Utz Brands, Inc. (NYSE: UTZ) (“Utz” or the “Company”), a leading
U.S. manufacturer of branded salty snacks, today reported financial
results for the Company’s second fiscal quarter ended July 2,
2023.
2Q’23 Summary:
- Net sales increased 3.6% year-over-year to $362.9 million
- Organic Net Sales increased 4.3% year-over-year
- Net loss of $(8.6) million vs. net income of $2.5 million in
the year-ago period
- Adjusted EBITDA increased 7.1% year-over-year to $45.2
million
- Raising fiscal 2023 Adjusted EBITDA outlook
See the description of the Non-GAAP financial measures mentioned
in this press release and reconciliations of the Non-GAAP adjusted
measures to the most comparable GAAP measures in the tables that
accompany this press release.
“Our second quarter results were consistent with our
expectations as our momentum continued led by sustained strong
demand across our advantaged portfolio of Power Brands,” said
Howard Friedman, Chief Executive Officer of Utz. “Looking ahead to
the remainder of the year, we are raising our full-year Adjusted
EBITDA outlook as we execute against our key growth and operational
strategies”.
Second Quarter 2023 Financial Highlights
13-Weeks Ended
(in $millions, except per share
amounts)
July 2, 2023
July 3, 2022
% Change
Net Sales
$
362.9
$
350.1
3.6
%
Organic Net Sales
365.2
350.1
4.3
%
Gross Profit
117.4
111.5
5.3
%
Gross Profit Margin
32.4
%
31.9
%
50 bps
Adjusted Gross Profit
126.9
126.0
0.7
%
Adjusted Gross Profit Margin
35.0
%
36.0
%
(102) bps
Net (Loss) Income
(8.6
)
2.5
nm
Net (Loss) Income Margin
(2.4
)%
0.7
%
nm
Adjusted Net Income
18.8
18.4
2.2
%
Adjusted EBITDA
45.2
42.2
7.1
%
Adjusted EBITDA Margin
12.5
%
12.1
%
40 bps
Basic (Loss) Earnings Per Share
$
(0.05
)
$
0.04
nm
Adjusted Earnings Per Share
$
0.13
$
0.13
—
%
Note: See description of Non-GAAP financial measures and
reconciliations of GAAP measures to Non-GAAP adjusted measures in
the tables that accompany this release.
Second Quarter 2023 Results
Net sales in the quarter increased 3.6% to $362.9 million
compared to $350.1 million in the second quarter of 2022. The
increase in net sales was driven by Organic Net Sales growth of
4.3%, partially offset by the Company’s continued shift to
independent operators (“IOs”) and the resulting increase in sales
discounts that impacted net sales growth by (0.7%).
Organic Net Sales growth was driven by the flow through of
pricing actions that were taken in fiscal 2022 in response to
inflationary pressures which account for a 6.0% increase in net
sales, partially offset by volume/mix declines of (1.7%). The
volume decline was primarily due to the Company’s ongoing SKU
rationalization program focused on reducing lower margin private
label and certain partner brands. The Company estimates this
program impacted volumes in the second quarter of 2023 by
approximately (3.5%). Excluding the impact from SKU
rationalization, the Company estimates that volume/mix would have
increased 1.8% in the second quarter of 2023 versus the prior year
period.
For the 13-week period ended July 2, 2023, the Company’s retail
sales, as measured by Circana (formerly IRI) MULO-C, increased 8.8%
versus the prior-year period and the Company’s Power Brands’ retail
sales increased 9.9% versus the prior-year period(1). Power Brands’
retail sales growth versus the prior-year period was led by Utz®,
On The Border®, Zapp’s®, Hawaiian®, and Boulder Canyon®. The
Company’s Foundation Brands’ retail sales increased 1.5%(2) versus
the prior year period.
(1)
Circana (formerly IRI) Total US MULO-C,
custom Utz Brands hierarchy, on a pro forma basis.
(2)
Circana does not include certain Partner
Brands and Private Label sales that are not assigned to Utz
Brands.
Gross profit margin was 32.4% compared to 31.9% in the prior
year period. Adjusted Gross Margin was 35.0% compared to 36.0% in
the prior year period. The benefits from net price realization,
productivity, and favorable sales mix more than offset cost
inflation. However, Adjusted Gross Margin was impacted by
transitory higher inbound freight costs and volume deleverage
resulting from our network optimization program, both of which are
expected to abate in the second half of 2023. Additionally, the
Company estimates that the continued shift to IOs negatively
impacted Adjusted Gross Margins by approximately 70 basis points,
but with offsetting benefits in Selling, Distribution, and
Administrative (“SD&A”) expense.
SD&A expenses increased 6.4% compared to the prior-year
period. Adjusted SD&A Expense decreased (2.6)% compared to the
prior year period from lower outbound freight costs resulting
primarily from the Company's productivity initiatives, but also due
in part to improved freight industry conditions. These factors were
partially offset by continued investments in brand marketing,
selling infrastructure and people, systems, and supply chain
capabilities to support growth.
The Company reported a net loss of $(8.6) million compared to
income of $2.5 million in the prior-year period. The decrease in
net income was primarily attributable to an asset impairment charge
of $7.6 million and severance expenses of $1.3 million related to
the previously announced closure of the Company’s manufacturing
operation at its Birmingham facility, and recording a liability of
$4.7 million for the termination of a supply contract with a
co-manufacturer. In addition, interest expense increased $4.3
million versus the prior year period.
Adjusted Net Income in the quarter increased 2.2% to $18.8
million compared to $18.4 million in the second quarter of 2022 and
Adjusted Earnings per Share of $0.13 was consistent with the prior
year period. Adjusted EBITDA increased 7.1% to $45.2 million, or
12.5% as a percentage of net sales, compared to Adjusted EBITDA of
$42.2 million, or 12.1% as a percentage of net sales, in the prior
year period.
Balance Sheet and Cash Flow Highlights
- As of July 2, 2023
- Total liquidity of approximately $170 million, consisting of
cash on hand of $73.7 million and $96.6 million available under the
Company’s revolving credit facility.
- Net debt of $913.3 million resulting in a Net Leverage Ratio of
5.1x based on trailing twelve months Normalized Adjusted EBITDA of
$177.4 million.
- For the 26-weeks ended July 2, 2023
- Cash flow used in operations was $4.3 million, which reflects
the seasonal use of working capital.
- Capital expenditures were $30.2 million, and dividend and
distributions paid were $16.0 million.
Fiscal Year 2023 Outlook
The Company is reaffirming its Net Sales outlook and raising its
Adjusted EBITDA outlook for fiscal 2023:
- Total net sales growth of 3% to 5% and Organic Net Sales
growth of 4% to 6%, with the Company’s continued shift to IOs
impacting total net sales growth by approximately (1.0%). Net sales
growth is expected to be driven by net price realization, increased
marketing and innovation, and continued distribution gains of the
Company’s Power Brands, partially offset by the estimated impact of
approximately (3%) from the Company’s SKU rationalization program.
Based on these assumptions, the Company expects volume / mix
consistent with fiscal 2022.
- Adjusted EBITDA growth of 8% to 11% (previously 7% to
10% growth) as gross margin expansion and lower delivery costs are
expected to more than offset cost inflation, and continued
investments in brand marketing, people, capabilities, and selling
infrastructure.
The Company continues to expect:
- An effective tax rate (normalized GAAP basis tax expense, which
excludes one-time items) in the range of 20% to 22%;
- Interest expense of approximately $55 million;
- Capital expenditures in the range of $50 to $55 million;
and
- Net Leverage Ratio below 4.5x at year-end fiscal 2023.
With respect to projected fiscal 2023 Adjusted EBITDA, a
quantitative reconciliation is not available without unreasonable
efforts due to the high variability, complexity, and low visibility
with respect to certain items which are excluded from Adjusted
EBITDA. We expect the variability of these items to have a
potentially unpredictable, and potentially significant, impact on
our future financial results.
Conference Call and Webcast Presentation
The Company will host a conference call to discuss these results
today at 8:30 a.m. Eastern Time. Please visit the “Events &
Presentations” section of Utz’s Investor Relations website at
https://investors.utzsnacks.com to access the live listen-only
webcast and presentation. Participants can also dial in over the
phone by calling 1 (888) 510-2008. The Event Plus passcode is
1774171. The Company has also posted presentation slides and
additional supplemental financial information, which are available
now on Utz’s Investor Relations website.
A replay will be archived online and is also available
telephonically approximately two hours after the call concludes
through Thursday, August 17, 2023, by dialing 1-800-770-2030, and
entering the Event Plus passcode 1774171.
About Utz Brands, Inc.
Utz Brands, Inc. (NYSE: UTZ) manufactures a diverse portfolio of
savory snacks through popular brands including Utz®, On The Border®
Chips & Dips, Golden Flake®, Zapp’s®, Good Health®, Boulder
Canyon®, Hawaiian Brand®, and TORTIYAHS!®, among others.
After a century with strong family heritage, Utz continues to
have a passion for exciting and delighting consumers with delicious
snack foods made from top-quality ingredients. Utz’s products are
distributed nationally through grocery, mass merchandisers, club,
convenience, drug, and other channels. Based in Hanover,
Pennsylvania, Utz has multiple manufacturing facilities located
across the U.S. to serve our growing customer base. For more
information, please visit www.utzsnacks.com or call
1‐800‐FOR‐SNAX.
Investors and others should note that Utz announces material
financial information to its investors using its investor relations
website (https://investors.utzsnacks.com/investors/default.aspx),
U.S. Securities and Exchange Commission (the “Commission”) filings,
press releases, public conference calls, and webcasts. Utz uses
these channels, as well as social media, to communicate with our
stockholders and the public about the Company, the Company’s
products and other Company information. It is possible that the
information that Utz posts on social media could be deemed to be
material information. Therefore, Utz encourages investors, the
media, and others interested in the Company to review the
information posted on the social media channels listed on Utz’s
investor relations website.
Forward-Looking Statements
This press release includes certain statements made herein that
are not historical facts but are “forward-looking statements”
within the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, as amended. The
forward-looking statements generally are accompanied by or include,
without limitation, statements such as “will”, “expect”, “intends”,
“goal” or other similar words, phrases or expressions. These
forward-looking statements include future plans for the Company,
the estimated or anticipated future results and benefits of the
Company’s future plans and operations, future capital structure,
future opportunities for the Company, statements regarding the
Company’s projected balance sheet and liabilities, including net
leverage, and other statements that are not historical facts. These
statements are based on the current expectations of the Company’s
management and are not predictions of actual performance. These
statements are subject to a number of risks and uncertainties and
the Company’s business and actual results may differ materially.
Factors that may cause such differences include, but are not
limited to: the risk that the Company’s gross profit margins may be
adversely impacted by a variety of factors, including variations in
raw materials pricing, retail customer requirements and mix, sales
velocities and required promotional support; changes in consumers’
loyalty to the Company’s brands due to factors beyond the Company’s
control; changes in demand for the Company’s products affected by
changes in consumer preferences and tastes or if the Company is
unable to innovate or market its products effectively; costs
associated with building brand loyalty and interest in the
Company’s products, which may be affected by actions by the
Company’s competitors’ that result in the Company’s products not
suitably differentiated from the products of their competitors;
fluctuations in results of operations of the Company from quarter
to quarter because of changes in promotional activities; the
possibility that the Company may be adversely affected by other
economic, business or competitive factors; the risk that recently
completed business combinations and other acquisitions recently
completed by the Company (collectively, the “Business
Combinations”) disrupt plans and operations; the ability to
recognize the anticipated benefits of such Business Combinations,
which may be affected by, among other things, competition and the
ability of the Company to grow and manage growth profitably and
retain its key employees; the outcome of any legal proceedings that
may be instituted against the Company following the consummation of
such Business Combinations; changes in applicable law or
regulations; costs related to the Business Combinations; the
ability of the Company to maintain the listing of the Company’s
Class A Common Stock on the New York Stock Exchange; the inability
of the Company to develop and maintain effective internal controls;
and other risks and uncertainties set forth in the section entitled
“Risk Factors” and “Forward-Looking Statements” in the Company’s
Annual Report on Form 10-K filed with the Commission, for the
fiscal year ended January 1, 2023 and other reports filed by the
Company with the Commission. In addition, forward-looking
statements provide the Company’s expectations, plans or forecasts
of future events and views as of the date of this communication.
These forward-looking statements should not be relied upon as
representing the Company’s assessments as of any date subsequent to
the date of this communication. The Company cautions investors not
to place undue reliance upon any forward-looking statements, which
speak only as of the date made. The Company does not undertake or
accept any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements to reflect
any change in its expectations or any change in events, conditions
or circumstances on which any such statement is based, except as
otherwise required by law.
Non-GAAP Financial Measures:
Utz uses non-GAAP financial information and believes it is
useful to investors as it provides additional information to
facilitate comparisons of historical operating results, identify
trends in our underlying operating results and provide additional
insight and transparency on how we evaluate the business. We use
non-GAAP financial measures to budget, make operating and strategic
decisions, and evaluate our performance. These non-GAAP financial
measures do not represent financial performance in accordance U.S.,
generally accepted accounted principles (“GAAP”) and may exclude
items that are significant in understanding and assessing financial
results. Therefore, these measures should not be considered in
isolation or as an alternative to net income, cash flows from
operations or other measures of profitability, liquidity or
performance under GAAP. You should be aware that the presentation
of these measures may not be comparable to similarly titled
measures used by other companies.
Management believes that non-GAAP financial measures should be
considered as supplements to the GAAP reported measures, should not
be considered replacements for, or superior to, the GAAP measures
and may not be comparable to similarly named measures used by other
companies. We believe that these non-GAAP measures of financial
results provide useful information to investors regarding certain
financial and business trends relating to the financial condition
and results of operations of the Company to date and that the
presentation of non-GAAP financial measures is useful to investors
in the evaluation of our operating performance compared to other
companies in the salty snack industry, as similar measures are
commonly used by the companies in this industry. These non-GAAP
financial measures are subject to inherent limitations as they
reflect the exercise of judgments by management about which expense
and income are excluded or included in determining these non-GAAP
financial measures. The non-GAAP financial measures are not
recognized in accordance with GAAP and should not be viewed as an
alternative to GAAP measures of performance.
Utz uses the following non-GAAP financial measures in its
financial communications, and in the future could use others:
- Organic Net Sales
- Adjusted Gross Profit
- Adjusted Gross Profit as % of Net Sales (Adjusted Gross Profit
Margin)
- Adjusted Selling, Distribution, and Administrative Expense
- Adjusted Selling, Distribution, and Administrative Expense as %
of Net Sales
- Adjusted Net Income
- Adjusted Earnings Per Share
- EBITDA
- Adjusted EBITDA
- Adjusted EBITDA as % of Net Sales (Adjusted EBITDA Margin)
- Normalized Adjusted EBITDA
- Net Leverage Ratio
Organic Net Sales is defined
as net sales excluding the impact of acquisitions and excluding the
impact of IO route conversions.
Adjusted Gross Profit
represents Gross Profit excluding Depreciation and Amortization
expense, a non-cash item. In addition, Adjusted Gross Profit
excludes the impact of costs that fall within the categories of
non-cash adjustments and non-recurring items such as those related
to stock-based compensation, hedging and purchase commitments
adjustments, asset impairments, acquisition, and integration costs,
business transformation initiatives, and financing-related costs.
Adjusted Gross Profit is one of the key performance indicators that
our management uses to evaluate operating performance. We also
report Adjusted Gross Profit as a percentage of Net Sales as an
additional measure for investors to evaluate our Adjusted Gross
Profit margins on Net Sales.
Adjusted Selling, Distribution, and
Administrative Expense is defined as all Selling,
Distribution, and Administrative expense excluding Depreciation and
Amortization expense, a non- cash item. In addition, Adjusted
Selling, Distribution, and Administrative Expenses exclude the
impact of costs that fall within the categories of non-cash
adjustments and non-recurring items such as those related to
stock-based compensation, hedging and purchase commitments
adjustments, asset impairments, acquisition and integration costs,
business transformation initiatives, and financing-related costs.
We also report Adjusted Selling, Distribution, and Administrative
Expense as a percentage of Net Sales as an additional measure for
investors to evaluate our Adjusted Selling, Distribution, and
Administrative margin on Net Sales.
Adjusted Net Income is
defined as Net Income excluding the additional Depreciation and
Amortization expense, a non-cash item, related to the Business
Combination with Collier Creek Holdings and the acquisitions of
Kennedy Endeavors, Kitchen Cooked, Inventure, Golden Flake, Truco
Enterprises, R.W. Garcia and Festida. In addition, Adjusted Net
Income is also adjusted to exclude deferred financing fees,
interest income, and expense relating to IO loans and certain
non-cash items, such as those related to stock-based compensation,
hedging, and purchase commitments adjustments, asset impairments,
acquisition and integration costs, business transformation
initiatives, remeasurement of warrant liabilities and
financing-related costs. Lastly, Adjusted Net Income normalizes the
income tax provision to account for the above-mentioned
adjustments.
Adjusted Earnings Per Share
is defined as Adjusted Net Income (as defined, herein) divided by
the weighted average shares outstanding for each period on a fully
diluted basis, assuming the Private Placement Warrants are net
settled and the Shares of Class V Common Stock held by Continuing
Members is converted to Class A Common Stock.
EBITDA is defined as Net
Income before Interest, Income Taxes, and Depreciation and
Amortization.
Adjusted EBITDA is defined
as EBITDA further adjusted to exclude certain non-cash items, such
as stock-based compensation, hedging and purchase commitments
adjustments, and asset impairments; acquisition and integration
costs; business transformation initiatives; and financing-related
costs. Adjusted EBITDA is one of the key performance indicators we
use in evaluating our operating performance and in making
financial, operating, and planning decisions. We believe Adjusted
EBITDA is useful to the users of this release and financial
information contained in the release in the evaluation of Utz’s
operating performance compared to other companies in the salty
snack industry, as similar measures are commonly used by companies
in this industry. We have historically reported an Adjusted EBITDA
metric to investors and banks for covenant compliance. We also
provide in this release, Adjusted EBITDA as a percentage of Net
Sales, as an additional measure for readers to evaluate our
Adjusted EBITDA margins on Net Sales.
Normalized Adjusted EBITDA
is defined as Adjusted EBITDA after giving effect to
pre-acquisition Adjusted EBITDA of the Festida Foods and R.W.
Garcia acquisitions, and the buyout of Clem and J&D Snacks.
Net Leverage Ratio is
defined as Normalized Adjusted EBITDA divided by Net Debt. Net Debt
is defined as Gross Debt less Cash and Cash Equivalents.
Management believes that the non-GAAP financial measures are
meaningful to investors because they increase transparency and
assist investors to understand and analyze our ongoing operational
performance. The financial measures are shown as supplemental
disclosures in this release because they are widely used by the
investment community for analysis and comparative evaluation. They
also provide additional metrics to evaluate the Company’s
operations and, when considered with both the GAAP results and the
reconciliation to the most comparable GAAP measures, provide a more
complete understanding of the Company’s business than could be
obtained absent this disclosure. The non-GAAP measures are not and
should not be considered an alternative to the most comparable GAAP
measures or any other figure calculated in accordance with GAAP, or
as an indicator of operating performance. The Company’s calculation
of the non-GAAP financial measures may differ from methods used by
other companies. Management believes that the non-GAAP measures are
important to have an understanding of the Company’s overall
operating results in the periods presented. The non-GAAP financial
measures are not recognized in accordance with GAAP and should not
be viewed as an alternative to GAAP measures of performance. As new
events or circumstances arise, these definitions could change. When
the definitions change, we will provide the updated definitions and
present the related non-GAAP historical results on a comparable
basis.
Utz Brands, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
For the thirteen weeks ended July 2, 2023
and July 3, 2022
(In thousands, except share
information)
(Unaudited)
(in thousands)
Thirteen weeks ended July 2,
2023
Thirteen weeks ended July 3,
2022
Net sales
$
362,853
$
350,147
Cost of goods sold
245,460
238,618
Gross profit
117,393
111,529
Selling, distribution, and
administrative expenses
Selling and distribution
66,869
68,796
Administrative
47,584
38,816
Total selling, distribution, and
administrative expenses
114,453
107,612
(Loss) gain on sale of assets,
net
(279
)
1,375
Income from operations
2,661
5,292
Other (expense) income
Interest expense
(15,019
)
(10,727
)
Other income (expense)
272
(645
)
Gain on remeasurement of warrant
liability
2,808
5,760
Other (expense) income, net
(11,939
)
(5,612
)
Loss before taxes
(9,278
)
(320
)
Income tax benefit
(725
)
(2,865
)
Net (loss) income
(8,553
)
2,545
Net loss attributable to noncontrolling
interest
4,429
634
Net (loss) income attributable to
controlling interest
$
(4,124
)
$
3,179
Earnings per Class A Common stock: (in
dollars)
Basic
$
(0.05
)
$
0.04
Diluted
$
(0.05
)
$
0.04
Weighted-average shares of Class A
Common stock outstanding
Basic
81,063,457
80,171,174
Diluted
81,063,457
81,510,936
Net (loss) income
$
(8,553
)
$
2,545
Other comprehensive income:
Change in fair value of interest rate
swap
9,572
3,011
Comprehensive income
1,019
5,556
Net comprehensive (income) loss
attributable to noncontrolling interest
383
(647
)
Net comprehensive income attributable to
controlling interest
$
1,402
$
4,909
Utz Brands, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
For the twenty-six weeks ended July 2, 2023
and July 3, 2022
(In thousands, except share
information)
(Unaudited)
(in thousands)
Twenty-six weeks ended July 2,
2023
Twenty-six weeks ended July 3,
2022
Net sales
$
714,286
$
690,914
Cost of goods sold
492,397
475,578
Gross profit
221,889
215,336
Selling, distribution, and
administrative expenses
Selling and distribution
131,915
156,906
Administrative
88,624
77,367
Total selling, distribution, and
administrative expenses
220,539
234,273
Gain on sale of assets, net
(787
)
1,742
(Loss) income from operations
563
(17,195
)
Other (expense) income
Interest expense
(29,397
)
(19,830
)
Other income (expense)
1,887
(125
)
Gain on remeasurement of warrant
liability
576
7,704
Other (expense) income, net
(26,934
)
(12,251
)
Loss before taxes
(26,371
)
(29,446
)
Income tax benefit
(3,336
)
(93
)
Net loss
(23,035
)
(29,353
)
Net loss attributable to noncontrolling
interest
9,784
14,962
Net loss attributable to controlling
interest
$
(13,251
)
$
(14,391
)
Loss per Class A Common stock: (in
dollars)
Basic
$
(0.16
)
$
(0.18
)
Diluted
$
(0.16
)
$
(0.18
)
Weighted-average shares of Class A
Common stock outstanding
Basic
81,020,732
79,371,789
Diluted
81,020,732
79,371,789
Net loss
$
(23,035
)
$
(29,353
)
Other comprehensive income:
Change in fair value of interest rate
swap
(753
)
30,820
Comprehensive (loss) income
(23,788
)
1,467
Net comprehensive loss attributable to
noncontrolling interest
10,105
1,715
Net comprehensive (loss) income
attributable to controlling interest
$
(13,683
)
$
3,182
Utz Brands, Inc.
CONSOLIDATED BALANCE SHEETS
July 2, 2023 and January 1, 2023
(In thousands)
As of July 2,
2023
As of January 1, 2023
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
73,657
$
72,930
Accounts receivable, less allowance of
$2,669 and $1,815, respectively
140,977
136,985
Inventories
122,386
118,006
Prepaid expenses and other assets
40,090
34,991
Current portion of notes receivable
5,745
9,274
Total current assets
382,855
372,186
Non-current Assets
Property, plant and equipment, net
345,664
345,198
Goodwill
915,295
915,295
Intangible assets, net
1,081,231
1,099,565
Non-current portion of notes
receivable
13,975
12,794
Other assets
102,064
95,328
Total non-current assets
2,458,229
2,468,180
Total assets
$
2,841,084
$
2,840,366
LIABILITIES AND EQUITY
Current Liabilities
Current portion of term debt
$
19,290
$
18,472
Current portion of other notes payable
8,584
12,589
Accounts payable
119,597
114,360
Accrued expenses and other
63,423
92,012
Total current liabilities
210,894
237,433
Non-current portion of term debt and
revolving credit facility
947,700
893,335
Non-current portion of other notes
payable
21,173
20,339
Non-current accrued expenses and other
73,407
67,269
Non-current warrant liability
44,928
45,504
Deferred tax liability
122,798
124,802
Total non-current liabilities
1,210,006
1,151,249
Total liabilities
1,420,900
1,388,682
Commitments and Contingencies
Equity
Shares of Class A Common Stock, $0.0001
par value; 1,000,000,000 shares authorized; 81,141,417 and
80,882,334 shares issued and outstanding as of July 2, 2023 and
January 1, 2023, respectively
8
8
Shares of Class V Common Stock, $0.0001
par value; 61,249,000 shares authorized; 59,349,000 shares issued
and outstanding as of July 2, 2023 and January 1, 2023
6
6
Additional paid-in capital
935,269
926,919
Accumulated deficit
(277,111
)
(254,564
)
Accumulated other comprehensive income
30,345
30,777
Total stockholders' equity
688,517
703,146
Noncontrolling interest
731,667
748,538
Total equity
1,420,184
1,451,684
Total liabilities and equity
$
2,841,084
$
2,840,366
Utz Brands, Inc.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
For the twenty-six weeks ended July 2, 2023
and July 3, 2022
(In thousands)
(Unaudited)
Twenty-six weeks ended July 2,
2023
Twenty-six weeks ended July 3,
2022
Cash flows from operating
activities
Net loss
$
(23,035
)
$
(29,353
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Impairment and other charges
9,548
3,319
Depreciation and amortization
40,405
44,564
Gain on remeasurement of warrant
liability
(576
)
(7,704
)
Loss (gain) on sale of assets
787
(1,742
)
Share-based compensation
8,939
5,779
Deferred taxes
(2,003
)
(977
)
Deferred financing costs
451
703
Changes in assets and liabilities:
Accounts receivable, net
(3,992
)
(20,673
)
Inventories
(4,379
)
(20,029
)
Prepaid expenses and other assets
(11,687
)
(5,415
)
Accounts payable and accrued expenses and
other
(18,773
)
5,260
Net cash used in operating activities
(4,315
)
(26,268
)
Cash flows from investing
activities
Acquisitions, net of cash acquired
—
(75
)
Purchases of property and equipment
(30,158
)
(60,278
)
Proceeds from sale of property and
equipment
959
2,551
Proceeds from sale of routes
12,446
12,383
Proceeds from the sale of IO notes
2,161
5,017
Proceeds from insurance claims for capital
investments
—
2,000
Notes receivable, net
(16,191
)
(8,849
)
Net cash used in investing activities
(30,783
)
(47,251
)
Cash flows from financing
activities
Line of credit borrowings, net
61,000
29,824
Borrowings on term debt and notes
payable
3,246
28,873
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
)
Distribution to noncontrolling
interest
(6,766
)
(6,410
)
Net cash provided by financing
activities
35,825
51,754
Net increase (decrease) in cash and cash
equivalents
727
(21,765
)
Cash and cash equivalents at beginning
of period
72,930
41,898
Cash and cash equivalents at end of
period
$
73,657
$
20,133
Reconciliation of
Non-GAAP Financial Measures to Reported Financial
Measures
Net Sales and Organic Net Sales
13-Weeks Ended
26-Weeks Ended
(dollars in millions)
July 2, 2023
July 3, 2022
Change
July 2, 2023
July 3, 2022
Change
Net Sales as Reported
$
362.9
$
350.1
3.6
%
$
714.3
$
690.9
3.4
%
Impact of Acquisitions
—
—
—
—
Impact of IO Conversions
2.3
—
5.3
—
Organic Net Sales
$
365.2
$
350.1
4.3
%
$
719.6
$
690.9
4.2
(1)
Organic Net Sales excludes the Impact of
Acquisitions and the Impact of IO Conversions that took place after
Q2 2022.
Gross Profit and Adjusted Gross Profit
13-Weeks Ended
26-Weeks Ended
(dollars in millions)
July 2, 2023
July 3, 2022
July 2, 2023
July 3, 2022
Gross Profit
$
117.4
$
111.5
$
221.9
$
215.3
Depreciation and Amortization
9.0
10.9
17.6
21.5
Non-Cash, Non-recurring adjustments
0.5
3.6
8.4
4.9
Adjusted Gross Profit
$
126.9
$
126.0
$
247.9
$
241.7
Adjusted Gross Profit as a % of Net
Sales
35.0
%
36.0
%
34.7
%
35.0
%
Adjusted Selling, Distribution, and Administrative
Expense
13-Weeks Ended
26-Weeks Ended
(dollars in millions)
July 2, 2023
July 3, 2022
July 2, 2023
July 3, 2022
Selling, Distribution, and
Administrative Expense - Incl Depreciation and Amortization
$
114.5
$
107.6
$
220.5
$
234.3
Depreciation and Amortization in SD&A
Expense
(11.3
)
(11.5
)
(22.8
)
(23.1
)
Non-Cash, and/or Non-recurring
Adjustments
(21.5
)
(12.3
)
(35.5
)
(48.3
)
Adjusted Selling, Distribution, and
Administrative Expense
$
81.7
$
83.8
$
162.2
$
162.9
Adjusted SD&A Expense as a % of Net
Sales
22.5
%
23.9
%
22.7
%
23.6
%
Adjusted Net Income
13-Weeks Ended
26-Weeks Ended
(dollars in millions, except per share
data)
July 2, 2023
July 3, 2022
July 2, 2023
July 3, 2022
Net Income (Loss)
$
(8.6
)
$
2.5
$
(23.0
)
$
(29.4
)
Income Tax (Benefit) Expense
(0.7
)
(2.9
)
(3.3
)
(0.1
)
(Loss) Income Before Taxes
(9.3
)
(0.4
)
(26.3
)
(29.5
)
Deferred Financing Fees
0.5
0.4
0.5
0.7
Acquisition Step-Up Depreciation and
Amortization
11.7
13.2
23.6
26.4
Certain Non-Cash Adjustments
8.5
4.8
17.7
8.3
Acquisition and Integration
3.7
7.2
7.4
36.0
Business and Transformation
Initiatives
10.3
3.6
18.5
7.9
Financing-Related Costs
—
0.1
0.1
0.2
(Gain) on Remeasurement of Warrant
Liability
(2.8
)
(5.8
)
(0.6
)
(7.7
)
Other Non-Cash and/or Non-Recurring
Adjustments
31.9
23.5
67.2
71.8
Adjusted Earnings before Taxes
22.6
23.1
40.9
42.3
Taxes on Earnings as Reported
0.7
2.9
3.3
0.1
Income Tax Adjustments(1)
(4.5
)
(7.6
)
(10.4
)
(8.7
)
Adjusted Taxes on Earnings
(3.8
)
(4.7
)
(7.1
)
(8.6
)
Adjusted Net Income
$
18.8
$
18.4
$
33.8
$
33.7
Average Weighted Basic Shares
Outstanding
140.4
139.5
140.4
138.7
Fully Diluted Shares on an As-Converted
Basis
143.2
140.9
143.0
140.4
Adjusted Earnings Per Share
$
0.13
$
0.13
$
0.24
$
0.24
(1) Income Tax Rate Adjustment calculated
as (Loss) Income before taxes plus (i) Acquisition, Step-Up
Depreciation and Amortization and (ii) Other Non-Cash and/or
Non-Recurring Adjustments, multiplied by a normalized GAAP
effective tax rate, minus the actual tax provision recorded in the
Consolidated Statement of Operations and Comprehensive Loss. The
normalized GAAP effective tax rate excludes one-time items such as
the impact of tax rate changes on deferred taxes and changes in
valuation allowances.
Depreciation & Amortization
13-Weeks Ended
26-Weeks Ended
(dollars in millions)
July 2, 2023
July 3, 2022
July 2, 2023
July 3, 2022
Core D&A - Non-Acquisition-related
included in Gross Profit
$
6.3
$
6.8
$
12.1
$
13.3
Step-Up D&A - Transaction-related
included in Gross Profit
2.7
4.1
5.5
8.2
Depreciation & Amortization -
included in Gross Profit
9.0
10.9
17.6
21.5
Core D&A - Non-Acquisition-related
included in SD&A Expense
2.3
2.4
4.7
4.9
Step-Up D&A - Transaction-related
included in SD&A Expense
9.0
9.1
18.1
18.2
Depreciation & Amortization -
included in SD&A Expense
11.3
11.5
22.8
23.1
Depreciation & Amortization -
Total
$
20.3
$
22.4
$
40.4
$
44.6
Core Depreciation and Amortization
$
8.6
$
9.2
$
16.8
$
18.2
Step-Up Depreciation and Amortization
11.7
13.2
23.6
26.4
Total Depreciation and
Amortization
$
20.3
$
22.4
$
40.4
$
44.6
EBITDA and Adjusted EBITDA
13-Weeks Ended
26-Weeks Ended
(dollars in millions)
July 2, 2023
July 3, 2022
July 2, 2023
July 3, 2022
Net Income (Loss)
$
(8.6
)
$
2.5
$
(23.0
)
$
(29.4
)
Plus non-GAAP adjustments:
Income Tax (Benefit) Expense
(0.7
)
(2.9
)
(3.3
)
(0.1
)
Depreciation and Amortization
20.3
22.4
40.4
44.6
Interest Expense, Net
15.0
10.7
29.4
19.8
Interest Income from IO loans(1)
(0.5
)
(0.4
)
(0.9
)
(0.9
)
EBITDA
25.5
32.3
42.6
34.0
Certain Non-Cash Adjustments(2)
8.5
4.8
17.7
8.3
Acquisition and Integration(3)
3.7
7.2
7.4
36.0
Business Transformation Initiatives(4)
10.3
3.6
18.5
7.9
Financing-Related Costs(5)
—
0.1
0.1
0.2
(Gain) loss on Remeasurement of Warrant
Liabilities(6)
(2.8
)
(5.8
)
(0.6
)
(7.7
)
Adjusted EBITDA
$
45.2
$
42.2
$
85.7
$
78.7
Net income (loss) as a % of Net
Sales
(2.4
)%
0.7
%
(3.2
)%
(4.3
)%
Adjusted EBITDA as a % of Net
Sales
12.5
%
12.1
%
12.0
%
11.4
%
(1)
Interest Income from IO loans refers to Interest Income that we
earn from IO notes receivable that have resulted from our
initiatives to transition from RSP distribution to IO distribution
("Business Transformation Initiatives"). There is a notes payable
recorded that mirrors most of the IO notes receivable, and the
interest expense associated with the notes payable is part of the
Interest Expense, Net adjustment.
(2)
Certain Non-Cash Adjustments are comprised
primarily of the following:
Incentive programs – The Company incurred
$3.4 million and $3.3 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 July 2, 2023 and July 3, 2022, respectively.
The Company incurred $8.1 million and $4.8 million of share-based
compensation, that was awarded to associates and directors, and
compensation expense associated with the employee stock purchase
plan for the twenty-six weeks ended July 2, 2023 and July 3, 2022,
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 related to fixed
assets. During the twenty-six weeks ended July 2, 2023, the Company
recorded impairments totaling $9.6 million. During the twenty-six
weeks ended July 3, 2022, the Company recorded an impairment of
$2.0 million related to the termination of a distribution
agreements.
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 commitment related
unrealized gains and losses. The adjustment related to Purchase
Commitment and Other non-cash adjustment (gains) losses were $(2.5)
million and $1.5 million for the thirteen weeks ended July 2, 2023
and July 3, 2022, respectively. The twenty-six weeks ended July 2,
2023 and July 3, 2022 also included $0.0 million and $1.5 million
of unrealized purchase commitment gains, respectively.
(3)
Adjustment for Acquisition and Integration
Costs – This is comprised of consulting, transaction services, and
legal fees incurred for acquisitions and certain potential
acquisitions, in addition to expenses associated with integrating
recent acquisitions. Such expenses were $3.4 million and $8.3
million for the thirteen and twenty-six weeks ended July 2, 2023,
respectively, as well as $0.3 million of expense and $0.9 million
of income for the change of the Tax Receivable Agreement Liability
associated with the Business Combination for the thirteen and
twenty-six weeks ended July 2, 2023, respectively. Charges related
to the buyout of multiple distributors, which was accounted for as
a contract termination resulted in expense of $23.0 million for the
twenty-six week period ended July 3, 2022. Additionally, other
acquisitions and integration cost of $6.2 million and $12.0 million
were recorded for the thirteen and twenty-six weeks ended July 3,
2022, respectively, also included are adjustment of $1.0 million
and $1.0 million of expense for the increase of the Tax Receivable
Agreement Liability associated with the Business Combination for
the thirteen and twenty-six week period ended July 3, 2022,
respectively.
(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 transition
costs, fall into this category. The Company incurred such costs of
$5.6 million and $3.6 million for the thirteen weeks ended July 2,
2023 and July 3, 2022, respectively, and $13.8 million and $7.9
million for the twenty-six weeks ended July 2, 2023 and July 3,
2022, 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
facilities 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.
Normalized Adjusted EBITDA
FY 2022
FY 2023
(dollars in millions)
Q1
Q2
Q3
Q4
FY 2022
Q1
Q2
TTM
Adjusted EBITDA
$ 36.5
$ 42.2
$ 47.7
$ 44.1
$ 170.5
$ 40.4
$ 45.2
$ 177.4
Pre-Acquisition Adjusted EBITDA(1)
0.2
—
—
—
0.2
—
—
—
Normalized Adjusted EBITDA
$ 36.7
$ 42.2
$ 47.7
$ 44.1
$ 170.7
$ 40.4
$ 45.2
$ 177.4
(1)
Pre-Acquisition Adjusted EBITDA - This
adjustment represents the Adjusted EBITDA of acquired companies,
prior to the acquisition date, as well as from the buyout date of
Clem and J&D Snacks.
Net Debt and Leverage Ratio
(dollars in millions)
As of July 2, 2023
Term Loan
$
775.3
Real Estate Loan
86.4
ABL Facility
61.0
Capital Leases(1)
64.1
Deferred Purchase Price
0.2
Gross Debt(2)
987.0
Cash and Cash Equivalents
73.7
Total Net Debt
$
913.3
Last 52-Weeks Normalized Adjusted
EBITDA
$
177.4
Net Leverage Ratio(3)
5.1x
(1)
Capital Leases include equipment term
loans and excludes the impact of step-up accounting.
(2)
Excludes amounts related to guarantees on
IO loans which are collateralized by routes. We have the ability to
recover substantially all of the outstanding loan value in the
event of a default scenario, which historically has been
uncommon.
(3)
Based on Normalized Adjusted EBITDA of
$177.4 million.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230810620896/en/
Investors Kevin Powers Utz Brands, Inc.
kpowers@utzsnacks.com
Media Kevin Brick Utz Brands, Inc.
kbrick@utzsnacks.com
Utz Brands (NYSE:UTZ)
Historical Stock Chart
From Jun 2024 to Jul 2024
Utz Brands (NYSE:UTZ)
Historical Stock Chart
From Jul 2023 to Jul 2024