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 fiscal first quarter ended April 3,
2022.
Highlights:
- Net sales increased 26.6% year-over-year. Organic Net Sales
increased 20.7% year over year.
- IRI retail sales increased 18.1% year-over-year driven by
strong Power Brands growth of 20.1%(1).
- GAAP Net loss was $(31.9) million(2) vs. $(23.3) million in the
year-ago period.
- Adjusted EBITDA was $36.5 million vs. $37.9 million in the
year-ago period.
- The Company is raising its full-year fiscal 2022 net sales
outlook and reaffirming its Adjusted EBITDA outlook.
(1) IRI total US MULO-C, on a pro forma
basis, 13-weeks ended April 3, 2022.
(2) 1Q’22 GAAP net loss primarily driven
by the $23.0 million buyout of multiple third-party DSD rights in
the quarter that were treated as contract termination costs and
booked as an expense on the income statement and not as an
investing activity on the Statement of Cash Flows.
“We are pleased to deliver record first quarter net sales with
Organic Net Sales growth of nearly 21 percent,” said Dylan
Lissette, Chief Executive Officer of Utz. “Consumer demand for our
strong portfolio of brands is at an all-time high, and we are
incredibly excited about the continued opportunity to improve our
market position in key growth channels and geographies. In
addition, as inflation continues to increase, we are taking
incremental price actions to help offset higher costs, and we are
encouraged by our continued sales volume increases as price
elasticity is better than we anticipated.”
Mr. Lissette continued, “As a result of our strong top-line
trends, we are raising our net sales growth expectations for fiscal
2022. Furthermore, we remain on track to achieve our profit outlook
as our pricing actions, along with our productivity programs, give
us confidence that we will be able to offset the continuing high
inflation as we exit 2022 and move into 2023.”
First Quarter 2022 Financial Highlights
Quarter Ended
(in $millions, except per share
amounts)
April 3, 2022
April 4, 2021
% Change
Net Sales
$
340.8
$
269.2
26.6
%
Organic Net Sales
324.8
269.2
20.7
%
Gross Profit
103.8
95.2
9.0
%
Adjusted Gross Profit
115.7
104.5
10.7
%
Adjusted Gross Profit Margin
33.9
%
38.8
%
(487) bps
Net Loss
(31.9
)
(23.3
)
nm
Adjusted Net Income
15.4
19.0
(18.9
) %
Adjusted EBITDA
36.5
37.9
(3.7
) %
Adjusted EBITDA Margin
10.7
%
14.1
%
(337) bps
Adjusted Earnings Per Share
$
0.11
$
0.13
(17.8
) %
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.
First Quarter Growth Highlights
For the 13-week period ended April 3, 2022, the Company’s retail
sales as measured by IRI MULO-C increased 18.1% versus the
prior-year period, as compared to Salty Snack Category growth of
13.4%. Sales growth was driven by a healthy balance of net price
realization and volume gains. The Company’s Power Brands’ retail
sales increased 20.1% versus the prior-year period. Power Brands’
sales growth versus the prior-year period was led by Utz®, ON THE
BORDER®, Zapp’s®, TORTIYAHS!®, Hawaiian®, TGI Fridays®, and Boulder
Canyon®. Retail sales increased double digits with share gains
across all three Geographies: Core, Expansion, and Emerging. The
Company’s Foundation Brands increased 6.0% reflecting the continued
strategy to focus its resources on its Power Brands.
IRI Retail Sales Growth Summary
Last 13-Weeks Ended April 3,
2022
(in $millions)
YoY Change
Total Retail Sales Growth(1)
Salty Snack Category
13.4 %
Utz
18.1 %
Power Brands
20.1 %
Foundation Brands(2)
6.0 %
Sales by Geography Growth(1)
Core
Salty Snack Category
13.9 %
Utz
17.8 %
Power Brands
20.0 %
Expansion
Salty Snack Category
12.2 %
Utz
17.4 %
Power Brands
20.3 %
Emerging
Salty Snack Category
13.5 %
Utz
20.0 %
Power Brands
20.2 %
(1)
IRI Custom Panel, Total US MULO-C, on a
pro forma basis.
(2)
IRI does not include Partner Brands and
Private Label retail sales.
Fiscal Year 2022 Outlook
For fiscal 2022, the Company is raising its total net sales
growth outlook from 7-10% to 10-13%, and its Organic Net Sales
growth outlook from 4-6% to 8-10%. This improved outlook for net
sales growth reflects continued strong consumer demand for the
Company’s advantaged portfolio of snacking brands, and higher
pricing related to increased input costs.
For fiscal 2022, the Company is raising its expectation for
gross input cost inflation from the low-double digits to
mid-to-high-teens as key input costs have increased significantly
largely due to geopolitical events. That being said, the Company is
taking incremental pricing actions this year to help offset these
cost increases. As the benefits of the Company’s pricing actions
and productivity programs continue to build, the Company continues
to expect to offset higher inflation in fiscal 2022. As a result,
the Company’s Adjusted EBITDA outlook is unchanged and expects
fiscal 2022 Adjusted EBITDA to grow modestly versus fiscal 2021
Adjusted EBITDA of $156.2 million. Utz continues to expect stronger
Adjusted EBITDA performance in the second half of fiscal 2022, and
in fiscal 2023.
Additionally, in fiscal year 2022, the Company now expects
capital expenditures of approximately $50 million, excluding the
impact of the Kings Mountain transaction. In accordance with
Generally Accepted Accounting Principles (“GAAP”), the $38.4
million purchase of the Kings Mountain facility is expected to be
booked on the Company’s Statement of Cash Flows as a capital
expenditure and not as an acquisition. Finally, the Company
continues to expect an effective tax rate of approximately 20%
(normalized GAAP basis tax expense, which excludes one-time items)
and net leverage at year-end fiscal 2022 to be consistent with
year-end fiscal 2021.
With respect to projected fiscal year 2022 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.
First Quarter 2022 Financial Results
See the description of the Non-GAAP financial measures mentioned
in this press release and reconciliations of the Non-GAAP adjusted
measures to the GAAP measures in the tables that accompany this
release. In addition, see the description of the periods
representing the Predecessor and Successor periods in the Company's
Form 10-K for the fiscal year ended, January 2, 2022.
Net sales in the quarter increased 26.6% to $340.8 million
compared to $269.2 million in the first quarter of 2021. The
increase in net sales was driven by Organic Net Sales growth of
20.7% and acquisitions of 7.2%, partially offset by the Company’s
continued shift to independent operators (“IO”) and the resulting
increase in sales discounts that impacted net sales growth by
(1.3%). Organic Net Sales growth was driven by favorable price/mix
of 9.4% and volume gains of 11.3%.
Gross profit was $103.8 million, or 30.5% as a percentage of net
sales. Adjusted Gross Profit increased 10.7% to $115.7 million, or
33.9% as a percentage of net sales, compared to Adjusted Gross
Profit of $104.5 million, or 38.8% as a percentage of net sales, in
the prior year period. The decrease in Adjusted Gross Profit as a
percentage of net sales was primarily driven by higher commodity,
transportation, and labor inflation, which are collectively the
result of industry-wide supply chain challenges. Additionally, the
Company estimates that the continued shift to independent operators
impacted Adjusted Gross Margins by approximately 130 basis points,
but with offsetting benefits in Selling, Distribution, and
Administrative (“SD&A”) expense. These headwinds were partially
offset by higher net price realization, improved mix, and ongoing
benefits from the Company’s productivity programs.
The Company reported a net loss of $(31.9) million, primarily
driven by the $23.0 million buyout of multiple third-party DSD
rights in the quarter. In adherence to GAAP, these buyouts were
treated as contract termination costs and booked as an expense on
the income statement and not as an investing activity on the
Statement of Cash Flows. Adjusted Net Income in the first quarter
of 2022 was $15.4 million and this compares to Adjusted Net Income
of $19.0 million in the prior year period.
Adjusted EBITDA decreased (3.7)% to $36.5 million, or 10.7% as a
percentage of net sales, compared to Adjusted EBITDA of $37.9
million, or 14.1% as a percentage of net sales, in the prior year
period. The expected decrease in Adjusted EBITDA margin was driven
by the Adjusted Gross Profit as a percentage of sales performance
as described above, partially offset by lower SD&A expenses as
a percentage of sales versus the prior-year period.
Balance Sheet and Cash Flow Highlights
- As of April 3, 2022
- Cash on hand of $14.9 million and $80.8 million was available
under the Company’s revolving credit facility, providing liquidity
of approximately $95.7 million.
- Net debt of $870.8 million resulting in a Pro Forma Net
Leverage ratio of 5.1x based on Normalized Adjusted EBITDA of
$172.1 million. The net leverage is consistent with the Company’s
expectations as net debt is historically the highest at the end of
the first quarter due to the seasonal use of working capital.
- For the 13-weeks ended April 3, 2022
- Cash flow used in operations of $(36.0) million.
- As described above in the net loss discussion, the $23.0
million buyout of multiple third-party DSD rights in the quarter
were treated as contract termination costs and booked as an expense
on the income statement in adherence to GAAP. As such, these
acquisitions were not booked as investing activities and impacted
cash flow from operations.
- Cash flow performance reflects the seasonal use of working
capital.
- Capital expenditures of $8.1 million.
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, May 19, 2022, by dialing 1-800-770-2030, and
entering confirmation code 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 operates 18 facilities located in Alabama,
Arizona, Illinois, Indiana, Louisiana, Massachusetts, Michigan,
Nevada, North Carolina, Pennsylvania, and Washington. 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),
SEC 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 issues. 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 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 the expected effects from the
COVID-19 pandemic, future plans for Utz Brands, Inc. (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, 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 recently completed business combination with Collier Creek
Holdings 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 inability 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; 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
the Company’s competitors’ actions that result in the Company’s
products not suitably differentiated from the products of
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; 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 U.S. Securities and
Exchange Commission, as amended (the “Commission”) for the fiscal
year ended January 2, 2022 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. Except as
required by law, the Company undertakes no obligation to update
such statements to reflect events or circumstances arising after
such date, and cautions investors not to place undue reliance on
any such forward-looking statements. 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 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
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:
- 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 Earnings Per Share
- Adjusted EBITDA as % of Net Sales (Adjusted EBITDA Margin)
- Normalized Adjusted EBITDA
Organic Net Sales is defined
as net sales excluding the impact of acquisitions and excluding the
impact of Independent Operator 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, and
Truco Enterprises. 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,
along with adjustments for estimated unrealized cost synergies
related to the acquisition of Truco Enterprises, Vitner’s, Festida
Foods, R.W. Garcia, and the buyouts and contract terminations of
Clem and J&D Snacks.
Management believes that the non-GAAP financial measures are
meaningful to investors because they increase transparency and
assists 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
April 3, 2022 and April 4, 2021
(In thousands, except share
information)
(Unaudited)
Thirteen weeks ended April 3,
2022
Thirteen weeks ended April 4,
2021
Net sales
$
340,767
$
269,182
Cost of goods sold
236,960
173,941
Gross profit
103,807
95,241
Selling, distribution, and
administrative expenses
Selling and distribution
88,110
56,728
Administrative
38,551
29,933
Total selling, distribution, and
administrative expenses
126,661
86,661
Gain on sale of assets, net
367
719
(Loss) income from operations
(22,487
)
9,299
Other (expense) income
Interest expense
(9,103
)
(10,861
)
Other income
520
718
Gain (loss) on remeasurement of warrant
liability
1,944
(21,501
)
Other (expense) income, net
(6,639
)
(31,644
)
Loss before taxes
(29,126
)
(22,345
)
Income tax expense
2,772
1,004
Net loss
(31,898
)
(23,349
)
Net loss attributable to noncontrolling
interest
14,328
820
Net loss attributable to controlling
interest
$
(17,570
)
$
(22,529
)
Earnings (loss) per Class A Common
stock: (in dollars)
Basic & diluted
$
(0.22
)
$
(0.30
)
Weighted-average shares of Class A
Common stock outstanding
Basic & diluted
78,572,404
75,927,005
Net loss
$
(31,898
)
$
(23,349
)
Other comprehensive income:
Change in fair value of interest rate
swap
27,809
822
Comprehensive loss
(4,089
)
(22,527
)
Net comprehensive loss attributable to
noncontrolling interest
2,362
—
Net comprehensive loss attributable to
controlling interest
$
(1,727
)
$
(22,527
)
Utz Brands, Inc.
CONSOLIDATED BALANCE
SHEETS
April 3, 2022 and January 2,
2022
(In thousands)
As of April 3, 2022
As of January 2, 2022
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
14,899
$
41,898
Accounts receivable, less allowance of
$1,302 and $1,391, respectively
148,432
131,388
Inventories
93,778
79,517
Prepaid expenses and other assets
17,042
18,395
Current portion of notes receivable
6,401
6,706
Total current assets
280,552
277,904
Non-current Assets
Property, plant and equipment, net
298,656
303,807
Goodwill
915,490
915,438
Intangible assets, net
1,130,208
1,142,509
Non-current portion of notes
receivable
19,614
20,725
Other assets
78,505
55,963
Total non-current assets
2,442,473
2,438,442
Total assets
$
2,723,025
$
2,716,346
LIABILITIES AND EQUITY
Current Liabilities
Current portion of term debt
$
11,414
$
11,414
Current portion of other notes payable
13,057
9,957
Accounts payable
104,967
95,369
Accrued expenses and other
53,356
71,280
Total current liabilities
182,794
188,020
Non-current portion of term debt and
revolving credit facility
852,722
830,548
Non-current portion of other notes
payable
23,129
24,709
Non-current accrued expenses and other
56,109
55,838
Non-current warrant liability
44,280
46,224
Deferred tax liability
136,837
136,334
Total non-current liabilities
1,113,077
1,093,653
Total liabilities
1,295,871
1,281,673
Commitments and Contingencies
Equity
Shares of Class A Common Stock, $0.0001
par value; 1,000,000,000 shares authorized; 78,597,175 and
77,644,645 shares issued and outstanding as of April 3, 2022 and
January 2, 2022, 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 April 3, 2022 and January 2, 2022.
6
6
Additional paid-in capital
909,144
912,574
Accumulated deficit
(254,168
)
(236,598
)
Accumulated other comprehensive income
19,558
3,715
Total stockholders' equity
674,548
679,705
Noncontrolling interest
752,606
754,968
Total equity
1,427,154
1,434,673
Total liabilities and equity
$
2,723,025
$
2,716,346
Utz Brands, Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
For the thirteen weeks ended
April 3, 2022 and April 4, 2021
(In thousands)
(Unaudited)
Thirteen weeks ended April 3,
2022
Thirteen weeks ended April 4,
2021
Cash flows from operating
activities
Net loss
$
(31,898
)
$
(23,349
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Impairment and other charges
3,319
—
Depreciation and amortization
22,121
19,407
(Gain) loss on remeasurement of warrant
liability
(1,944
)
21,501
Gain on sale of assets
(367
)
(719
)
Share-based compensation
1,379
2,883
Deferred taxes
1,912
1,061
Deferred financing costs
341
2,870
Changes in assets and liabilities:
Accounts receivable, net
(17,044
)
(11,176
)
Inventories
(14,261
)
(7,040
)
Prepaid expenses and other assets
(26
)
866
Accounts payable and accrued expenses and
other
464
(19,487
)
Net cash used in operating activities
(36,004
)
(13,183
)
Cash flows from investing
activities
Acquisitions, net of cash acquired
(75
)
(25,189
)
Purchases of property and equipment
(8,137
)
(2,134
)
Purchases of intangibles
—
(1,200
)
Proceeds from sale of property and
equipment
1,138
391
Proceeds from sale of routes
4,604
1,450
Proceeds from the sale of IO notes
—
2,295
Proceeds from insurance claims
2,000
—
Notes receivable, net
221
(924
)
Net cash used in investing activities
(249
)
(25,311
)
Cash flows from financing
activities
Line of credit borrowings, net
20,000
15,000
Borrowings on term debt and notes
payable
8,726
720,000
Repayments on term debt and notes
payable
(9,066
)
(783,735
)
Payment of debt issuance cost
—
(8,372
)
Payments of tax withholding requirements
for employee stock awards
(6,217
)
—
Exercised warrants
—
57,232
Dividends
(4,189
)
(4,261
)
Distribution to noncontrolling
interest
—
(181
)
Net cash provided by (used in) financing
activities
9,254
(4,317
)
Net decrease in cash and cash
equivalents
(26,999
)
(42,811
)
Cash and cash equivalents at beginning
of period
41,898
46,831
Cash and cash equivalents at end of
period
$
14,899
$
4,020
Reconciliation of Non-GAAP Financial
Measures to Reported Financial Measures
Net Sales and Organic Net Sales
13-Weeks Ended
(dollars in millions)
April 3, 2022
April 4, 2021
Change
Net Sales as Reported
$
340.8
$
269.2
26.6
%
Impact of Acquisitions
(19.5
)
Impact of IO Conversions
3.5
Organic Net Sales
$
324.8
$
269.2
20.7
%
(1) Organic Net Sales excludes the Impact
of Acquisitions and the Impact of IO Conversions that took place
after Q1 2021, except for the impact of Vitner’s, which was
acquired on February 8, 2021.
Gross Profit and Adjusted Gross Profit
13-Weeks Ended
(dollars in millions)
April 3, 2022
April 4, 2021
Gross Profit
$
103.8
$
95.2
Depreciation and Amortization
10.6
8.1
Non-Cash, non-recurring adjustments
1.3
1.2
Adjusted Gross Profit
$
115.7
$
104.5
Adjusted Gross Profit as a % of Net
Sales
33.9
%
38.8
%
Adjusted Selling, Distribution, and Administrative
Expense
13-Weeks Ended
(dollars in millions)
April 3, 2022
April 4, 2021
Selling, Distribution, and
Administrative Expense - Incl Depreciation and Amortization
$
126.7
$
86.7
Depreciation and Amortization in SD&A
Expense
(11.5
)
(11.3
)
Non-Cash, and/or Non-recurring
Adjustments
(36.0
)
(8.2
)
Adjusted Selling, Distribution, and
Administrative Expense
$
79.2
$
67.2
Adjusted SD&A Expense as a % of Net
Sales
23.2
%
25.0
%
Adjusted Net Income
13-Weeks Ended
(dollars in millions, except per share
data)
April 3, 2022
April 4, 2021
Net Loss
$
(31.9
)
$
(23.3
)
Income Tax Expense
2.8
1.0
Loss Before Taxes
(29.1
)
(22.3
)
Deferred Financing Fees
0.3
2.7
Acquisition Step-Up Depreciation and
Amortization
13.2
12.7
Certain Non-Cash Adjustments
3.5
4.2
Acquisition and Integration
28.8
1.9
Business and Transformation
Initiatives
4.4
3.3
Financing-Related Costs
0.1
—
Gain (Loss) on Remeasurement of Warrant
Liability
(1.9
)
21.5
Other Non-Cash and/or Non-Recurring
Adjustments
48.4
46.3
Adjusted Earnings before Taxes
19.3
24.0
Taxes on Earnings as Reported
(2.8
)
(1.0
)
Income Tax Adjustments(1)
(1.1
)
(4.0
)
Adjusted Taxes on Earnings
(3.9
)
(5.0
)
Adjusted Net Income
$
15.4
$
19.0
Basic Shares Outstanding
137.9
136.3
Fully Diluted Shares on an As-Converted
Basis
139.9
142.0
Adjusted Earnings Per Share
$
0.11
$
0.13
(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
(dollars in millions)
April 3, 2022
April 4, 2021
Core D&A - Non-Acquisition-related
included in Gross Profit
$
6.5
$
4.5
Step-Up D&A - Transaction-related
included in Gross Profit
4.1
3.6
Depreciation & Amortization -
included in Gross Profit
10.6
8.1
Core D&A - Non-Acquisition-related
included in SD&A Expense
2.4
2.2
Step-Up D&A - Transaction-related
included in SD&A Expense
9.1
9.1
Depreciation & Amortization -
included in SD&A Expense
11.5
11.3
Depreciation & Amortization -
Total
$
22.1
$
19.4
Core Depreciation and Amortization
$
8.9
$
6.7
Step-Up Depreciation and Amortization
13.2
12.7
Total Depreciation and
Amortization
$
22.1
$
19.4
EBITDA and Adjusted EBITDA
13-Weeks Ended
(dollars in millions)
April 3, 2022
April 4, 2021
Net Loss
$
(31.9
)
$
(23.3
)
Plus non-GAAP adjustments:
Income Tax Expense
2.8
1.0
Depreciation and Amortization
22.1
19.4
Interest Expense, Net
9.1
10.9
Interest Income (IO loans)(1)
(0.5
)
(1.0
)
EBITDA
1.6
7.0
Certain Non-Cash Adjustments(2)
3.5
4.2
Acquisition and Integration(3)
28.8
1.9
Business Transformation Initiatives(4)
4.4
3.3
Financing-Related Costs(5)
0.1
—
(Gain) Loss on Remeasurement of Warrant
Liabilities(6)
(1.9
)
21.5
Adjusted EBITDA
$
36.5
$
37.9
Adjusted EBITDA as a % of Net
Sales
10.7
%
14.1
%
(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 – For the thirteen
weeks ended April 3, 2022 and April 4, 2021, the Company incurred
$1.4 million and $2.9 million, respectively, of share based
compensation and employee stock purchase plan. During the thirteen
weeks ended April 3, 2022, the Company recorded an impairment of
$2.0 million related to the termination of distribution
agreements.
(3)
Adjustment for Acquisition and Integration
Costs – This is comprised of consulting, transaction services, and
legal fees incurred for acquisitions and certain potential
acquisitions. The majority of charges are related to the buyout of
multiple distributors, which was accounted for as a contract
termination resulting in expense of $23.0 million for the thirteen
weeks ended April 3, 2022, versus the costs incurred for the
Vitner's acquisition, the Truco acquisition, and related
integration expenditures where we incurred costs of $1.9 million
for the thirteen weeks ended April 4, 2021.
(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 realized from the
sale of distribution rights to IOs and the subsequent disposal of
trucks, and ERP transition costs, offset by severance costs
associated with the elimination of RSP positions, fall into this
category. The Company incurred such costs of $4.4 million and $3.3
million for the thirteen weeks ended April 3, 2022 and April 4,
2021, respectively.
(5)
Financing-Related Costs – These costs
include adjustments for various items related to raising debt and
preferred equity capital or debt extinguishment costs. The Company
incurred expenses of $0.3 million for the thirteen weeks ended
April 3, 2022.
(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 2021
FY 2022
(dollars in millions)
Q1
Q2
Q3
Q4
FY 2021
Q1
TTM
Adjusted EBITDA
$
37.9
$
35.7
$
44.8
$
37.7
$
156.1
$
36.5
$
154.7
Pre-Acquisition Adjusted EBITDA(1)
3.6
3.0
2.0
1.6
10.2
0.2
6.8
Acquisition Synergies(2)
3.1
3.1
2.6
2.5
11.3
2.4
10.6
Normalized Adjusted EBITDA
$
44.6
$
41.8
$
49.4
$
41.8
$
177.6
$
39.1
$
172.1
(1) Pre-Acquisition Adjusted EBITDA - This
adjustment represents the Adjusted EBITDA of acquired companies,
Festida Foods and R.W. Garcia, prior to the acquisition date, as
well as from the buyout date of Clem and J&D Snacks.
(2) Represents identified
integration-related cost savings expected to be realized from the
elimination of certain procurement, manufacturing, and logistics as
well as selling, distribution, and administrative expenses, in
connection with the acquisitions of Truco Enterprises, Vitner’s,
Festida Foods, R.W. Garcia, and the buyouts of Clem and J&D
Snacks.
Net Debt and Leverage Ratio
(dollars in millions)
As of April 3, 2022
Term Loan
$
785.2
Revolving Credit Facility
56.0
Capital Leases(1)
38.8
Deferred Purchase Price
5.7
Gross Debt(2)
885.7
Cash and Cash Equivalents
14.9
Total Net Debt
$
870.8
Last 52-Weeks Normalized Adjusted
EBITDA
$
172.1
Net Leverage Ratio
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 is uncommon.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220512005304/en/
Investor Kevin Powers Utz Brands, Inc.
kpowers@utzsnacks.com
Media Kevin Brick Utz Brands, Inc.
kbrick@utzsnacks.com
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