Utz Brands, Inc. (NYSE: UTZ) (“Utz” or the “Company”), a leading
U.S. manufacturer of branded Salty Snacks and a small-cap value
Staples equity, today reported financial results for the Company’s
fiscal second quarter ended June 30, 2024.
2Q’24 Summary(1)
- Net Sales of $356.2 million
- Organic Net Sales increased 1.6%
- Gross Profit Margin expansion of 260bps
- Adjusted Gross Profit Margin expansion of 260bps
- Net Income of $25.4 million
- Adjusted EBITDA increased 10.0% to $49.7 million
- Earnings per share of $0.23
- Adjusted Earnings per share increased 46.2% to $0.19
(1) All comparisons for the
second quarter of 2024 are compared to the second quarter ended
July 2, 2023.
"I'm pleased with our continued strong momentum in the second
quarter, as we gained dollar, pound, and unit share in the Salty
Snack category for the third consecutive quarter. In addition, we
delivered our sixth consecutive quarter of year-over-year Adjusted
EBITDA Margin expansion, driven by strong Adjusted Gross Profit
Margin growth, and we increased Adjusted Earnings per Share by
46%," said Howard Friedman, Chief Executive Officer of Utz. "We
made necessary adjustments to our promotional activities during the
quarter to address consumer value expectations. Our accelerated
productivity cost savings provide us the flexibility to both
continue to expand our margins and increase investments behind our
brands to support our geographic expansion. We expect our growth
opportunities will drive strong volume growth in the second half of
the year."
Second Quarter 2024 Results
Second quarter net sales were $356.2 million compared to $362.9
million in the prior year period. The divestiture of the R.W.
Garcia® and Good Health® brands impacted net sales growth by
(3.3%), and the Company’s continued shift to independent operators
(IOs) and the resulting increase in sales discounts impacted net
sales growth by an estimated (0.1%). Organic Net Sales increased
1.6% led by increased volume/mix of 2.3% driven by strong growth of
the Company’s Power Brands, partially offset by lower net price
realization of (0.7%).
For the 13-week period ended June 30, 2024, the Company’s retail
sales, as measured by Circana MULO-C, increased 1.1% versus the
prior-year period led by volume growth of 3.2%. The Company’s total
Power Brands’ retail sales increased 1.7% versus the prior-year
period and the Company’s Power Four Brands of Utz®, On The Border®,
Zapp’s® and Boulder Canyon® increased 2.8%.
Gross profit margin of 35.0% expanded 260bps compared to 32.4%
in the prior year period. Adjusted Gross Profit Margin of 37.6%
also expanded 260bps compared to 35.0% in the prior year period as
the benefits from productivity and favorable sales volume/mix more
than offset supply chain cost inflation, investments to support the
Company’s productivity initiatives and lower pricing. The continued
shift to IOs impacted Adjusted Gross Profit Margin by approximately
10bps, but with offsetting benefits in Selling, Distribution, and
Administrative (SD&A) expense.
SD&A expenses were $104.6 million compared to $114.5 million
in the prior year period. Adjusted SD&A Expenses were $84.5
million compared to $81.7 million in the prior year period
primarily due to increased marketing spend, higher distribution
costs, and investments in capabilities. These expenses were
partially offset by productivity benefits.
The Company reported net income of $25.4 million compared to a
net loss of $(8.6) million in the prior year period. Adjusted Net
Income in the quarter increased 46.3% to $27.5 million compared to
$18.8 million in the prior year period. Adjusted Earnings per Share
increased 46.2% to $0.19 compared to $0.13 in the prior year
period. The Adjusted Earnings per share growth in the second
quarter was the result of operating earnings growth, lower core
depreciation and amortization expense, and lower interest expense
as a result of increased long-term debt repayment.
Adjusted EBITDA increased 10.0% to $49.7 million, or 14.0% as a
percentage of net sales, compared to $45.2 million, or 12.5% as a
percentage of net sales, in the prior year period. The Adjusted
EBITDA margin improvement was driven by Adjusted Gross Margin
expansion primarily due to the Company’s productivity programs.
Balance Sheet and Cash Flow Highlights
- As of June 30, 2024
- Total liquidity of $196.9 million, consisting of cash on hand
of $66.6 million and $130.3 million available under the Company’s
revolving credit facility.
- Net debt of $747.5 million resulting in a Net Leverage Ratio of
3.8x based on trailing twelve months Normalized Adjusted EBITDA of
$194.6 million.
- In April 2024, the Company:
- Used ~$9.0 million of net proceeds from its most recent plant
dispositions to pay down long-term debt and increased its cash
balance by ~$5.0 million resulting in a ~$14.0 million reduction of
net debt.
- Completed a repricing of its $630 million Term Loan which
reduced 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%.
- The Company estimates that the combination of the ~$9.0 million
debt paydown and the repricing of the Term Loam will result in cash
interest expense savings of ~$3.0 million annually.
- For the twenty-six weeks ended June 30, 2024
- Cash flow used in operations was $(0.2) million, which reflects
the seasonal use of working capital, and also includes an
approximately $30 million impact from the sale of Good Health® and
R.W. Garcia®, and the manufacturing facilities.
- Capital expenditures were $37.8 million, and dividend and
distributions paid were $18.9 million.
Fiscal Year 2024 Outlook
- The Company is modestly revising its outlook for Organic Net
Sales growth from ~3% or better to now ~3%. The revised outlook
is due to a more moderate growth outlook for the Salty Snack
Category. The Company continues to expect Organic Net Sales growth
driven by volume growth, fueled by increased marketing investments,
product innovation, already achieved distribution gains, and an
easier second half growth comparison. The Company’s outlook also
assumes net sales will be impacted by ~$45 million due to the sale
of the Good Health® and R.W. Garcia® brands.
- The Company is reaffirming its outlook for Adjusted EBITDA
growth of 5%-8% and assumes the estimated impact of the forgone
profit contribution from the brands divested in February 2024 are
mostly offset by accelerated cost savings and the transition
services agreement.
- The Company is raising its outlook for Adjusted Earnings per
Share growth from 23%-28%, to 28%-32%. The improved growth rate
expectation is the result of a more favorable effective tax rate
and lower core depreciation and amortization expense resulting from
the Company’s plant divestitures in April 2024.
The Company also expects:
- An effective tax rate (normalized GAAP basis tax expense, which
excludes one-time items) in the range of 17%-19% (previously
18%-20%);
- Interest expense of ~$47 million (unchanged);
- Capital expenditures in the range of $80-$90 million
(unchanged); and
- Net Leverage Ratio of ~3.6x (unchanged) at year-end fiscal
2024.
With respect to projected fiscal 2024 Organic Net Sales,
Adjusted EBITDA and Adjusted Earnings Per Share, 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 Organic Net Sales,
Adjusted EBITDA and Adjusted Earnings Per Share, respectively. 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 has also posted a pre-recorded management discussion
of its second quarter results to its website at
https://investors.utzsnacks.com. In addition, the Company will host
a live question and answer session with analysts at 8:00 a.m.
Eastern Time today. Please visit the “Events & Presentations”
section of Utz’s Investor Relations website at
https://investors.utzsnacks.com to access the live listen-only
webcast. Participants can also dial in over the phone by calling
1-888-596-4144. The Event Plus passcode is 3860587. The Company has
also posted presentation slides and additional supplemental
financial information, which are available now on Utz’s Investor
Relations website.
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, Zapp’s®, and Boulder Canyon®, among
others.
After a century with a 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 the Company’s website 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, 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, plans related to
transformation of the Company’s supply chain; the Company’s product
mix; the Company’s ability to reduce debt and the anticipated
interest expense savings from the repricing of the $630 million
Term Loan; the Company’s cost savings plans and the Company’s
logistics optimization efforts; the estimated or anticipated future
results and benefits of the Company’s plans and operations; the
effects of inflation or supply chain disruptions on the Company or
its business; the benefits of the Company’s productivity
initiatives, the effects of the Company’s marketing and innovation
initiatives, 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, including
changes in consumer spending due to factors such as increasing
household debt; 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,
particularly in the Company’s Expansion geographies; 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;
consolidation of key suppliers to the Company; inability of the
Company to adopt efficiencies into its manufacturing processes,
including automation and labor optimization, its network, including
through plant consolidation and lowest landed cost for shipping its
products, or its logistics operations; 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”) or dispositions
that disrupt plans and operations; the ability to recognize the
anticipated benefits of such Business Combinations or dispositions,
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 or dispositions; changes in applicable
law or regulations; costs related to the Business Combinations or
dispositions; 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 December 31, 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, identifies
trends in our underlying operating results, and provides 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 to 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, earnings per share 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 measures reported, 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. The Company’s calculation of the non-GAAP financial
measures may differ from methods used by other companies. We
believe that these non-GAAP financial measures 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 when considered with both the
GAAP results and the reconciliations to the most comparable GAAP
measures, 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. 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 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 impacts of acquisitions, divestitures
and 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 Margin 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 Expense 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.
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 are 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, 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 because the financial
information contained in the release can be used 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 also provide in this release,
Adjusted EBITDA as a percentage of Net Sales, as an additional
measure for readers to evaluate our Adjusted EBITDA Margin on Net
Sales.
Normalized Adjusted EBITDA
is defined as Adjusted EBITDA after giving effect to
pre-acquisition Adjusted EBITDA for certain acquisitions and
dispositions from time to time.
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.
Utz Brands, Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME
For the thirteen weeks ended
June 30, 2024 and July 2, 2023
(In thousands, except share
information)
(Unaudited)
(in thousands)
Thirteen weeks
ended June 30, 2024
Thirteen weeks
ended July 2, 2023
Net sales
$
356,190
$
362,853
Cost of goods sold
231,436
245,460
Gross profit
124,754
117,393
Selling, distribution, and
administrative expenses
Selling and distribution
73,780
66,869
Administrative
30,813
47,584
Total selling, distribution, and
administrative expenses
104,593
114,453
Gain (loss) on sale of assets,
net
2,373
(279
)
Income from operations
22,534
2,661
Other income (expense), net
Interest expense
(10,209
)
(15,019
)
Loss on debt extinguishment
(1,273
)
—
Other income
198
272
Gain on remeasurement of warrant
liability
12,888
2,808
Other income (expense), net
1,604
(11,939
)
Income (loss) before taxes
24,138
(9,278
)
Income tax benefit
(1,309
)
(725
)
Net income (loss)
25,447
(8,553
)
Net (income) loss attributable to
noncontrolling interest
(5,599
)
4,429
Net income (loss) attributable to
controlling interest
$
19,848
$
(4,124
)
Income (loss) per Class A Common stock:
(in dollars)
Basic
$
0.24
$
(0.05
)
Diluted
$
0.23
$
(0.05
)
Weighted-average shares of Class A
Common stock outstanding
Basic
81,457,014
81,063,457
Diluted
84,954,412
81,063,457
Net income (loss)
$
25,447
$
(8,553
)
Other comprehensive (loss)
income:
Change in fair value of interest rate
swap
(2,142
)
9,572
Comprehensive income
23,305
1,019
Net comprehensive (income) loss
attributable to noncontrolling interest
(4,696
)
383
Net comprehensive income attributable to
controlling interest
$
18,609
$
1,402
Utz Brands, Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME
For the twenty-six weeks ended
June 30, 2024 and July 2, 2023
(In thousands, except share
information)
(Unaudited)
(in thousands)
Twenty-six weeks
ended June 30, 2024
Twenty-six weeks
ended July 2, 2023
Net sales
$
702,713
$
714,286
Cost of goods sold
458,386
492,397
Gross profit
244,327
221,889
Selling, distribution, and
administrative expenses
Selling and distribution
147,446
131,915
Administrative
66,595
88,624
Total selling, distribution, and
administrative expenses
214,041
220,539
Gain (loss) on sale of assets,
net
1,903
(787
)
Income from operations
32,189
563
Other income (expense), net
Gain on sale of business
44,015
—
Interest expense
(24,040
)
(29,397
)
Loss on debt extinguishment
(1,273
)
—
Other income
1,108
1,887
Gain on remeasurement of warrant
liability
1,080
576
Other income (expense), net
20,890
(26,934
)
Income (loss) before taxes
53,079
(26,371
)
Income tax expense (benefit)
25,236
(3,336
)
Net income (loss)
27,843
(23,035
)
Net (income) loss attributable to
noncontrolling interest
(11,986
)
9,784
Net income (loss) attributable to
controlling interest
$
15,857
$
(13,251
)
Income (loss) per Class A Common stock:
(in dollars)
Basic
$
0.19
$
(0.16
)
Diluted
$
0.19
$
(0.16
)
Weighted-average shares of Class A
Common stock outstanding
Basic
81,423,240
81,020,732
Diluted
84,762,662
81,020,732
Net income (loss)
$
27,843
$
(23,035
)
Other comprehensive income
(loss):
Change in fair value of interest rate
swap
2,517
(753
)
Comprehensive income (loss)
30,360
(23,788
)
Net comprehensive (income) loss
attributable to noncontrolling interest
(13,048
)
10,105
Net comprehensive income (loss)
attributable to controlling interest
$
17,312
$
(13,683
)
Utz Brands, Inc.
CONSOLIDATED BALANCE
SHEETS
June 30, 2024 and December 31,
2023
(In thousands, except per
share information)
As of
June 30, 2024
As of
December 31, 2023
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
66,574
$
52,023
Accounts receivable, less allowance of
$3,077 and $2,933, respectively
137,962
135,130
Inventories
100,710
104,666
Prepaid expenses and other assets
44,539
30,997
Current portion of notes receivable
4,581
5,237
Total current assets
354,366
328,053
Non-current Assets
Assets held for sale
—
7,559
Property, plant and equipment, net
300,050
318,881
Goodwill
870,695
915,295
Intangible assets, net
1,012,447
1,063,413
Non-current portion of notes
receivable
9,968
12,413
Other assets
102,590
101,122
Total non-current assets
2,295,750
2,418,683
Total assets
$
2,650,116
$
2,746,736
LIABILITIES AND EQUITY
Current Liabilities
Current portion of term debt
$
12,034
$
21,086
Current portion of other notes payable
7,365
7,649
Accounts payable
121,793
124,361
Accrued expenses and other
68,263
77,590
Total current liabilities
209,455
230,686
Non-current portion of term debt and
revolving credit facility
785,539
878,511
Non-current portion of other notes
payable
17,291
19,174
Non-current accrued expenses and other
73,843
76,720
Non-current warrant liability
42,192
43,272
Deferred tax liability
116,068
114,690
Total non-current liabilities
1,034,933
1,132,367
Total liabilities
1,244,388
1,363,053
Commitments and Contingencies
Shares of Class A Common Stock, $0.0001
par value; 1,000,000,000 shares authorized; 81,530,122 and
81,187,977 shares issued and outstanding as of June 30, 2024 and
December 31, 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 June 30, 2024 and December 31, 2023
6
6
Additional paid-in capital
955,280
944,573
Accumulated deficit
(293,750
)
(298,049
)
Accumulated other comprehensive income
24,413
22,958
Total stockholders' equity
685,957
669,496
Noncontrolling interest
719,771
714,187
Total equity
1,405,728
1,383,683
Total liabilities and equity
$
2,650,116
$
2,746,736
Utz Brands, Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
For the twenty-six
weeks ended June 30, 2024 and July 2, 2023
(In thousands)
(Unaudited)
Twenty-six weeks
ended June 30, 2024
Twenty-six weeks
ended July 2, 2023
Cash flows from operating
activities
Net income (loss)
$
27,843
$
(23,035
)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Impairment and other charges
—
9,548
Depreciation and amortization
35,883
40,405
Gain on sale of business
(44,015
)
—
Gain on remeasurement of warrant
liability
(1,080
)
(576
)
(Gain) loss on sale of assets
(1,903
)
787
Loss on debt extinguishment
1,273
—
Share-based compensation
9,174
8,939
Deferred taxes
6,445
(2,003
)
Deferred financing costs
2,509
451
Changes in assets and liabilities:
Accounts receivable, net
(9,628
)
(3,992
)
Inventories
(3,969
)
(4,379
)
Prepaid expenses and other assets
(15,140
)
(11,687
)
Accounts payable and accrued expenses and
other
(7,561
)
(18,773
)
Net cash used in operating activities
(169
)
(4,315
)
Cash flows from investing
activities
Purchases of property and equipment
(37,781
)
(30,158
)
Purchases of intangibles
(9,220
)
—
Proceeds from sale of property and
equipment
24,062
959
Proceeds from sale of business
167,500
—
Proceeds from sale of routes
13,669
12,446
Proceeds from the sale of IO notes
1,544
2,161
Notes receivable
(18,834
)
(16,191
)
Net cash provided by (used in) investing
activities
140,940
(30,783
)
Cash flows from financing
activities
Borrowings on line of credit
92,000
61,000
Repayments on line of credit
(47,191
)
—
Borrowings on term debt and notes
payable
16,618
3,246
Repayments on term debt and notes
payable
(166,608
)
(11,785
)
Payment of debt issuance cost
(733
)
—
Payments of tax withholding requirements
for employee stock awards
(1,397
)
(589
)
Dividends paid
(9,428
)
(9,281
)
Distribution to noncontrolling
interest
(9,481
)
(6,766
)
Net cash (used in) provided by financing
activities
(126,220
)
35,825
Net increase in cash and cash
equivalents
14,551
727
Cash and cash equivalents at beginning
of period
52,023
72,930
Cash and cash equivalents at end of
period
$
66,574
$
73,657
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)
June 30, 2024
July 2, 2023
Change
June 30, 2024
July 2, 2023
Change
Net Sales as Reported
$
356.2
$
362.9
(1.8
)%
$
702.7
$
714.3
(1.6
)%
Impact of Dispositions
—
(11.8
)
—
(20.3
)
Impact of IO Conversions
0.5
—
2.0
—
Organic Net Sales (1)
$
356.7
$
351.1
1.6
%
$
704.7
$
694.0
1.5
%
(1) Organic Net Sales excludes the Impact
of Dispositions and the Impact of IO Conversions that took place
after Q2 2023.
Gross Profit and Adjusted
Gross Profit
13-Weeks Ended
26-Weeks Ended
(dollars in millions)
June 30, 2024
July 2, 2023
June 30, 2024
July 2, 2023
Gross Profit
$
124.8
$
117.4
$
244.3
$
221.9
Gross Profit as a % of Net
Sales
35.0
%
32.4
%
34.8
%
31.1
%
Depreciation and Amortization
6.7
9.0
13.9
17.6
Non-Cash, Non-recurring
adjustments
2.6
0.5
4.6
8.4
Adjusted Gross Profit
$
134.1
$
126.9
$
262.8
$
247.9
Adjusted Gross Profit as a % of
Net Sales
37.6
%
35.0
%
37.4
%
34.7
%
Adjusted Selling,
Distribution, and Administrative Expense
13-Weeks Ended
26-Weeks Ended
(dollars in millions)
June 30, 2024
July 2, 2023
June 30, 2024
July 2, 2023
Selling, Distribution, and
Administrative Expense
$
104.6
$
114.5
$
214.0
$
220.5
Depreciation and Amortization in
SD&A Expense
(10.9
)
(11.3
)
(22.0
)
(22.8
)
Non-Cash, and/or Non-recurring
Adjustments
(9.2
)
(21.5
)
(22.1
)
(35.5
)
Adjusted Selling,
Distribution, and Administrative Expense
$
84.5
$
81.7
$
169.9
$
162.2
Adjusted SD&A Expense as a %
of Net Sales
23.7
%
22.5
%
24.2
%
22.7
%
Adjusted Net Income
13-Weeks Ended
26-Weeks Ended
(dollars in millions, except per
share data)
June 30, 2024
July 2, 2023
June 30, 2024
July 2, 2023
Net Income (Loss)
$
25.4
$
(8.6
)
$
27.8
$
(23.0
)
Income Tax Expense (Benefit)
(1.3
)
(0.7
)
25.2
(3.3
)
Income (loss) Before
Taxes
24.1
(9.3
)
53.0
(26.3
)
Deferred Financing Fees
0.7
0.5
2.5
0.5
Acquisition Step-Up Depreciation
and Amortization
10.8
11.7
22.3
23.6
Certain Non-Cash Adjustments
4.9
8.5
8.9
17.7
Acquisition, Divestiture and
Integration
1.1
3.7
(37.3
)
7.4
Business and Transformation
Initiatives
4.5
10.3
10.3
18.5
Financing-Related Costs
0.3
—
0.3
0.1
Loss on Remeasurement of Warrant
Liability
(12.9
)
(2.8
)
(1.1
)
(0.6
)
Other Non-Cash and/or
Non-Recurring Adjustments
9.4
31.9
5.9
67.2
Adjusted Earnings before
Taxes
33.5
22.6
58.9
40.9
Taxes on Earnings as Reported
1.3
0.7
(25.2
)
3.3
Income Tax Adjustments(1)
(7.3
)
(4.5
)
14.6
(10.4
)
Adjusted Taxes on Earnings
(6.0
)
(3.8
)
(10.6
)
(7.1
)
Adjusted Net Income
$
27.5
$
18.8
$
48.3
$
33.8
Average Weighted Basic Shares
Outstanding on an As-Converted Basis
140.8
140.4
140.8
140.4
Fully Diluted Shares on an
As-Converted Basis
144.3
143.2
144.1
143.0
Adjusted Earnings Per
Share
$
0.19
$
0.13
$
0.34
$
0.24
(1) Income Tax 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)
June 30, 2024
July 2, 2023
June 30, 2024
July 2, 2023
Core D&A -
Non-Acquisition-related included in Gross Profit
$
4.6
$
6.3
$
9.2
$
12.1
Step-Up D&A -
Transaction-related included in Gross Profit
2.1
2.7
4.7
5.5
Depreciation &
Amortization - included in Gross Profit
6.7
9.0
13.9
17.6
Core D&A -
Non-Acquisition-related included in SD&A Expense
$
2.2
$
2.3
$
4.4
$
4.7
Step-Up D&A -
Transaction-related included in SD&A Expense
8.7
9.0
17.6
18.1
Depreciation &
Amortization - included in SD&A Expense
10.9
11.3
22.0
22.8
Depreciation &
Amortization - Total
$
17.6
$
20.3
$
35.9
$
40.4
Core Depreciation and
Amortization
$
6.8
$
8.6
$
13.6
$
16.8
Step-Up Depreciation and
Amortization
$
10.8
$
11.7
$
22.3
$
23.6
Total Depreciation and
Amortization
$
17.6
$
20.3
$
35.9
$
40.4
EBITDA and Adjusted
EBITDA
13-Weeks Ended
26-Weeks Ended
(dollars in millions)
June 30, 2024
July 2, 2023
June 30, 2024
July 2, 2023
Net Income (Loss)
$
25.4
$
(8.6
)
$
27.8
$
(23.0
)
Plus non-GAAP adjustments:
Income Tax Expense (Benefit)
(1.3
)
(0.7
)
25.2
(3.3
)
Depreciation and Amortization
17.6
20.3
35.9
40.4
Interest Expense, Net
10.2
15.0
24.0
29.4
Interest Income from 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)
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
%
(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 $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, 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. Garcia Sale.
(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 $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 – 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.
Normalized Adjusted
EBITDA
FY 2023
FY 2024
(dollars in millions)
Q1
Q2
Q3
Q4
FY 2023
Q1
Q2
TTM
Adjusted EBITDA
$
40.4
$
45.2
$
52.1
$
49.4
$
187.2
(1)
$
43.4
$
49.7
$
194.6
Pre-Acquisition Adjusted
EBITDA(1)
—
—
—
—
—
—
—
—
Normalized Adjusted
EBITDA
$
40.4
$
45.2
$
52.1
$
49.4
$
187.2
(1)
$
43.4
$
49.7
$
194.6
(1) Does not total due to
rounding.
Net Debt and Leverage
Ratio
(dollars in millions)
As of June 30, 2024
Term Loan
$
630.3
Real Estate Loan
60.9
ABL Facility
45.2
Capital Leases(1)
77.6
Deferred Purchase Price
0.1
Gross Debt(2)
814.1
Cash and Cash Equivalents
66.6
Total Net Debt
$
747.5
Last 52-Weeks Normalized Adjusted
EBITDA
$
194.6
Net Leverage Ratio(3)
3.8x
(1) Capital Leases include equipment term
loans and exclude the impact of step-up accounting.
(2) Excludes amounts related to guarantees
on IO loans which are collateralized by routes. The Company has 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
$194.6 million.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240801490621/en/
Investor Contact Kevin Powers Utz Brands, Inc.
kpowers@utzsnacks.com
Media Contact Kevin Brick Utz Brands, Inc.
kbrick@utzsnacks.com
Utz Brands (NYSE:UTZ)
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Utz Brands (NYSE:UTZ)
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