaudited interim consolidated financial statements as of and for the thirteen and twenty-six weeks ended June 30, 2024, together with our audited consolidated financial statements for our most recently completed fiscal year set forth under Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023.

This discussion contains forward-looking statements that involve risks and uncertainties.

4 unchanged sentences

Our fiscal quarters are comprised of thirteen weeks each, except for fifty-three-week fiscal years for which the fourth quarter is comprised of fourteen weeks, and ends on the thirteenth Sunday of each quarter (fourteenth Sunday of the fourth quarter, when applicable).

Our Company was founded in 1921 in Hanover, Pennsylvania and benefits from over 100 years of brand awareness and heritage in the salty snack industry.

Utz Brands Inc.

(the “Company”) was founded in 1921 in Hanover, Pennsylvania and benefits from over 100 years of brand awareness and heritage in the salty snack industry.

We are a leading United States manufacturer of branded salty snacks, producing a broad offering of salty snacks, including potato chips, tortilla chips, pretzels, cheese snacks, pork skins, pub/party mixes, and other snacks.

Our iconic portfolio of authentic, craft, and BFY brands, includes Utz®, ON THE BORDER® , Zapp’s®, Golden Flake®, Boulder Canyon®, Hawaiian® Brand, and TORTIYAHS!®, among others, and enjoys strong household penetration in the United States, where our products can be found in approximately 49% of U.S.

Our iconic portfolio of authentic, craft, and “better-for-you” ("BFY") brands, includes Utz®, ON THE BORDER® , Zapp’s®, Golden Flake®, Boulder Canyon®, Hawaiian® Brand, and TORTIYAHS!®, among others, and enjoys strong household penetration in the United States, where our products can be found in approximately 49% of U.S.

households as of December 31, 2023.

As of March 31, 2024, we operate 11 manufacturing facilities across the United States with a broad range of capabilities, and are distributed nationally to grocery, mass merchant, club, convenience, drug and other retailers through direct shipments, distributors, and approximately 2,300 direct-store delivery ("DSD") routes.

As of June 30, 2024, we operate 8 primary manufacturing facilities across the United States with a broad range of capabilities, and are distributed nationally to grocery, mass merchant, club, convenience, drug and other retailers through direct shipments, distributors, and approximately 2,350 direct-store delivery ("DSD") routes.

We have historically expanded our geographic reach and product portfolio organically and through acquisitions.

4 unchanged sentences

salty snacks category, within the broader approximately $129 billion market for U.S.

snack foods as of March 24, 2024.

For the thirteen weeks ended March 31, 2024, U.S.

snack foods as of June 30, 2024.

For the thirteen weeks ended June 30, 2024, U.S.

retail sales for salty snacks based on Circana data increased by 0.2% versus the comparable prior year period.

Our retail sales increased 4.1% over the thirteen weeks ended March 31, 2024.

In the last few years snacking occasions have been on the rise as consumers increasingly seek out convenient, delicious snacks for both on-the-go and at-home lifestyles.

A 2023 study from Circana cites that 54% of consumers eat snacks to add excitement to their daily diet, up two points versus two years ago and that 49% of consumers snack three or more times per day, up four points versus two years ago.

Additionally, the salty snacks category has historically benefited from favorable competitive dynamics, including low private label penetration and category leaders competing primarily through marketing and innovation.

Our retail sales increased 1.1% over the thirteen weeks ended June 30, 2024.

A 2024 study from Circana cites that 46% of consumers snack three or more times a day, down three points compared to a year ago but with no change versus five years ago Additionally, the salty snacks category has historically benefited from favorable competitive dynamics, including low private label penetration and category leaders competing primarily through marketing and innovation.

We expect these consumer trends to continue to drive consistent retail sales growth for salty snacks for the foreseeable future.

6 unchanged sentences

Additionally, we maintain ongoing efforts led by our transformation office, to expand our profitability, including implementing significant reductions to our operating cost structure in both supply chain and overhead costs.

Financing Costs and Exposure to Interest Rate Changes – As of March 31, 2024, we had $701.2 million in variable rate indebtedness, down from $851.5 million at December 31, 2023.

The decrease in variable rate debt is primarily due to a $141.0 million payment on the Term Loan B and $8.5 million payment on the loan by City National Bank which is secured by a majority of the real estate assets of our subsidiaries through September 2032 (the “Real Estate Term Loan”) made in connection with the Good Health and R.W.

Garcia Sale as described in Note 2.

As of March 31, 2024 our variable rate indebtedness is benchmarked to the Term SOFR Screen Rate (‘SOFR”).

As of March 31, 2024, we entered into interest rate hedges covering $547.0 million of debt.

Financing Costs and Exposure to Interest Rate Changes – As of June 30, 2024, we had $736.4 million in variable rate indebtedness, down from $851.5 million at December 31, 2023.

The decrease in variable rate debt is primarily due to a $141.0 million payment toward the outstanding balance of the Term Loan B and $17.7 million payment toward the outstanding balance of the loan by City National Bank which is secured by a majority of the real estate assets of our subsidiaries through September 2032 (the “Real Estate Term Loan”) made in connection with the Good Health and R.W.

Garcia Sale (as defined below) and the Manufacturing Facilities Sale (as defined below) each as described in Note 2.

Divestitures and Note 4.

Property, Plant and Equipment, Net.

As of June 30, 2024, our variable rate indebtedness is benchmarked to the Term SOFR Screen Rate ("SOFR”).

As of June 30, 2024, we have existing interest rate swaps totaling $582.9 million of debt.

Our interest rate hedge strategy has limited some of our exposure to changes in interest rates.

1 unchanged sentence

We continue to use low-cost, short- and long-term debt to finance our ongoing working capital, capital expenditures and other investments and dividends.

Our weighted average interest rate for the thirteen weeks ended March 31, 2024 was 6.6%, up from 5.6% during the thirteen weeks ended April 2, 2023.

We have used interest rate swaps to help manage some of our exposure to interest rate changes, which can drive cash flow variability related to our debt.

Our weighted average interest rate for the twenty-six weeks ended June 30, 2024 was 5.8%, up from 5.7% during the twenty-six weeks ended July 2, 2023.

We have used interest rate swaps to manage part of our exposure to interest rate changes, which can drive cash flow variability related to our debt.

Refer to Note 8.

7 unchanged sentences

Garcia Sale") for $167.5 million, subject to customary adjustments.

Divestiture for further discussion.

Divestitures for further discussion.

On April 22, 2024, the Company sold to Our Home™ its Berlin, PA, and Fitchburg, MA manufacturing facilities and certain related assets (the “Manufacturing Facilities Sale”).

The total consideration for the transactions is $18.5 million related to the facilities and certain inventory, subject to customary adjustments.

The Company and Our Home will operate under transition services agreements which end during the first half of 2025.

In addition, the parties will operate under reciprocal co-manufacturing agreements under which Our Home will co-manufacture certain of the Company's products and the Company will co-manufacture certain Good Health products.

Certain Good Health products will continue to be distributed and sold on the Company's DSD network for Our Home.

The Company received approximately $18.7 million in advance from Our Home for certain terms under these agreements for which the Company will recognize through income from operations over the term of the transition services agreements and co-manufacturing agreements.

Trade Name Purchase

During the thirteen weeks ended June 30, 2024, the Company paid $9.2 million to purchase an indefinite life intangible for use of a third-party brand name.

This intangible is included in indefinite life trade names.

Goodwill and Intangible Assets, Net.

Commodity Trends

We regularly monitor worldwide supply and commodity costs so that we can cost-effectively secure ingredients, packaging and fuel required for production.

A number of external factors such as weather, which may be impacted in unanticipated ways due to climate change, commodity market conditions, and the effects of governmental, agricultural or other programs, may affect the cost and availability of raw materials and agricultural materials used in our products.

A number of external factors such as weather, which may be impacted in unanticipated ways due to climate change, commodity market conditions, inflationary conditions, and the effects of governmental, agricultural or other programs, may affect the cost and availability of raw materials and agricultural materials used in our products.

We address commodity costs primarily through the use of buying-forward, which locks in pricing for key materials between three and 18 months in advance.

11 unchanged sentences

Independent Operator Conversions

Our DSD distribution is executed via Company-owned routes operated by route sales professionals ("RSP" or "RSPs"), and third-party routes managed by independent operators ("IOs").

Our DSD distribution is executed via Company-owned routes operated by route sales professionals ("RSP" or "RSPs"), and third-party routes managed by IOs.

We have used the IO and RSP models for more than a decade.

In fiscal year 2017, we embarked on a multi-year strategy to convert all company-owned RSP routes to the IO model.

As of March 31, 2024, substantially all of our DSD routes are managed by IOs.

As of June 30, 2024, substantially all of our DSD routes are managed by IOs.

The conversion process involves selling distribution rights of a defined route to an IO.

As we convert a large number of routes in a year, there is a meaningful decrease in the selling, distribution administrative costs that we previously incurred on RSPs and a corresponding increase in discounts paid to IOs to cover their costs to distribute our product.

As we convert a large number of routes in a year, there is a meaningful decrease in the selling, distribution and administrative costs that we previously incurred on RSPs and a corresponding increase in discounts paid to IOs to cover their costs to distribute our product.

The net impact is a reduction in selling and distribution expenses and a decrease in net sales and gross profit.

1 unchanged sentence

Results of Operations

The following tables present selected unaudited financial data for the thirteen weeks ended March 31, 2024 and April 2, 2023.

(in thousands) Thirteen weeks ended March 31, 2024 Thirteen weeks ended April 2, 2023

The following tables present selected unaudited financial data for the thirteen and twenty-six weeks ended June 30, 2024 and July 2, 2023.

(in thousands) Thirteen weeks ended June 30, 2024 Thirteen weeks ended July 2, 2023 Twenty-six weeks ended June 30, 2024 Twenty-six weeks ended July 2, 2023

Net sales $ 356,190 $ 362,853 $ 702,713 $ 714,286

5 unchanged sentences

Total selling, distribution, and administrative expenses 104,593 114,453 214,041 220,539

Loss on sale of assets, net (470) (508)

Income (loss) from operations 9,655 (2,098)

Other (expense) income

Gain (loss) on sale of assets, net 2,373 (279) 1,903 (787)

Income from operations 22,534 2,661 32,189 563

Other income (expense)

Gain on sale of business — — 44,015 —

Interest expense (10,209) (15,019) (24,040) (29,397)

Loss on debt extinguishment (1,273) — (1,273) —

Other income 198 272 1,108 1,887

Loss on remeasurement of warrant liability (11,808) (2,232)

Gain on remeasurement of warrant liability 12,888 2,808 1,080 576

Other income (expense), net 1,604 (11,939) 20,890 (26,934)

Income (loss) before taxes 24,138 (9,278) 53,079 (26,371)

Income tax expense (benefit) 26,544 (2,611)

Income tax (benefit) expense (1,309) (725) 25,236 (3,336)

Net income (loss) 25,447 (8,553) 27,843 (23,035)

Net (income) loss attributable to noncontrolling interest (5,599) 4,429 (11,986) 9,784

Net loss attributable to controlling interest $ (3,990) $ (9,127)

Thirteen weeks ended March 31, 2024 versus thirteen weeks ended April 2, 2023

Net sales was $346.5 million and $351.4 million for the thirteen weeks ended March 31, 2024 and April 2, 2023, respectively.

Net sales for the thirteen weeks ended March 31, 2024 decreased $4.9 million or 1.4% over the comparable period in 2023.

Net income (loss) attributable to controlling interest $ 19,848 $ (4,124) $ 15,857 $ (13,251)

Thirteen weeks ended June 30, 2024 versus Thirteen weeks ended July 2, 2023

Net sales were $356.2 million and $362.9 million for the thirteen weeks ended June 30, 2024 and July 2, 2023, respectively.

Net sales for the thirteen weeks ended June 30, 2024 decreased $6.7 million or 1.8% over the comparable period in 2023.

The Good Health and R.W.

Garcia Sale contributed 2.5% to the year-over-year decrease in net sales for thirteen weeks ended March 31, 2024 and an additional 0.4% of the decrease was related to continued IO conversions.

The decrease in net sales was partially offset by favorable volume/mix of 1.1% and pricing of 0.4%.

IO discounts increased to $44.4 million for the thirteen weeks ended March 31, 2024 from $42.2 million for the corresponding thirteen weeks ended April 2, 2023.

Net sales are evaluated based on classification as Power and Foundation brands.

Our Power Brands, which comprise 83% of our net sales for the thirteen weeks ended March 31, 2024, are comprised of our iconic heritage Utz brand and iconic On The Border® brand;

Garcia Sale contributed 3.3% to the year-over-year decrease in net sales for thirteen weeks ended June 30, 2024 as well as 0.7% decrease was attributable to changes in pricing and a 0.1% decrease related to the Company's shift to IOs.

These decreases in net sales were partially offset by favorable volume/mix of 2.3%.

IO discounts increased to $47.7 million for the thirteen weeks ended June 30, 2024 from $45.8 million for the corresponding thirteen weeks ended July 2, 2023.

Sales are evaluated based on classification as Power and Foundation brands.

Our Power Brands, which comprise 77% of our volume for the thirteen weeks ended June 30, 2024, are comprised of our iconic heritage Utz brand and iconic On The Border® brand;

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

2 unchanged sentences

and selected licensed brands such as TGI Fridays®.

Our Foundation Brands, which comprise 17% of our net sales for the thirteen weeks ended March 31, 2024, include strong regional snacking brands, such as Golden Flake® Chips and Cheese, and Snyder of Berlin®, as well as other partner and private label brands.

For the thirteen weeks ended March 31, 2024, Power brand sales increased by approximately 3.9%, while Foundation brand sales decreased by approximately 8.4% from corresponding sales for the thirteen weeks ended April 2, 2023.

Our Foundation Brands, which comprise 23% of our volume for the thirteen weeks ended June 30, 2024, include strong regional snacking brands, such as Golden Flake® Chips and Cheese, and Snyder of Berlin®, as well as other partner and private label brands.

For the thirteen weeks ended June 30, 2024, Power brand volume increased by approximately 4%, while Foundation brand volume decreased by approximately 10% as compared to the thirteen weeks ended July 2, 2023.

Excluding the impacts of increased IO discounts related to IO conversions and the Good Health and R.W.

Garcia Sale, net sales increased 1.5% for the thirteen weeks ended March 31, 2024 versus the corresponding period in fiscal year 2023 driven by the favorable volume/mix and pricing discussed above driven by the Company's Power Brands.

Garcia Sale, net sales increased 1.6% for the thirteen weeks ended June 30, 2024 versus the corresponding period in fiscal year 2023 driven by the favorable volume/mix discussed above driven by the Company's Power Brands.

Cost of goods sold and Gross profit

Gross profit was $119.6 million and $104.5 million for the thirteen weeks ended March 31, 2024 and April 2, 2023, respectively.

Our gross profit margin was 34.5% for the thirteen weeks ended March 31, 2024 versus 29.7% for the thirteen weeks ended April 2, 2023.

The increase in gross profit and gross profit margin was primarily driven by productivity, favorable sales mix and pricing, partially offset by cost inflation and supply chain investments.

Additionally, IO discounts increased to $44.4 million for the thirteen weeks ended March 31, 2024 from $42.2 million for the thirteen weeks ended April 2, 2023.

IO conversions contributed to a gross profit decline of $1.5 million, or a gross profit margin of 0.4%.

Gross profit was $124.8 million and $117.4 million for the thirteen weeks ended June 30, 2024 and July 2, 2023, respectively.

Our gross profit margin was 35.0% for the thirteen weeks ended June 30, 2024 versus 32.4% for the thirteen weeks ended July 2, 2023.

The increase in gross profit and gross profit margin was primarily driven by benefits from productivity and favorable sales volume/mix offset by lower pricing, supply chain cost inflation, and investments to support the Company’s productivity initiatives.

Additionally, IO discounts increased to $47.7 million for the thirteen weeks ended June 30, 2024 from $45.8 million for the thirteen weeks ended July 2, 2023.

Selling, distribution, and administrative expense

Selling, distribution, and administrative expenses were $109.4 million and $106.1 million for the thirteen weeks ended March 31, 2024 and April 2, 2023, respectively, resulting in an increase of $3.4 million or 3.2% for the thirteen weeks ended March 31, 2024 over the corresponding period in fiscal year 2023.

The increase in expenses for the thirteen weeks ended March 31, 2024 compared to the thirteen weeks ended April 2, 2023 was primarily due to primarily due to to increased marketing spend, higher distribution costs, and investments in capabilities.

These expenses were partially offset by a reduction in selling costs from the shift to IO’s and productivity benefits.

Loss on sale of assets

Loss on sale of assets was $0.5 million for each of the thirteen weeks ended March 31, 2024 and April 2, 2023 .

Selling, distribution, and administrative expenses were $104.6 million and $114.5 million for the thirteen weeks ended June 30, 2024 and July 2, 2023, respectively, resulting in an decrease of $9.9 million or 8.6% for the thirteen weeks ended June 30, 2024 over the corresponding period in fiscal year 2023.

The decrease in expenses for the thirteen weeks ended June 30, 2024 compared to the thirteen weeks ended July 2, 2023 was primarily attributable to the $7.6 million of impairment expense and the $1.3 million of severance expense related to the closure of the manufacturing operation at the Birmingham, AL facility as discussed in Note 4.

Property, Plant and Equipment, Net.

During the thirteen weeks ended July 2, 2023, the Company also recognized a liability and related expense of $4.7 million related to a contract termination with a co-manufacturer, which is recorded in the administrative line on the Consolidated Statement of Operations and Comprehensive Income (Loss).

This agreement was a continuation of the Company's response to shifting production from a manufacturing facility that was damaged by a natural disaster in 2021.

This decrease was partially offset by increased marketing spend, higher distribution costs, and investments in capabilities.

Gain (loss) on sale of assets

Gain (loss) on sale of assets was $2.4 million and $(0.3) million for the thirteen weeks ended June 30, 2024 and July 2, 2023, respectively .

Other income (expense), net

Other income (expense), net was $19.3 million and $(15.0) million for the thirteen weeks ended March 31, 2024 and April 2, 2023, respectively.

The increase in other income for the thirteen weeks ended March 31, 2024 compared to the thirteen weeks ended April 2, 2023 was primarily due to the gain on sale of business of $44.0 million relating to the Good Health and R.W.

Other income (expense), net was $1.6 million and $(11.9) million for the thirteen weeks ended June 30, 2024 and July 2, 2023, respectively.

The increase of $13.6 million in other income for the thirteen weeks ended June 30, 2024 compared to the thirteen weeks ended July 2, 2023 was primarily due to an increase in the gain on the remeasurement of warrant liability of $10.1 million for the thirteen weeks ended June 30, 2024 and the decrease in interest expense of $4.8 million primarily related to the $141.0 million payment on our Term Loan B and $8.5 million payment on our Real Estate Term Loan during the twenty-six weeks ended June 30, 2024, as well as the additional payment on our Real Estate Term Loan of $9.2 million during the thirteen weeks ended June 30, 2024.

This increase was partially offset by the loss on debt extinguishment of $1.3 million recognized during the thirteen weeks ended June 30, 2024.

Term Debt, Revolving Credit Facility, and Other Notes Payable for further discussion.

Income tax benefit was $1.3 million and $0.7 million for the thirteen weeks ended June 30, 2024 and July 2, 2023, respectively.

Twenty-six weeks ended June 30, 2024 versus twenty-six weeks ended July 2, 2023

Net sales were $702.7 million and $714.3 million for the twenty-six weeks ended June 30, 2024 and July 2, 2023, respectively.

Net sales for the twenty-six weeks ended June 30, 2024 decreased $11.6 million or 1.6% over the comparable period in 2023.

The Good Health and R.W.

Garcia Sale contributed 2.8% to the year-over-year decrease in net sales for twenty-six weeks ended June 30, 2024 and an additional 0.3% of the decrease was related to continued IO conversions and decrease of 0.1% related to pricing.

The decrease in net sales was partially offset by favorable volume/mix of 1.6%.

IO discounts increased to $92.1 million for the twenty-six weeks ended June 30, 2024 from $88.0 million for the corresponding twenty-six weeks ended July 2, 2023.

Sales are evaluated based on classification as Power and Foundation brands.

Our Power Brands, which comprise 76% of our volume for the twenty-six weeks ended June 30, 2024, are comprised of our iconic heritage Utz brand and iconic On The Border® brand;

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

BFY brands such as Boulder Canyon®;

strong regional snacking brands such as Bachman®, Tim’s Cascade® Snacks, and "Dirty" Potato Chips®;

and selected licensed brands such as TGI Fridays®.

Our Foundation Brands, which comprise 24% of our volume for the twenty-six weeks ended June 30, 2024, include strong regional snacking brands, such as Golden Flake® Chips and Cheese, and Snyder of Berlin®, as well as other partner and private label brands.

For the twenty-six weeks ended June 30, 2024, Power brand volume increased by approximately 4%, while Foundation brand volume decreased by approximately 13% as compared to twenty-six weeks ended July 2, 2023.

Excluding the impacts of increased IO discounts related to IO conversions and the Good Health and R.W.

Garcia Sale, net sales increased 1.5% for the twenty-six weeks ended June 30, 2024 versus the corresponding period in fiscal year 2023 driven by the favorable volume/mix discussed above driven by the Company's Power Brands.

Cost of goods sold and Gross profit

Gross profit was $244.3 million and $221.9 million for the twenty-six weeks ended June 30, 2024 and July 2, 2023, respectively.

Our gross profit margin was 34.8% for the twenty-six weeks ended June 30, 2024 versus 31.1% for the twenty-six weeks ended July 2, 2023.

The increase in gross profit and gross profit margin was primarily driven by productivity and favorable sales volume/mix more than offset lower pricing, supply chain cost inflation, and investments to support the Company’s productivity initiatives.

Additionally, IO discounts increased to $92.1 million for the twenty-six weeks ended June 30, 2024 from $88.0 million for the twenty-six weeks ended July 2, 2023.

Selling, distribution, and administrative expense

Selling, distribution, and administrative expenses were $214.0 million and $220.5 million for the twenty-six weeks ended June 30, 2024 and July 2, 2023, respectively, resulting in a decrease of $6.5 million or 2.9% for the twenty-six weeks ended June 30, 2024 over the corresponding period in fiscal year 2023.

The decrease in expenses for the twenty-six weeks ended June 30, 2024 compared to the thirteen weeks ended July 2, 2023 was primarily attributable to $9.5 million related to the impairment of fixed assets, primarily related to the closure of the manufacturing operation at the Birmingham, AL facility during the twenty-six weeks ended July 2, 2023 as discussed in Note 4.

Property, Plant and Equipment, Net.

The Company also recognized a liability and related expense of $4.7 million related to a contract termination with a co-manufacturer, which is recorded in the administrative line on the Consolidated Statement of Operations and Comprehensive Income (Loss) during the twenty-six weeks ended July 2, 2023.

This agreement was a continuation of the Company's response to shifting production from a manufacturing facility that was damaged by a natural disaster in 2021.

This decrease was partially offset by an increased marketing spend, higher distribution costs, and investments in capabilities.

Gain (loss) on sale of assets

Gain (loss) on sale of assets was $1.9 million and $(0.8) million for the twenty-six weeks ended June 30, 2024 and July 2, 2023, respectively.

Other income (expense), net

Other income (expense), net was $20.9 million and $(26.9) million for the twenty-six weeks ended June 30, 2024 and July 2, 2023, respectively.

The increase in other income of $47.9 million for the twenty-six weeks ended June 30, 2024 compared to the thirteen weeks ended July 2, 2023 was primarily due to the gain on sale of business of $44.0 million relating to the Good Health and R.W.

Garcia Sale which occurred on February 5, 2024.

Divestiture for further discussion.

This gain was partially offset by an increase in the loss on the remeasurement of warrant liability of $9.6 million for the thirteen weeks ended March 31, 2024 versus the corresponding period in fiscal year 2023.

Income tax expense (benefit) was $26.5 million and $(2.6) million for the thirteen weeks ended March 31, 2024 and April 2, 2023, respectively.

The increase in income tax expense for the thirteen weeks ended March 31, 2024 versus the corresponding period in fiscal year 2023 is primarily attributable to the Good Health and R.W.

Divestitures for further discussion.

and the decrease in interest expense of $5.4 million primarily related to the $141.0 million payment on our Term Loan B and $8.5 million payment on our Real Estate Term Loan during the twenty-six weeks ended June 30, 2024 as well as the additional payment on our Real Estate Term Loan of $9.2 million during the thirteen weeks ended June 30, 2024.

This increase was partially offset by the loss on debt extinguishment of $1.3 million recognized during the thirteen weeks ended June 30, 2024.

Term Debt, Revolving Credit Facility, and Other Notes Payable for further discussion.

Income tax expense (benefit) was $25.2 million and $(3.3) million for the twenty-six weeks ended June 30, 2024 and July 2, 2023, respectively.

The increase in income tax expense for the twenty-six weeks ended June 30, 2024 versus the corresponding period in fiscal year 2023 is primarily attributable to the Good Health and R.W.

Garcia Sale which occurred on February 5, 2024.

Divestiture for further discussion.

Divestitures for further discussion.

Non-GAAP Financial Measures

17 unchanged sentences

We also report Adjusted EBITDA as a percentage of Net Sales as an additional measure for investors to evaluate our Adjusted EBITDA margins on Net Sales.

The following table provides a reconciliation from net income (loss) to EBITDA and Adjusted EBITDA for the thirteen weeks ended March 31, 2024 and April 2, 2023:

(dollars in millions) Thirteen weeks ended March 31, 2024 Thirteen weeks ended April 2, 2023

Net loss $ 2.4 $ (14.5)

The following table provides a reconciliation from net income (loss) to EBITDA and Adjusted EBITDA for the thirteen and twenty-six weeks ended June 30, 2024 and July 2, 2023:

(dollars in millions) Thirteen weeks ended June 30, 2024 Thirteen weeks ended July 2, 2023 Twenty-six weeks ended June 30, 2024 Twenty-six weeks ended July 2, 2023

Net income (loss)

$ 25.4 $ (8.6) $ 27.8 $ (23.0)

Plus non-GAAP adjustments:

3 unchanged sentences

Interest Income (IO loans) (1)

(0.1) (0.5) (0.9) (0.9)

EBITDA 51.8 25.5 112.0 42.6

Certain Non-Cash Adjustments (2)

4.9 8.5 8.9 17.7

Acquisition, Divestiture and Integration (3)

1.1 3.7 (37.3) 7.4

Business Transformation Initiatives (4)

4.5 10.3 10.3 18.5

Financing-Related Costs (5)

Loss on Remeasurement of Warrant Liability (6)

0.3 — 0.3 0.1

Gain on Remeasurement of Warrant Liability (6)

(12.9) (2.8) (1.1) (0.6)

Adjusted EBITDA $ 49.7 $ 45.2 $ 93.1 $ 85.7

Net income (loss) as a % of Net Sales 7.1 % (2.4) % 4.0 % (3.2) %

Adjusted EBITDA as a % of Net Sales 14.0 % 12.5 % 13.2 % 12.0 %

2 unchanged sentences

(2) Certain Non-Cash Adjustments are comprised primarily of the following:

Incentive programs – The Company incurred $3.9 million and $4.6 million of share-based compensation expense, that was awarded to associates and directors, and compensation expense associated with the employee stock purchase plan for the thirteen weeks ended March 31, 2024 and April 2, 2023, respectively.

Asset Impairments and Write-Offs — For the thirteen weeks ended April 2, 2023, the Company recorded an adjustment for an impairment of $1.9 million related to fixed assets.

Incentive programs – The Company incurred $4.5 million and $3.4 million of share-based compensation expense, that was awarded to associates and directors, and compensation expense associated with the employee stock purchase plan (the "ESPP") and the omnibus equity incentive plan (the"OEIP") for the thirteen weeks ended June 30, 2024 and July 2, 2023, respectively.

The Company incurred $8.4 million and $8.1 million of share-based compensation expense, that was awarded to associates and directors, and compensation expense associated with the ESPP and the OEIP for the twenty-six weeks ended June 30, 2024 and July 2, 2023, respectively.

Asset Impairments and Write-Offs — For the thirteen weeks ended July 2, 2023, the Company recorded an adjustment for an impairment of $7.6 million on fixed assets related to the Manufacturing Closure.

During the twenty-six weeks ended July 2, 2023, the Company recorded impairments totaling $9.6 million.

Purchase Commitments and Other Adjustments – We have purchase commitments for specific quantities at fixed prices for certain of our products’ key ingredients.

To facilitate comparisons of our underlying operating results, this adjustment was made to remove the volatility of purchase commitments related to unrealized gains and losses.

The adjustment related to Purchase Commitments and Other Adjustments was $0.1 million and $2.7 million for the thirteen weeks ended March 31, 2024 and April 2, 2023, respectively.

(3) Adjustment for Acquisition, Divestiture and Integration Costs and (Gains) – This is comprised of consulting, transaction services, and legal fees incurred for acquisitions and divestitures and certain potential acquisitions and divestitures, in addition to expenses associated with integrating recent acquisitions.

Such expenses were $5.6 million for the thirteen weeks ended March 31, 2024.

Also included for the thirteen weeks ended March 31, 2024 was a gain of $44.0 million related to the Good Health and R.W.

These expenses were $4.9 million for the thirteen weeks ended April 2, 2023, offset by $1.2 million of income for the reduction of the Tax Receivable Agreement Liability associated with the Business Combination.

The adjustment related to Purchase Commitments and Other Adjustments, including cloud computing amortization was expense (income) of $0.4 million and $(2.5) million for the thirteen weeks ended June 30, 2024 and July 2, 2023, respectively.

The adjustment related to Purchase Commitments and Other Adjustments, including cloud computing amortization was $0.5 million and $0 million for the twenty-six weeks ended June 30, 2024 and July 2, 2023, respectively.

(3) Adjustment for Acquisition, Divestiture and Integration Costs and (Gains) – Such expenses were $1.1 million and $3.4 million for the thirteen weeks ended June 30, 2024 and July 2, 2023, respectively;

and $6.7 million and $8.3 million for the twenty-six weeks ended June 30, 2024 and July 2, 2023, respectively.

Additionally, other acquisitions and integration costs (income) of $0.3 million were recorded for the thirteen weeks ended July 2, 2023 and $(0.9) million for the twenty-six weeks ended July 2, 2023 related to the change in the liability associated with the Tax Receivable Agreement entered into in connection with the consummation of the business combination by the Company (formerly Collier Creek Holdings) with Utz Brands Holdings, LLC (“UBH”) pursuant to the terms of the Business Combination Agreement, dated as of June 5, 2020.

Also included for the twenty-six weeks ended June 30, 2024 was a gain of $44.0 million related to the Good Health and R.W.

(4) Business Transformation Initiatives Adjustment – This adjustment is related to consultancy, professional, and legal fees incurred for specific initiatives and structural changes to the business that do not reflect the cost of normal business operations.

In addition, gains and losses realized from the sale of distribution rights to IOs and the subsequent disposal of trucks, severance costs associated with the elimination of RSP positions, and enterprise resource planning system transition costs, fall into this category.

The Company incurred such costs of $5.8 million and $8.2 million for the thirteen weeks ended March 31, 2024 and April 2, 2023, respectively.

The Company incurred such costs of $4.5 million and $5.6 million for the thirteen weeks ended June 30, 2024 and July 2, 2023, respectively, and $10.3 million and $13.8 million for the twenty-six weeks ended June 30, 2024 and July 2, 2023, respectively.

Additionally, the thirteen and twenty-six weeks ended July 2, 2023 also includes expense of $4.7 million related to a contract termination.

This agreement was a continuation of the Company's response to shifting production from a manufacturing facility that was damaged by a natural disaster in 2021.

(5) Financing-Related Costs – These costs include adjustments for various items related to raising debt and equity capital or debt extinguishment costs.

(6) Gains and losses related to the changes in the remeasurement of warrant liabilities are not expected to be settled in cash, and when exercised would result in a cash inflow to the Company with the Warrants converting to Class A Common Stock with the liability being extinguished and the fair value of the Warrants at the time of exercise being recorded as an increase to equity.

(6) Gains and losses – Such gains and losses related to the changes in the remeasurement of warrant liabilities are not expected to be settled in cash, and when exercised would result in a cash inflow to the Company with the Warrants converting to Class A Common Stock with the liability being extinguished and the fair value of the Warrants at the time of exercise being recorded as an increase to equity.

Liquidity and Capital Resources

8 unchanged sentences

We use short-term debt as management determines is reasonable, principally to finance ongoing operations, including our seasonal requirements for working capital (generally accounts receivable, inventory, and prepaid expenses and other current assets, less accounts payable, accrued payroll, and other accrued liabilities), and a combination of equity and long-term debt to finance both our base working capital needs and our non-current assets.

As of March 31, 2024 and December 31, 2023, $0.2 million and $0.4 million, respectively, was outstanding under the Company's asset-based revolving credit facility ("ABL facility").

Term Debt and Revolving Credit Facility

On April 17, 2024, the Company amended its Term Loan B to refinance in full all of the $630.0 million outstanding term loans and reduce the interest rate from the SOFR plus the applicable rate of 3.00% plus a credit spread adjustment to SOFR plus the applicable rate of 2.75%, as well as certain other changes.

Other material terms of the Term Loan B, including the January 2028 maturity date, remain unchanged.

The Company recorded a loss on debt extinguishment of $1.3 million related to the refinancing of its Term Loan B in its Consolidated Statement of Operations and Comprehensive Income (Loss) for the thirteen weeks ended June 30, 2024 and twenty-six weeks ended June 30, 2024.

On April 17, 2024, the Company amended its asset-based revolving credit facility ("ABL facility") to reduce the rate from SOFR plus the applicable rate ranging from 1.50%-2.00% plus a credit spread adjustment to SOFR plus the applicable rate ranging from 1.50%-2.00%, as well as certain other changes.

Other material terms of the ABL, including maturity date, remain unchanged.

As of June 30, 2024 and December 31, 2023, $45.2 million and $0.4 million, respectively, was outstanding under the Company's ABL 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 and amounts borrowed.

As of March 31, 2024 and December 31, 2023, $151.9 million and $158.4 million, respectively, was available for borrowing, net of letters of credit.

Standby letters of credit in the amount of $16.3 million and $12.2 million have been issued as of March 31, 2024 and December 31, 2023, respectively.

As of June 30, 2024 and December 31, 2023, $130.3 million and $158.4 million, respectively, was available for borrowing, net of letters of credit.

Standby letters of credit in the amount of $10.3 million and $12.2 million have been issued as of June 30, 2024 and December 31, 2023, respectively.

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

2 unchanged sentences

Cash Requirements

Our expected future payments at March 31, 2024 primarily consist of:

Our expected future payments at June 30, 2024 primarily consisted of:

• Short-term cash requirements related primarily to funding operations (including expenditures for raw materials, labor, manufacturing and distribution, trade and promotions, advertising and marketing, benefit plan obligations and lease expenses) as well as periodic expenditures for acquisitions, stockholder returns (such as dividend payments), property, plant and equipment and any significant one-time non-operating items;

3 unchanged sentences

Term Debt, Revolving Credit Facility, and Other Notes Payable );

• Long-term cash requirements related to our deferred taxes;

• Long-term cash requirements related to our current and deferred taxes;

• Operating lease liabilities.

10 unchanged sentences

Contingencies .

The following table presents net cash provided by operating activities, investing activities and financing activities for the thirteen weeks ended March 31, 2024 and April 2, 2023.

(in thousands) Thirteen weeks ended March 31, 2024 Thirteen weeks ended April 2, 2023

The following table presents net cash provided by operating activities, investing activities and financing activities for the twenty-six weeks ended June 30, 2024 and July 2, 2023.

(in thousands) Twenty-six weeks ended June 30, 2024 Twenty-six weeks ended July 2, 2023

Net cash used in operating activities $ (169) $ (4,315)

1 unchanged sentence

Net cash (used in) provided by financing activities $ (126,220) $ 35,825

Net cash used in operating activities for the thirteen weeks ended March 31, 2024 was $9.1 million compared to $8.4 million thirteen weeks ended April 2, 2023, with the difference largely driven by increases in accounts payable and accrued expense and other, partially offset by a decrease in cash net income and the timing of accounts receivable, net.

Cash provided by investing activities for the thirteen weeks ended March 31, 2024 was $158.0 million primarily driven by proceeds from sale of business of $167.5 million partially offset by purchases of property and equipment, versus cash used in investing activity of $14.0 million for the thirteen weeks ended April 2, 2023 primarily driven by purchases of property and equipment.

Net cash used in financing activities was $154.0 million for the thirteen weeks ended March 31, 2024, primarily driven by the pay down of debt utilizing the proceeds from the Good Health and R.W.

Garcia Sale versus net cash provided by financing activities of $7.5 million for the thirteen weeks ended April 2, 2023, which was primarily a result of a draw on the line of credit of $20.0 million and other borrowings offset by payments of dividends and distributions.

Net cash used in operating activities for the twenty-six weeks ended June 30, 2024 was $0.2 million compared to $4.3 million twenty-six weeks ended July 2, 2023, with the difference largely driven by increases in accounts payable and accrued expenses and other, partially offset by a decrease related to the timing of accounts receivable, net and prepaid expenses and other assets, which includes approximately $30 million impact from the Good Health and R.W.

Garcia Sale and Manufacturing Facilities Sale.

Cash provided by investing activities for the twenty-six weeks ended June 30, 2024 was $140.9 million, primarily driven by proceeds from sale of business of $167.5 million, proceeds from sale of property and equipment primarily related to the sale of the manufacturing facilities in Birmingham, AL, Berlin, PA and Fitchburg, MA and proceeds from the sale of routes to IOs.

These proceeds were partially offset by purchases of property and equipment, notes receivable and purchase of intangibles related to an indefinite life intangible for the use of a third party brand name.

This compares to the cash used in investing activity of $30.8 million for the twenty-six weeks ended July 2, 2023 primarily driven by purchases of property and equipment.

Net cash used in financing activities was $126.2 million for the twenty-six weeks ended June 30, 2024, primarily driven by the pay down of debt utilizing the proceeds from the Good Health and R.W.

Garcia Sale partially offset by borrowings on line of credit as well as payment of dividends and distribution to noncontrolling interest versus net cash provided by financing activities of $35.8 million for the twenty-six weeks ended July 2, 2023, which was primarily a result of a draw on the line of credit of $61.0 million partially offset by repayments on term debt and notes payable, payments of dividends and distribution to noncontrolling interest.

Debt Covenants

1 unchanged sentence

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 March 31, 2024.

UBH and its subsidiaries were in compliance with its financial covenants as of June 30, 2024.

New Accounting Pronouncements

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis