- Disposition of two manufacturing facilities to Our Home™
- Total cash proceeds received of $18.5 million
- Net cash proceeds to be deployed to reduce long-term debt and
add cash to balance sheet
- Our Home™ to offer employment to Utz associates as part of
transition
- Completed repricing of $630 million Term Loan resulting in a
lower interest rate
Utz Brands, Inc. (NYSE: UTZ) (“Utz” or the “Company”), a leading
U.S. manufacturer of branded salty snacks, today announced that
certain of its subsidiaries including Utz Quality Foods, LLC have
entered into a definitive agreement for the sale of certain assets
to Our Home™ (“Our Home”). Under the agreement, affiliates of Our
Home have agreed to purchase the Company’s Berlin, PA, and
Fitchburg, MA manufacturing facilities and certain related assets.
This follows a separate transaction in February 2024, in which Our
Home purchased three manufacturing facilities and two brands from
Utz.
Following the closing of the transactions, Utz and Our Home will
operate under a Transition Services Agreement for up to 12 months.
The total consideration for the transactions is $18.5 million,
subject to customary adjustments, and the transactions are expected
to close on April 22, 2024. In addition, post-closing, Our Home
will co-manufacture certain Utz products for a period of time under
the terms of a co-manufacturing agreement. Our Home plans to
continue to operate and grow the manufacturing facilities under its
platform while offering employment to Utz associates working in
those facilities as part of the transition.
Howard Friedman, Chief Executive Officer of Utz, said, “This
transaction will allow us to focus on the next phase of our
optimization efforts as we invest in our remaining facilities and
continue to deliver on our value creation initiatives. We now
operate eight primary manufacturing facilities, down from 16 in
2021, allowing us to allocate more volume to our larger
manufacturing facilities and better leverage our fixed costs. This
is all consistent with the supply chain transformation strategy we
outlined at our 2023 Investor Day.”
Aaron Greenwald, Founder and Chief Executive Officer of Our
Home, said, “We are thrilled to announce this acquisition from Utz
as it further scales Our Home’s snacking platform and manufacturing
footprint, providing us the ability to manufacture potato chips,
puffed snacks and popcorn across our better-for-you brands.”
Financial Benefits of the Plant Disposition Transactions and
Advisors
The transactions are expected to provide approximately $14
million in after-tax net proceeds, which Utz will use to pay down
its long-term debt (~$9M) and add cash to the balance sheet (~$5M).
The debt reduction is expected to modestly lower interest expense
in fiscal 2024 based on the Company’s current outlook for interest
rates.
The Company expects the impact of the transactions to be
accretive to its Adjusted Earnings Per Share on a full-year basis
in 2024, reflecting the benefit of the transition services
agreement and the use of net proceeds from the sale to pay down
long-term debt and reduce interest expense. Relative to the update
we provided on our fiscal year 2023 earnings call in February 2024,
the Company does not expect this transaction to materially change
the pacing of targeted supply chain network optimization cost
savings of approximately $45 million to be achieved from 2024
through 2026.
RBC Capital Markets LLC is serving as exclusive financial
advisor and Cozen O’Connor P.C. is serving as legal advisor to Utz
Brands, Inc. Winston & Strawn LLP is serving as legal advisor
to Our Home.
Term Loan Repricing
Utz announced today that it has successfully completed a
repricing of its $630 million Term Loan (“Term Loan”) due in
January 2028. The repricing reduces the applicable interest rate on
the Term Loan by approximately 36 bps (assuming one-month SOFR)
from Term SOFR plus a credit spread adjustment plus 3.00% to Term
SOFR plus 2.75%. There are no changes to the maturity of the Term
Loan following this repricing and all other terms are substantially
unchanged. Under the amended terms of the Term Loan, the Company
estimates that the repricing of debt will produce cash interest
expense savings of approximately $2 million annually.
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®, 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 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.
About Our Home
Our Home is a leading, independent Better-For-You snack platform
that provides delicious, wholesome snacks at a great value. The
company strives to create nourishing snacks that offer a warm and
welcoming sense of familiarity to communities, catering to every
occasion and satisfying various cravings. This commitment is
demonstrated through the company's ownership of production and
manufacturing facilities spanning all snack sub-categories, and a
portfolio of brands that includes Food Should Taste Good®,
Popchips®, Real Food From The Ground Up®, Good
Health®, R.W. Garcia® and YOU NEED THIS®.
For more information on Our Home, visit our-home.com.
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 with
generally accepted accounted principles in the United States
(“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 Adjusted Earnings Per Share, a non-GAAP financial
measure, in its financial communications, and in the future could
use others. “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. “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.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. The forward-looking
statements contained in this press release include, without
limitation, statements related to the planned sale of the Berlin,
PA and Fitchburg, MA manufacturing facilities and certain related
assets and the timing and financing thereof; the anticipated
interest expense savings from the repricing of the Term Loan; and
the expected impact of the planned transactions, including without
limitation, the expected impact on Utz’s overall market position,
the Company’s projected retail sales, net sales, Adjusted EBITDA
and Adjusted Earnings Per Share, included in this press release.
Utz’s actual results may differ from its expectations, estimates
and projections and consequently, you should not rely on these
forward-looking statements as predictions of future events. Words
such as “expect,” “estimate,” “project,” “budget,” “forecast,”
“anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,”
“believes,” “predicts,” “potential,” “continue,” and similar
expressions are intended to identify such forward-looking
statements. These forward-looking statements include, without
limitation, Utz’s expectations with respect to future performance.
These forward-looking statements involve significant risks and
uncertainties that could cause the actual results to differ
materially from the expected results. Most of these factors are
outside Utz’s control and are difficult to predict. Factors that
may cause such differences include, but are not limited to: whether
and when the closing conditions will be satisfied and whether and
when the transaction will close, whether and when Utz will be able
to realize the expected financial results and accretive effect of
the divestiture, and how customers, competitors, suppliers and
employees will react to the divestiture; the Company’s compliance
with forward-looking elements of the agreement, including but not
limited to, certain post-closing covenants related to the
transactions and the rights of Our Home to indemnification and
other remedies under the agreement in the event the Company fails
to comply with such covenants or otherwise breaches the agreement;
the inability of Utz to maintain the listing of Utz’s Class A
Common Stock on the New York Stock Exchange; the inability of Utz
to develop and maintain effective internal controls; the risk that
Utz’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 Utz’s control; changes in demand for
Utz’s products affected by changes in consumer preferences and
tastes or if Utz is unable to innovate or market its products
effectively; costs associated with building brand loyalty and
interest in Utz’s products, which may be affected by Utz’s
competitors’ actions that result in Utz’s products not suitably
differentiated from the products of competitors; fluctuations in
results of operations of Utz from quarter to quarter because of
changes in promotional activities; the possibility that Utz may be
adversely affected by other economic, business or competitive
factors; and other risks and uncertainties set forth in the section
entitled “Risk Factors” and “Forward-Looking Statements” in Utz’s
Annual Report on Form 10-K filed with the U.S. Securities and
Exchange Commission on February 29, 2024. There may be additional
risks that Utz considers immaterial or which are unknown. It is not
possible to predict or identify all such risks. Utz cautions that
the foregoing list of factors is not exclusive. Utz cautions
readers not to place undue reliance upon any forward-looking
statements, which speak only as of the date made. Utz 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20240418138018/en/
Investor Kevin Powers Utz Brands, Inc.
kpowers@utzsnacks.com
Media Kevin Brick Utz Brands, Inc.
kbrick@utzsnacks.com
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