Utz Brands, Inc. (NYSE: UTZ) (“Utz” or the “Company”), a leading
U.S. manufacturer of branded salty snacks, today reported financial
results for the fourth quarter and full-year ended December 31,
2023.
4Q’23 Summary:
- Net sales decreased (0.7)% year-over-year to $352.1
million.
- Organic Net Sales decreased (0.3)% year-over-year.
- Net loss of $(33.2) million vs. net income of $13.8 million in
the year-ago period.
- Adjusted EBITDA increased 12.0% year-over-year to $49.4
million.
FY’23 Summary:
- Net sales increased 2.1% year-over-year to $1,438.2
million.
- Organic Net Sales increased 2.8% year-over-year.
- Net loss of $(40.0) million vs. net loss of $(14.0) million in
the year-ago period.
- Adjusted EBITDA increased 9.8% year-over-year to $187.2
million.
Recent Development:
- Completed dispositions on February 5, 2024: Good Health®
and RW Garcia® brands, certain related assets, and three
manufacturing facilities.
- After-tax net proceeds of ~$150 million immediately used to pay
down variable rate long term debt and reduce leverage.
“In 2023 we evolved through capacity, distribution and
capability investments that position Utz to capture its full
potential. In a dynamic environment, I am proud of our continued
progress on building Utz into a pure-play U.S. snacking company of
scale with an advantaged brand portfolio in the attractive Salty
Snacks category,” said Howard Friedman, Chief Executive Officer.
“As we begin 2024, we have hit the ground running, and closed our
recently announced brand and manufacturing plant dispositions which
fast-tracks our deleveraging timeline, accelerates our supply chain
transformation, and increases focus in our brand portfolio. We have
compelling long-term growth opportunities, and our 2024 outlook
begins our runway to deliver the 2026 targets that we discussed at
our Investor Day in December.”
Fourth Quarter and Full Year 2023 Financial
Highlights
13-Weeks Ended
52-Weeks Ended
(in $millions, except per share
amounts)
December 31, 2023
January 1, 2023
% Change
December 31, 2023
January 1, 2023
% Change
Net Sales
$
352.1
$
354.7
(0.7
)%
$
1,438.2
$
1,408.4
2.1
%
Organic Net Sales
353.7
354.7
(0.3
)%
1,447.4
1,408.4
2.8
%
Gross Profit
115.3
115.4
(0.1
)%
456.5
449.1
1.6
%
Gross Profit Margin
32.8
%
32.5
%
25 bps
31.7
%
31.9
%
(15) bps
Adjusted Gross Profit
130.6
129.7
0.7
%
513.6
504.1
1.9
%
Adjusted Gross Profit Margin
37.1
%
36.6
%
52 bps
35.7
%
35.8
%
(8) bps
Net (Loss) Income
(33.2
)
13.8
nm
(40.0
)
(14.0
)
nm
Net Income Margin
(9.4
)%
3.9
%
nm
(2.8
)%
(1.0
)%
nm
Adjusted Net Income
22.9
21.5
6.5
%
81.3
77.7
4.6
%
Adjusted EBITDA
49.4
44.1
12.0
%
187.2
170.5
9.8
%
Adjusted EBITDA Margin
14.0
%
12.4
%
160 bps
13.0
%
12.1
%
91 bps
Basic (Loss) Earnings Per Share(1)
$
(0.34
)
$
0.18
nm
$
(0.31
)
$
—
nm
Adjusted Earnings Per Diluted Share(1)
$
0.16
$
0.15
6.7
%
$
0.57
$
0.55
3.6
%
(1) On an As-Converted Basis
See the description of the Non-GAAP
financial measures used in this press release and reconciliations
of such Non-GAAP measures to the most comparable GAAP measures in
the tables that accompany this press release.
Fourth Quarter 2023 Results
Total net sales in the quarter decreased (0.7)% to $352.1
million compared to $354.7 million in the prior year period. The
decrease in net sales was partially driven by the Company’s
continued shift to independent operators (“IOs”) and the resulting
increase in sales discounts which the Company estimates impacted
net sales growth by (0.4%).
Organic Net Sales decreased (0.3)% from lower net price
realization of (0.8%) primarily due to lapping +17% price
realization in 4Q’22, and certain adjustments to price pack
architecture. Pricing was partially offset by increased volume/mix
of 0.5% driven by strong growth of the Company’s Power Brands,
while also being adversely impacted from earlier than planned
holiday shipments in the third quarter of 2023. In addition, volume
performance was adversely impacted by the Company’s ongoing SKU
rationalization program reducing private label and partner brands
to increase focus on our Power Brands. The Company estimates this
SKU rationalization program impacted volumes in the fourth quarter
of 2023 by approximately (2.5%). Excluding the impact from SKU
rationalization, the Company estimates that volume/mix would have
increased 3.0% in the fourth quarter of 2023 versus the prior year
period.
For the 13-week period ended December 31, 2023, the Company’s
retail sales, as measured by Circana MULO-C, increased 4.1% versus
the prior-year period led by volume growth of 4.3%. The Company’s
Power Brands’ retail sales increased 5.3% versus the prior-year
period(1) and was led by Utz®, On The Border®, Boulder Canyon®, and
Golden Flake® Pork. The Company’s Foundation Brands’ retail sales
decreased (4.2%)(2) versus the prior year period.
(1)
Circana Total US MULO-C, custom Utz Brands
hierarchy, on a pro forma basis.
(2)
Circana does not include certain Partner
Brands and Private Label sales that are not assigned to Utz
Brands.
Gross profit margin was 32.8% compared to 32.5% in the prior
year period. Adjusted Gross Margin was 37.1% compared to 36.6% in
the prior year period. The benefits from productivity and favorable
sales mix more than offset lower net price realization, cost
inflation and supply chain investments. However, the continued
shift to IOs impacted Adjusted Gross Profit Margin as expected by
approximately 40 basis points, but with offsetting benefits in
Selling, Distribution, and Administrative (“SD&A”) expense.
SD&A expenses decreased (0.6)% compared to the prior year
period. Adjusted SD&A Expense decreased (5.1)% compared to the
prior year period primarily due to a reduction in selling costs
from the shift to IO’s, lower administrative expenses, and
productivity benefits. These factors were partially offset by
continued investments in brand marketing, selling infrastructure
and people, systems, and supply chain capabilities to support
growth.
The Company reported a net loss of $(33.2) million compared to
net income of $13.8 million in the prior year period. The decrease
in net income compared to the prior year was primarily due to
income tax expense of $(14.2) million in the current period versus
an income tax benefit of $22.2 million in the prior year. In
addition, the decrease in net income was driven by a $(14.4)
million loss from the remeasurement of private placement warrant
liability in the fourth quarter of 2023 versus a loss of $(3.3)
million in the prior year period and interest expense of $(15.7)
million in the current period compared to $(12.9) million in the
prior year period. The increase in interest expense is primarily
attributable to higher interest rates on the portion of the
Company’s floating rate debt.
Adjusted Net Income in the quarter increased 6.5% to $22.9
million compared to $21.5 million in the prior year period.
Adjusted Earnings per Share increased 6.7% to $0.16 compared to
$0.15 in the prior year period. Adjusted EBITDA increased 12.0% to
$49.4 million, or 14.0% as a percentage of net sales, compared to
Adjusted EBITDA of $44.1 million, or 12.4% as a percentage of net
sales, in the prior year period.
Balance Sheet and Cash Flow Highlights
- As of December 31, 2023
- Total liquidity of $210.4 million, consisting of cash on hand
of $52.0 million and $158.4 million available under the Company’s
revolving credit facility.
- Net debt of $866.7 million resulting in a Net Leverage Ratio of
4.6x based on trailing twelve months Normalized Adjusted EBITDA of
$187.2 million.
- Subsequent to year-end, the Company used the ~$150 million in
net proceeds from its recent dispositions (as described earlier) to
pay down long term debt and reduce leverage.
- For the 52-weeks ended December 31, 2023
- Cash flow from operations was $76.6 million, which reflects
strong working capital improvement in the second half of fiscal
2023.
- Capital expenditures were $55.7 million, and dividend and
distributions paid were $32.1 million.
Fiscal Year 2024 Outlook
In fiscal 2024, the Company expects:
- Organic Net Sales growth of ~3% or better driven by volume
growth, and assumes total net sales to be impacted by ~$45
million due to the recently closed transaction for the dispositions
of the Good Health® and R.W. Garcia® brands and manufacturing
facilities.
- Adjusted EBITDA growth of 5% to 8% and assumes the
estimated impact of the forgone contribution to Adjusted EBITDA
from the brand dispositions are mostly offset by accelerated cost
savings and the transition services agreement.
- Adjusted EPS growth of 16% to 21% driven by stronger
operating performance and earnings accretion from the dispositions
after factoring in the use of net proceeds to pay down long term
debt.
The Company also expects:
- An effective tax rate (normalized GAAP basis tax expense, which
excludes one-time items) in the range of 19% to 21%;
- Interest expense of ~$50 million;
- Capital expenditures in the range of $80 to $90 million;
and
- Net Leverage Ratio of ~3.6x at year-end fiscal 2024.
With respect to projected fiscal 2024 Adjusted EBITDA, a
quantitative reconciliation is not available without unreasonable
efforts due to the high variability, complexity, and low visibility
with respect to certain items which are excluded from Adjusted
EBITDA. We expect the variability of these items to have a
potentially unpredictable, and potentially significant, impact on
our future financial results.
Conference Call and Webcast Presentation
The Company will host a conference call to discuss these results
today at 8:30 a.m. Eastern Time. Please visit the “Events &
Presentations” section of Utz’s Investor Relations website at
https://investors.utzsnacks.com to access the live listen-only
webcast and presentation. Participants can also dial in over the
phone by calling 1-888-596-4144. 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.
A replay will be archived online and is also available
telephonically approximately two hours after the call concludes
through Thursday, March 7, 2024, by dialing 1-888-596-4144, and
entering the Event Plus passcode 3860587.
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
geographic expansion; the Company’s product mix; the Company’s ESG
priorities; 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 impact of the Company’s SKU rationalization
program, 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
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, 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 the following non-GAAP financial measures in its
financial communications, and in the future could use others:
- Organic Net Sales
- Adjusted Gross Profit
- Adjusted Gross Profit as % of Net Sales (Adjusted Gross Profit
Margin)
- Adjusted Selling, Distribution, and Administrative Expense
- Adjusted Selling, Distribution, and Administrative Expense as %
of Net Sales
- Adjusted Net Income
- Adjusted Earnings Per Share
- EBITDA
- Adjusted EBITDA
- Adjusted EBITDA as % of Net Sales (Adjusted EBITDA Margin)
- Normalized Adjusted EBITDA
- Net Leverage Ratio
Organic Net Sales is defined
as net sales excluding the impact of acquisitions and excluding the
impact of IO route conversions.
Adjusted Gross Profit
represents Gross Profit excluding Depreciation and Amortization
expense, a non-cash item. In addition, Adjusted Gross Profit
excludes the impact of costs that fall within the categories of
non-cash adjustments and non-recurring items such as those related
to stock-based compensation, hedging and purchase commitments
adjustments, asset impairments, acquisition, and integration costs,
business transformation initiatives, and financing-related costs.
Adjusted Gross Profit is one of the key performance indicators that
our management uses to evaluate operating performance. We also
report Adjusted Gross Profit as a percentage of Net Sales as an
additional measure for investors to evaluate our Adjusted Gross
Profit 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 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 certain
previously past completed business combinations. 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, 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 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.
Management believes that the non-GAAP financial measures are
meaningful to investors because they increase transparency and
assist investors to understand and analyze our ongoing operational
performance. The financial measures are shown as supplemental
disclosures in this release because they are widely used by the
investment community for analysis and comparative evaluation. They
also provide additional metrics to evaluate the Company’s
operations and, when considered with both the GAAP results and the
reconciliation to the most comparable GAAP measures, provide a more
complete understanding of the Company’s business than could be
obtained absent this disclosure. The non-GAAP measures are not and
should not be considered an alternative to the most comparable GAAP
measures or any other figure calculated in accordance with GAAP, or
as an indicator of operating performance. The Company’s calculation
of the non-GAAP financial measures may differ from methods used by
other companies. Management believes that the non-GAAP measures are
important to have an understanding of the Company’s overall
operating results in the periods presented. The non-GAAP financial
measures are not recognized in accordance with GAAP and should not
be viewed as an alternative to GAAP measures of performance. As new
events or circumstances arise, these definitions could change. When
the definitions change, we will provide the updated definitions and
present the related non-GAAP historical results on a comparable
basis.
Utz Brands, Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME
For the thirteen weeks ended
December 31, 2023 and January 1, 2023
(In thousands, except share
information)
(Unaudited)
Thirteen weeks ended December
31, 2023
Thirteen weeks ended January
1, 2023
Net sales
$
352,099
$
354,669
Cost of goods sold
236,771
239,221
Gross profit
115,328
115,448
Selling, distribution, and
administrative expenses
Selling and distribution
71,035
67,892
Administrative
36,041
39,794
Total selling, distribution, and
administrative expenses
107,076
107,686
Gain (loss) on sale of assets,
net
1,925
(228
)
Income from operations
10,177
7,534
Other (expense) income
Interest expense
(15,656
)
(12,946
)
Other income
787
320
Loss on remeasurement of warrant
liability
(14,328
)
(3,312
)
Other expense, net
(29,197
)
(15,938
)
Loss before taxes
(19,020
)
(8,404
)
Income tax expense (benefit)
14,192
(22,231
)
Net (loss) income
(33,212
)
13,827
Net loss attributable to noncontrolling
interest
5,533
1,060
Net (loss) income attributable to
controlling interest
$
(27,679
)
$
14,887
Earnings per Class A Common stock: (in
dollars)
Basic
$
(0.34
)
$
0.18
Diluted
$
(0.34
)
$
0.18
Weighted-average shares of Class A
Common stock outstanding
Basic
81,142,952
80,815,963
Diluted
81,142,952
83,362,862
Net (loss) income
$
(33,212
)
$
13,827
Other comprehensive (loss):
Change in fair value of interest rate
swap
(16,837
)
(3,196
)
Comprehensive (loss) income
(50,049
)
10,631
Net comprehensive loss attributable to
noncontrolling interest
12,646
2,413
Net comprehensive (loss) income
attributable to controlling interest
$
(37,403
)
$
13,044
Utz Brands, Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME
For the fiscal years ended
December 31, 2023 and January 1, 2023
(In thousands, except share
information)
(Unaudited)
(in thousands)
For the Fiscal Year Ended
December 31, 2023
For the Fiscal Year Ended
January 1, 2023
Net sales
$
1,438,237
$
1,408,401
Cost of goods sold
981,751
959,344
Gross profit
456,486
449,057
Selling, distribution and
administrative expenses
Selling and distribution
273,923
294,061
Administrative
159,196
150,343
Total selling, distribution, and
administrative expenses
433,119
444,404
(Loss) gain on sale of assets,
net
(7,350
)
691
Income from operations
16,017
5,344
Other (expense) income
Interest expense
(60,590
)
(44,424
)
Other income
3,066
400
Gain on remeasurement of warrant
liability
2,232
720
Other expense, net
(55,292
)
(43,304
)
Loss before income taxes
(39,275
)
(37,960
)
Income tax expense (benefit)
757
(23,919
)
Net loss
(40,032
)
(14,041
)
Net loss attributable to noncontrolling
interest
15,095
13,649
Net loss attributable to controlling
interest
$
(24,937
)
$
(392
)
Loss per share of Class A Common
Stock:
(in dollars)
Basic
$
(0.31
)
$
—
Diluted
$
(0.31
)
$
—
Weighted-average shares of Class A
Common Stock outstanding
Basic
81,081,458
80,093,094
Diluted
81,081,458
80,093,094
Net loss
$
(40,032
)
$
(14,041
)
Other comprehensive (loss)
gain:
Change in fair value of interest rate
swap
(13,543
)
47,279
Comprehensive (loss) income
(53,575
)
33,238
Net comprehensive loss (income)
attributable to noncontrolling interest
20,819
(6,568
)
Net comprehensive (loss) income
attributable to controlling interest
$
(32,756
)
$
26,670
Utz Brands, Inc.
CONSOLIDATED BALANCE
SHEETS
December 31, 2023 and January
1, 2023
(In thousands)
(Unaudited)
As of December 31,
2023
As of January 1,
2023
ASSETS
Current Assets
Cash and cash equivalents
$
52,023
$
72,930
Accounts receivable, less allowance of
$2,933 and $1,815, respectively
135,130
136,985
Inventories
104,666
118,006
Prepaid expenses and other assets
30,997
34,991
Current portion of notes receivable
5,237
9,274
Total current assets
328,053
372,186
Non-current Assets
Assets held for sale
7,559
—
Property, plant and equipment, net
318,881
345,198
Goodwill
915,295
915,295
Intangible assets, net
1,063,413
1,099,565
Non-current portion of notes
receivable
12,413
12,794
Other assets
101,122
95,328
Total non-current assets
2,418,683
2,468,180
Total assets
$
2,746,736
$
2,840,366
LIABILITIES AND EQUITY
Current Liabilities
Current portion of term debt
$
21,086
$
18,472
Current portion of other notes payable
7,649
12,589
Accounts payable
124,361
114,360
Accrued expenses and other
77,590
92,012
Total current liabilities
230,686
237,433
Non-current portion of term debt
878,511
893,335
Non-current portion of other notes
payable
19,174
20,339
Non-current accrued expenses and other
76,720
67,269
Non-current warrant liability
43,272
45,504
Deferred tax liability
114,690
124,802
Total non-current liabilities
1,132,367
1,151,249
Total liabilities
1,363,053
1,388,682
Commitments and contingencies
Equity
Shares of Class A Common Stock, $0.0001
par value; 1,000,000,000 shares authorized; 81,187,977 and
80,882,334 shares issued and outstanding as of December 31, 2023
and January 1, 2023, respectively.
8
8
Shares of Class V Common Stock, $0.0001
par value; 61,249,000 shares authorized; 59,349,000 and 59,349,000
shares issued and outstanding as of December 31, 2023 and January
1, 2023, respectively.
6
6
Additional paid-in capital
944,573
926,919
Accumulated deficit
(298,049
)
(254,564
)
Accumulated other comprehensive income
22,958
30,777
Total stockholders’ equity
669,496
703,146
Noncontrolling interest
714,187
748,538
Total equity
1,383,683
1,451,684
Total liabilities and equity
$
2,746,736
$
2,840,366
Utz Brands, Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
For the fiscal years ended
December 31, 2023 and January 1, 2023
(In thousands)
(Unaudited)
For the Fiscal Year Ended
December 31, 2023
For the Fiscal Year Ended
January 1, 2023
Cash flows from operating
activities
Net loss
$
(40,032
)
$
(14,041
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Impairment and other charges
12,575
4,678
Depreciation and amortization
79,488
86,801
Gain on remeasurement of warrant
liability
(2,232
)
(720
)
Loss (gain) on sale of assets
7,350
(691
)
Stock based compensation
17,069
10,632
Deferred income taxes
(8,938
)
(29,359
)
Amortization of deferred financing
costs
1,556
1,933
Changes in assets and liabilities:
Accounts receivable, net
1,855
(5,597
)
Inventories, net
12,652
(38,490
)
Prepaid expenses and other assets
(14,433
)
(18,379
)
Accounts payable and accrued expenses and
other
9,730
51,426
Net cash provided by operating
activities
76,640
48,193
Cash flows from investing
activities
Acquisitions, net of cash acquired
—
(75
)
Purchases of property and equipment
(55,724
)
(87,965
)
Proceeds from sale of property and
equipment
9,539
4,333
Proceeds from sale of routes
28,665
23,399
Proceeds from the sale of IO notes
5,405
5,017
Proceeds from insurance claims for capital
investments
1,700
3,935
Notes receivable, net
(38,077
)
(24,711
)
Net cash used in investing activities
(48,492
)
(76,067
)
Cash flows from financing
activities
Borrowings on line of credit
71,000
79,000
Repayments on line of credit
(70,632
)
(115,000
)
Borrowings on term debt and notes
payable
13,113
124,592
Repayments on term debt and notes
payable
(29,211
)
(21,037
)
Payment of debt issuance cost
(656
)
(3,660
)
Payments of tax withholding requirements
for employee stock awards
(589
)
(6,217
)
Proceeds from issuance of shares
—
28,000
Dividends paid
(18,548
)
(17,157
)
Distribution to noncontrolling
interest
(13,532
)
(9,615
)
Net cash (used in) provided by financing
activities
(49,055
)
58,906
Net (decrease) increase in cash and cash
equivalents
(20,907
)
31,032
Cash and cash equivalents at beginning
of period
72,930
41,898
Cash and cash equivalents at end of
period
$
52,023
$
72,930
Reconciliation of Non-GAAP Financial
Measures to Reported Financial Measures
Net Sales and Organic Net Sales
13-Weeks Ended
52-Weeks Ended
(dollars in millions)
December 31, 2023
January 1, 2023
Change
December 31, 2023
January 1, 2023
Change
Net Sales as Reported
$
352.1
$
354.7
(0.7
)%
$
1,438.2
$
1,408.4
2.1
%
Impact of Acquisitions
—
—
—
—
Impact of IO Conversions
1.6
—
9.2
—
Organic Net Sales (1)
$
353.7
$
354.7
(0.3
)%
$
1,447.4
$
1,408.4
2.8
%
(1)
Organic Net Sales excludes the Impact of
Acquisitions and the Impact of IO Conversions that took place after
Q2 2022.
Gross Profit and Adjusted Gross Profit
13-Weeks Ended
52-Weeks Ended
(dollars in millions)
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
Gross Profit
$
115.3
$
115.4
$
456.5
$
449.1
Depreciation and Amortization
8.0
8.9
33.9
40.7
Non-Cash, Non-recurring adjustments
7.3
5.4
23.2
14.3
Adjusted Gross Profit
$
130.6
$
129.7
$
513.6
$
504.1
Adjusted Gross Profit as a % of Net
Sales
37.1
%
36.6
%
35.7
%
35.8
%
Adjusted Selling, Distribution, and Administrative
Expense
13-Weeks Ended
52-Weeks Ended
(dollars in millions)
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
Selling, Distribution, and
Administrative Expense
$
107.1
$
107.7
$
433.1
$
444.4
Depreciation and Amortization in SD&A
Expense
(11.4
)
(11.6
)
(45.6
)
(46.1
)
Non-Cash, and/or Non-recurring
Adjustments
(14.4
)
(10.4
)
(61.0
)
(65.0
)
Adjusted Selling, Distribution, and
Administrative Expense
$
81.3
$
85.7
$
326.5
$
333.3
Adjusted SD&A Expense as a % of Net
Sales
23.1
%
24.2
%
22.7
%
23.7
%
Adjusted Net Income
13-Weeks Ended
52-Weeks Ended
(dollars in millions, except per share
data)
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
Net Income (Loss)
$
(33.2
)
$
13.8
$
(40.0
)
$
(14.0
)
Income Tax Expense (Benefit)
14.2
(22.2
)
0.8
(23.9
)
Loss Before Taxes
(19.0
)
(8.4
)
(39.2
)
(37.9
)
Deferred Financing Fees
0.5
0.9
1.6
1.9
Acquisition Step-Up Depreciation and
Amortization
11.8
13.2
47.4
52.8
Certain Non-Cash Adjustments
8.5
2.1
50.7
11.3
Acquisition and Integration
(0.1
)
5.1
8.6
45.8
Business and Transformation
Initiatives
11.1
8.8
31.0
22.1
Financing-Related Costs
—
0.1
0.2
0.3
Loss (Gain) on Remeasurement of Warrant
Liability
14.4
3.3
(2.2
)
(0.7
)
Other Non-Cash and/or Non-Recurring
Adjustments
46.2
33.5
137.3
133.5
Adjusted Earnings before Taxes
27.2
25.1
98.1
95.6
Taxes on Earnings as Reported
(14.2
)
22.2
(0.8
)
23.9
Income Tax Adjustments(1)
9.9
(25.8
)
(16.0
)
(41.8
)
Adjusted Taxes on Earnings
(4.3
)
(3.6
)
(16.8
)
(17.9
)
Adjusted Net Income
$
22.9
$
21.5
$
81.3
$
77.7
Average Weighted Basic Shares Outstanding
on an As-Converted Basis
140.5
140.2
140.4
139.4
Fully Diluted Shares on an As-Converted
Basis
142.0
142.7
142.7
141.5
Adjusted Earnings Per Share
$
0.16
$
0.15
$
0.57
$
0.55
(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
52-Weeks Ended
(dollars in millions)
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
Core D&A - Non-Acquisition-related
included in Gross Profit
$
5.3
$
4.8
$
22.8
$
24.3
Step-Up D&A - Transaction-related
included in Gross Profit
2.7
4.1
11.1
16.4
Depreciation & Amortization -
included in Gross Profit
8.0
8.9
33.9
40.7
Core D&A - Non-Acquisition-related
included in SD&A Expense
2.3
2.5
9.3
9.7
Step-Up D&A - Transaction-related
included in SD&A Expense
9.1
9.1
36.3
36.4
Depreciation & Amortization -
included in SD&A Expense
11.4
11.6
45.6
46.1
Depreciation & Amortization -
Total
$
19.4
$
20.5
$
79.5
$
86.8
Core Depreciation and Amortization
$
7.6
$
7.3
$
32.1
$
34.0
Step-Up Depreciation and Amortization
11.8
13.2
47.4
52.8
Total Depreciation and
Amortization
$
19.4
$
20.5
$
79.5
$
86.8
EBITDA and Adjusted EBITDA
13-Weeks Ended
52-Weeks Ended
(dollars in millions)
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
Net (Loss) Income
$
(33.2
)
$
13.8
$
(40.0
)
$
(14.0
)
Plus non-GAAP adjustments:
Income Tax Expense (Benefit)
14.2
(22.2
)
0.8
(23.9
)
Depreciation and Amortization
19.4
20.5
79.5
86.8
Interest Expense, Net
15.7
12.9
60.6
44.4
Interest Income from IO loans(1)
(0.6
)
(0.3
)
(2.0
)
(1.6
)
EBITDA
15.5
24.7
98.9
91.7
Certain Non-Cash Adjustments(2)
8.5
2.1
50.7
11.3
Acquisition and Integration(3)
(0.1
)
5.1
8.6
45.8
Business Transformation Initiatives(4)
11.1
8.8
31.0
22.1
Financing-Related Costs(5)
—
0.1
0.2
0.3
(Gain) loss on Remeasurement of Warrant
Liabilities(6)
14.4
3.3
(2.2
)
(0.7
)
Adjusted EBITDA
$
49.4
$
44.1
$
187.2
$
170.5
Net income (loss) as a % of Net
Sales
(9.4
)%
3.9
%
(2.8
)%
(1.0
)%
Adjusted EBITDA as a % of Net
Sales
14.0
%
12.4
%
13.0
%
12.1
%
(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 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
$15.5 million and $8.8 million of share-based compensation that was
awarded to associates and directors for the fiscal year ended
December 31, 2023 and the fiscal year ended January 1, 2023,
respectively.
Asset Impairments and Write-Offs — For the
fiscal year ended December 31, 2023, the Company recorded an
adjustment for a non-cash loss on sale of $13.7 million related to
fixed assets for the sale of the Bluffton, Indiana plant, along
with $4.7 million related to the termination of the contract that
was settled with the sale, and impairments of $12.6 million related
to the closure of the Company's manufacturing facility in
Birmingham, Alabama and Gramercy, Louisiana. For the fiscal year
ended January 1, 2023, the Company recorded an adjustment for an
impairment of $2.0 million related to the termination of
distribution agreements.
Purchase Commitments and Other Adjustments
– We have purchase commitments for specific quantities at fixed
prices for certain of our products’ key ingredients. To facilitate
comparisons of our underlying operating results, this adjustment
was made to remove the volatility of purchase commitment related
unrealized gains and losses. The adjustment related to Purchase
Commitment and Other non-cash adjustments were $3.0 million and
$0.5 million for the fiscal year ended December 31, 2023 and the
fiscal year ended January 1, 2023, respectively. In addition, for
the fiscal year ended December 31, 2023, we recorded $1.2 million
for the amortization of cloud based computing assets.
(3)
Adjustment for Acquisition and Integration
Costs – This is comprised of consulting, transaction services, and
legal fees incurred for acquisitions and certain potential
acquisitions, in addition to expenses associated with integrating
recent acquisitions. Such expenses were $9.7 million for the fiscal
year ended December 31, 2023, as well as $1.1 million of income for
the change of liability associated with the Tax Receivable
Agreement for the fiscal year ended December 31, 2023. In fiscal
year 2022, the majority of charges are related to the buyout of
multiple distributors, which were accounted for as contract
terminations resulting in expense of $23.0 million as well as other
integration costs. During the fiscal year ended January 1, 2023, we
incurred incremental costs of $21.8 million, for the integration of
Truco Holdco Inc., R.W. Garcia Co., Inc., Kings Mountain,
distributor buyouts, and costs to evaluate other potential
acquisitions, as well as $1.0 million for the incremental liability
associated with the Tax Receivable Agreement included in the fiscal
year ended January 1, 2023.
(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 ERP transition costs, fall into this
category. The Company incurred such costs of $31.0 million for the
fiscal year ended December 31, 2023 and $22.1 million for the
fiscal year ended January 1, 2023, which included the closure of
our Gramercy, Louisiana and Birmingham, Alabama plants along with
various other supply chain, commercial and administrative
initiatives. During fiscal year 2023, we completed the closure of
our Gramercy, Louisiana and Birmingham, Alabama manufacturing
plants along with the sale of our Bluffton, Indiana manufacturing
plant.
(5)
Financing-Related Costs – These costs
include adjustments for various items related to raising debt and
equity capital or debt extinguishment costs.
(6)
Gains and losses related to the changes in
the remeasurement of warrant liabilities are not expected to be
settled in cash, and when exercised would result in a cash inflow
to the Company with the Warrants converting to Class A Common Stock
with the liability being extinguished and the fair value of the
Warrants at the time of exercise being recorded as an increase to
equity.
Normalized Adjusted EBITDA
FY 2022
FY 2023
(dollars in millions)
Q1
Q2
Q3
Q4
FY 2022
Q1
Q2
Q3
Q4
FY 2023
Adjusted EBITDA
$ 36.5
$ 42.2
$ 47.7
$ 44.1
$ 170.5
$ 40.4
$ 45.2
$ 52.1
$ 49.4
$ 187.2
(2)
Pre-Acquisition Adjusted EBITDA(1)
0.2
—
—
—
0.2
—
—
—
—
—
Normalized Adjusted EBITDA
$ 36.7
$ 42.2
$ 47.7
$ 44.1
$ 170.7
$ 40.4
$ 45.2
$ 52.1
$ 49.4
$ 187.2
(2)
(1) Pre-Acquisition Adjusted EBITDA - This
adjustment represents the Adjusted EBITDA of acquired companies,
prior to the acquisition date, as well as from the buyout date of
Clem and J&D Snacks.
(2) Does not total due to rounding.
Net Debt and Leverage Ratio
(dollars in millions)
As of December 31,
2023
Term Loan
$
771.3
Real Estate Loan
80.2
ABL Facility
0.4
Capital Leases(1)
66.6
Deferred Purchase Price
0.2
Gross Debt(2)
918.7
Cash and Cash Equivalents
52.0
Total Net Debt
$
866.7
Last 52-Weeks Normalized Adjusted
EBITDA
$
187.2
Net Leverage Ratio(3)
4.6x
(1) Capital Leases include equipment term
loans and excludes the impact of step-up accounting.
(2) Excludes amounts related to guarantees
on IO loans which are collateralized by routes. We have the ability
to recover substantially all of the outstanding loan value in the
event of a default scenario, which historically has been
uncommon.
(3) Based on Normalized Adjusted EBITDA of
$187.2 million.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240229318686/en/
Investor Kevin Powers Utz Brands, Inc.
kpowers@utzsnacks.com
Media Kevin Brick Utz Brands, Inc.
kbrick@utzsnacks.com
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