The Company Reaffirms FY 2021
Outlook
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 4,
2021.
“In the first quarter, we continued to execute against our value
creation strategies to position the Company for long-term success,”
said Dylan Lissette, Chief Executive Officer of Utz. “Even as we
lapped significant out-performance versus the category in the early
weeks of the COVID-19 pandemic last year, we are pleased with our
Power Brands’ sales momentum and the continued growth in our
Emerging and Expansion geographies. In addition, we successfully
went live on our ERP implementation that will better enable our
platform to scale, and we continued to make strategic acquisitions
with our recently announced definitive agreement to acquire Festida
Foods and our previously announced acquisition of Vitner’s, which
closed on February 8, 2021. Looking ahead, we remain on track to
deliver our targets for the full year.”
First Quarter 2021 Financial Highlights
Quarter Ended
(in $millions)
March 29, 2020
(Predecessor)
April 4, 2021
(Successor)
% Change
Net Sales
$
228.0
$
269.2
18.0
%
Pro Forma Net Sales(1,2)
275.2
269.2
(2.2)
%
Gross Profit
80.0
95.2
19.0
%
Adjusted Gross Profit(2)
85.3
104.5
22.5
%
Adjusted Gross Profit Margin(2)
37.4
%
38.8
%
+140
bps
Net Income (Loss)
1.7
(23.3)
nm
Adjusted Net Income(2)
11.5
19.0
65.2
%
Adjusted EBITDA(2)
29.2
37.9
29.8
%
Adjusted EBITDA Margin(2)
12.8
%
14.1
%
+130
bps
(1) Pro Forma Net Sales assumes the
Company owned H.K. Anderson and Truco Enterprises on the first day
of fiscal 2020, and that the Company owned Vitner’s on the first
day of fiscal February 2020. Pro Forma Net Sales are on an
estimated comparable 13-week basis.
(2) 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 4, 2021, the Company’s retail
sales as measured by IRI MULO-C increased 5.9% on a two-year CAGR
basis, consistent with Salty Snack category growth of 6.0% for the
same period.
For the 13-week period ended April 4, 2021, the Company’s Power
Brands’ retail sales increased 7.6% on a two-year CAGR basis,
increasing to nearly 87% of sales versus approximately 84% in the
same period in 2019. Power Brand sales growth during the two-year
period was led by Utz®, ON THE BORDER®, Zapp’s®, TORTIYAHS!, Golden
Flake® Pork Skins, Boulder Canyon®, Hawaiian®, TGI Fridays® and
Herdez®. As expected, the two-year CAGR retail sales decline of
4.3% in Foundation Brands reflects the Company’s continued strategy
to focus its resources on its Power Brands.
IRI Retail Sales Growth Summary(1)
Last 13-Weeks Ended April 4,
2021
(in $millions)
YoY Change
2-Year CAGR
Total Retail Sales Growth(1)
Salty Snack Category
1.7
%
6.0
%
Utz
(2.3)
%
5.9
%
Power Brands
(1.1)
%
7.6
%
Foundation Brands(2)
(10.8)
%
(4.3)
%
Sales by Geography Growth(1)
Core
Salty Snack Category
(0.6)
%
4.9
%
Utz
(6.4)
%
3.3
%
Power Brands
(5.5)
%
4.5
%
Expansion
Salty Snack Category
3.7
%
6.8
%
Utz
1.7
%
9.1
%
Power Brands
4.3
%
12.3
%
Emerging
Salty Snack Category
2.1
%
6.5
%
Utz
1.8
%
8.3
%
Power Brands
2.6
%
9.7
%
(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.
First Quarter 2021 Financial Results
See description of Non-GAAP financial measures mentioned in this
press release and reconciliations of GAAP measures to Non-GAAP
adjusted measures in the tables that accompany this release. In
addition, see description of the periods representing the
Predecessor and Successor periods in the Company's Form 10-Q for
the fiscal quarter ended, April 4, 2021.
Net sales in the quarter increased 18.0% to $269.2 million
compared to $228.0 in the first quarter of 2020. The increase in
net sales was driven by acquisitions of +21.5% and favorable
price/mix of +1.9%. Partially offsetting these factors were volume
declines of (4.7%) due to transitory events, namely pantry loading
at the onset of the COVID-19 pandemic and the February 2021
snowstorms. The Company estimates the February snowstorms
negatively impacted its net sales growth rate in the quarter by 200
to 300 basis points. In addition, the Company’s continued shift to
independent operators (“IO”) and the resulting increase in sales
discounts impacted net sales by (0.6%).
Pro Forma Net Sales decreased 2.2% to $269.2 million as compared
to Pro Forma Net Sales of $275.2 million in the first quarter of
2020, as the Company lapped the impact from COVID-19 on its first
quarter 2020 results. The year over year Pro Forma Net Sales growth
rate assumes the Company owned H.K. Anderson and Truco Enterprises
on the first day of fiscal 2020, and that the Company owned
Vitner’s on the first day of fiscal February 2020.
Pro Forma Net Sales increased 4.3% on a two-year CAGR basis. The
Pro Forma Net Sales two-year CAGR assumes the Company owned Kennedy
Endeavors, Kitchen Cooked, H.K. Anderson and Truco Enterprises on
the first day of fiscal 2019, and that the Company owned Vitner’s
on the first day of fiscal February 2019.
Gross profit was $95.2 million, or 35.4% as a percentage of net
sales. Adjusted Gross Profit increased 22.5% to $104.5 million, or
38.8% as a percentage of net sales, compared to Adjusted Gross
Profit of $85.3 million, or 37.4% as a percentage of net sales, in
the prior year period. The increase in Adjusted Gross Profit as a
percentage of net sales was primarily driven by improved
price/mix.
In the first quarter of 2021 the Company reported a net loss of
$(23.3) million, compared to net income of $1.7 million in the
prior year period. The net loss during the first quarter of 2021
was primarily driven by the loss on remeasurement of warrant
liabilities consistent with the accounting guidance recently
announced by the Securities and Exchange Commission (the “SEC”) for
warrants issued by special purpose acquisition companies and
increased depreciation and amortization related to the Business
Combination and acquisitions, as well as one-time expenses incurred
as a result of the debt refinancing in January 2021. Adjusted Net
Income in the first quarter of 2021 increased 65.2% to $19.0
million compared to Adjusted Net Income of $11.5 million in the
prior year period.
Adjusted EBITDA increased 29.8% to $37.9 million, or 14.1% as a
percentage of net sales, compared to Adjusted EBITDA of $29.2
million, or 12.8% as a percentage of net sales, in the prior year
period. The increase in Adjusted EBITDA margin was primarily driven
by the Company’s acquisition of Truco given the strong margin
profile of the acquired business.
First Quarter 2021 Balance Sheet and Cash Flow
Highlights
- $181 million in cash from the exercise of the public warrants
and forward purchase warrants during the fourth quarter of 2020 and
first quarter of 2021, simplifying the Company’s capital
structure.
- Placed a new $720 million Term Loan B due 2028 that extended
the maturity profile by over three years and reset certain credit
agreement terms, providing increased financial flexibility.
- Repaid in full the outstanding balance on the $490 million
Bridge Credit Facility used to fund the acquisition of Truco
Enterprises and certain rights to the ON THE BORDER® brand.
- Net debt of $739.2 million as of April 4, 2021 resulting in a
Pro Forma Net Leverage ratio of 4.0x based on Normalized Further
Adjusted EBITDA of $186.0 million.
- Capital expenditures of $2.1 million in the first quarter, and
this is expected to accelerate throughout the year to support the
Company’s productivity initiatives.
Fiscal Year 2021 Outlook
For the 52-week fiscal year ending January 2, 2022, the
Company is reaffirming its full-year outlook previously provided on
March 18, 2021. The Company’s full-year outlook excludes the impact
of the pending acquisition of Festida Foods, which is expected to
close in the second quarter of 2021.
- Net sales consistent with 2020 Pro Forma Net Sales of
$1.16B(1) with modest organic sales growth year over
year. The Company’s projected pro forma two-year CAGR for
fiscal 2020 and 2021 of approximately 6% is above the Company’s
long-term growth outlook of 3 – 4%.
- Adjusted EBITDA of $180 – $190 million(2) versus 2020
Further Adjusted EBITDA of $181 million(3), delivering a margin of
approximately 16%.
- Adjusted Earnings Per Share of $0.70 – $0.75, which
excludes step-up depreciation & amortization (“D&A”), stock
compensation expense, and non-recurring items. This assumes fully
diluted shares on an as-converted basis of approximately 142
million.
In addition to the risks and uncertainties identified under
“Forward-Looking Statements,” the Company’s 2021 guidance is
estimated based on the following assumptions, all unchanged versus
the previous outlook unless noted below:
- Funded $25 million Vitner's acquisition in February 2021 with
balance sheet cash
- Expecting 200 – 250 Independent Route (“IO”) conversions
- Core D&A of $25 – $27 million and now expect step-up
D&A of $50 – $53 million (comprised of approximately 40% cost
of goods sold and 60% SG&A expense)
- Capital expenditures of $30 – $40 million in order to drive
productivity efforts
- Commodity inflation of approximately 4%
- Productivity of approximately 2% of cost of goods sold
- Cash interest expense of approximately $30 million(4)
- Effective cash tax rate of 23.0 - 25.0% (% of pre-tax book
income)
- Net leverage ratio of approximately 3.5x by end of 2021(5)
Note: Pro Forma Net Sales, Adjusted
EBITDA, Further Adjusted EBITDA, and Adjusted EPS are non-GAAP
financial measures. See appendix for reconciliation of non-GAAP
financial measures to most directly comparable GAAP measures.
(1) 2020 Pro Forma Net Sales includes
$1.14 billion of pro forma net sales on a 52-week comparison basis
as defined in the reconciliation tables that accompany this press
release, and also assumes $20 million of net sales for Vitner's to
align with the expectation for FY 2021 (11 months of results from
operating and SKU rationalization activity). The Company’s 2021 pro
forma net sales growth rate outlook is inclusive of the impact from
the conversion of employee-serviced DSD routes to independent
operator-serviced routes.
(2) Assumes $48 – $52 million from the
acquisitions of Truco Enterprises, H.K. Anderson and Vitner’s.
Assumes $2 million contribution to Adjusted EBITDA from Truco
synergies and excludes approximately $5 million of unrealized cost
synergies expected to occur in 2022 and beyond.
(3) 2020 Further Adjusted EBITDA includes
$179 million of Further Adjusted EBITDA on a 52-week comparison
basis as defined in the reconciliation tables that accompany this
press release and also includes $2 million for Vitner's Adjusted
EBITDA to align with the expectation for FY 2021 (11 months of
results from operating and SKU rationalization activity).
(4) Excludes amortization of deferred
financing fees, interest expense related to loans to independent
operators that we guarantee, and interest income. Includes $250M
notional interest rate hedge that fixes 1-month LIBOR at
1.339%.
(5) Includes unrealized cost synergies of
approximately $5 million from acquisitions.
For the purpose of the Company’s fiscal 2021 outlook, the
Company has assumed (i) the macroeconomic environment continues as
it has for the last several months and (ii) there is no significant
change on the Company from the impact of COVID-19.
With respect to projected fiscal year 2021 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 Adjusted EBITDA, and which are excluded from
Adjusted Earnings per Share. 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. Investors can also dial in over the phone
by calling (833) 670-0764 from the North America and (343) 761-2595
internationally. 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 20, 2021, by dialing (800) 585-8367 from
North America, or (416) 621-4642 from international locations, and
entering confirmation code 7745628.
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
nearly 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 merchant, club,
convenience, drug and other channels. Based in Hanover,
Pennsylvania, Utz operates fourteen facilities located in
Pennsylvania, Alabama, Arizona, Illinois, Indiana, Louisiana,
Washington, and Massachusetts. 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 outbreakpandemic, future plans for Utz Brands, Inc. (the
“Company”)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 CommissionSEC, as amended (the “Commission”) for the
fiscal year ended January 3, 2021 and other reports filed by the
Company with the CommissionSEC. 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:
- Pro Forma Net Sales
- Adjusted Gross Profit
- Adjusted Gross Profit as % of Net Sales (Adjusted Gross Profit
Margin)
- Pro Forma Gross Profit
- Pro Forma Adjusted Gross Profit
- Adjusted Selling, General and Administrative Expense
- Adjusted Selling, General and Administrative Expense as % of
Net Sales
- Adjusted Net Income
- EBITDA
- Adjusted EBITDA
- Adjusted EBITDA as % of Net Sales (Adjusted EBITDA Margin)
- Further Adjusted EBITDA
- Further Adjusted EBITDA as % of Pro Forma Net Sales (Further
Adjusted EBITDA Margin)
- Normalized Further Adjusted EBITDA
Pro Forma Net Sales is
defined as Net Sales including the historical net sales relating to
the pre-acquisition periods of H.K. Anderson, Truco Enterprises and
Vitner’s acquisitions.
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.
Pro Forma Gross Profit is
defined as Gross Profit including the historical Gross Profit
relating to the pre-acquisition periods of H.K. Anderson, Truco
Enterprises and Vitner’s acquisitions.
Pro Forma Adjusted Gross
Profit is defined as Adjusted Gross Profit including the
historical Adjusted Gross Profit relating to the pre-acquisition
periods of H.K. Anderson, Truco Enterprises and Vitner’s
acquisitions.
Adjusted Selling, General and
Administrative Expense is defined as all Selling,
General and Administrative expense excluding Depreciation and
Amortization expense, a non cash item. In addition, Adjusted
Selling, General 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, General and Administrative Expense as a
percentage of Net Sales as an additional measure for investors to
evaluate our Adjusted Selling, General 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 acquisition 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, and
financing-related costs. Lastly, Adjusted Net Income normalizes the
income tax provision to account for the above-mentioned
adjustments.
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.
Further Adjusted EBITDA is
defined as Adjusted EBITDA after giving effect to pre-acquisition
Adjusted EBITDA of H.K. Anderson, Truco Enterprises and Vitner’s.
We also report Further Adjusted EBITDA as a percentage of Pro Forma
Net Sales as an additional measure to evaluate our Further Adjusted
EBITDA margins on Pro Forma Net Sales. This definition does not
include adjustments for estimated unrealized cost synergies,
estimated unrealized public company costs or trade spend
normalization, as reflected in Normalized Further Adjusted
EBITDA.
Normalized Further Adjusted
EBITDA is defined as Further Adjusted EBITDA including
adjustments for estimated unrealized cost synergies related to the
acquisition of H.K. Anderson, Truco Enterprises and Vitner’s. In
addition, Normalized Further Adjusted EBITDA also adjusts for
estimated unrealized public company costs, and a one-time trade
spend normalization adjustment at the end of 2019.
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 INCOME (LOSS)
For the thirteen weeks ended
April 4, 2021 (Successor) and March 29, 2020 (Predecessor)
(In thousands, except share
information)
(Unaudited)
Successor
Predecessor
Thirteen weeks ended April 4,
2021
Thirteen weeks ended March 29,
2020
Net sales
$
269,182
$
228,029
Cost of goods sold
173,941
148,015
Gross profit
95,241
80,014
Selling, general and administrative
expenses
Selling
56,728
48,333
General and administrative
29,933
19,940
Total selling, general and administrative
expenses
86,661
68,273
Gain on sale of assets
Gain on disposal of property, plant and
equipment
297
68
Gain on sale of routes, net
422
404
Total gain on sale of assets
719
472
Income from operations
9,299
12,213
Other (expense) income
Interest expense
(10,861)
(9,643)
Other income
718
580
Loss on remeasurement of warrant
liability
(21,501)
—
Other (expense) income, net
(31,644)
(9,063)
(Loss) income before taxes
(22,345)
3,150
Income tax expense
1,004
1,458
Net (loss) income
(23,349)
1,692
Net loss attributable to noncontrolling
interest
820
—
Net (loss) income attributable to
controlling interest
$
(22,529)
$
1,692
Earnings per Class A Common stock: (in
dollars)
Basic & diluted
$
(0.30)
Weighted-average shares of Class A
Common stock outstanding
Basic & diluted
75,927,005
Other comprehensive income
(loss):
Interest rate swap
$
822
$
(7,208)
Comprehensive loss
$
(21,707)
$
(5,516)
Utz Brands, Inc.
CONSOLIDATED BALANCE
SHEETS
April 4, 2021 and January 3,
2021
(In thousands)
As of April 4, 2021
As of January 3, 2021
(Unaudited)
(as restated)
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
4,020
$
46,831
Accounts receivable, less allowance of
$739 and $239, respectively
130,599
118,305
Inventories
67,584
59,810
Prepaid expenses and other assets
12,276
11,573
Current portion of notes receivable
5,918
7,666
Total current assets
220,397
244,185
Non-current Assets
Property, plant and equipment, net
262,999
270,416
Goodwill
880,063
862,183
Intangible assets, net
1,167,268
1,171,709
Non-current portion of notes
receivable
22,348
20,000
Other assets
14,160
15,671
Total non-current assets
2,346,838
2,339,979
Total assets
$
2,567,235
$
2,584,164
LIABILITIES AND EQUITY
Current Liabilities
Current portion of term debt
$
7,500
$
469
Current portion of other notes payable
8,142
9,018
Accounts payable
64,214
57,254
Accrued expenses and other
49,585
80,788
Current warrant liability
—
52,580
Total current liabilities
129,441
200,109
Non-current portion of term debt and
revolving credit facility
718,443
778,000
Non-current portion of other notes
payable
25,418
24,564
Non-current accrued expenses and other
37,483
37,771
Deferred tax liability
74,847
73,786
Non-current warrant liability
104,400
85,032
Total non-current liabilities
960,591
999,153
Total liabilities
1,090,032
1,199,262
Commitments and Contingencies
Equity
Shares of Class A Common Stock, $0.0001
par value; 1,000,000,000 shares authorized; 76,481,833 and
71,094,714 shares issued and outstanding as of April 4, 2021 and
January 3, 2021, respectively.
7
7
Shares of Class V Common Stock, $0.0001
par value; 61,249,000 shares authorized; 60,349,000 shares issued
and outstanding as of April 4, 2021 and January 3, 2021.
6
6
Additional paid-in capital
941,003
793,461
Accumulated deficit
(264,019)
(241,490)
Accumulated other comprehensive income
1,746
924
Total stockholders' equity
678,743
552,908
Noncontrolling interest
798,460
831,994
Total equity
1,477,203
1,384,902
Total liabilities and equity
$
2,567,235
$
2,584,164
Utz Brands, Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
For the thirteen weeks ended
April 4, 2021 (Successor) and March 29, 2020 (Predecessor)
(In thousands)
(Unaudited)
Successor
Predecessor
Thirteen weeks ended April 4,
2021
Thirteen weeks ended March 29,
2020
Cash flows from operating
activities
Net (loss) income
$
(23,349)
$
1,692
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Depreciation and amortization
19,407
8,912
Loss on remeasurement of warrant
liability
21,501
—
Gain on disposal of property and
equipment
(297)
(68)
Gain on sale of routes
(422)
(404)
Stock based compensation
2,883
—
Deferred taxes
1,061
975
Deferred financing costs
2,870
653
Changes in assets and liabilities:
Accounts receivable, net
(11,176)
(15,374)
Inventories
(7,040)
2,676
Prepaid expenses and other assets
866
(618)
Accounts payable and accrued expenses and
other
(19,487)
(1,217)
Net cash used in operating activities
(13,183)
(2,773)
Cash flows from investing
activities
Acquisitions, net of cash acquired
(25,189)
(8,789)
Purchases of property and equipment
(2,134)
(3,556)
Purchases of intangibles
(1,200)
(650)
Proceeds from sale of property and
equipment
391
152
Proceeds from sale of routes
1,450
1,159
Proceeds from the sale of IO notes
2,295
—
Notes receivable, net
(924)
(2,780)
Net cash used in investing activities
(25,311)
(14,464)
Cash flows from financing
activities
Line of credit borrowings, net
15,000
10,000
Borrowings on term debt and notes
payable
720,000
2,650
Repayments on term debt and notes
payable
(783,735)
(2,178)
Payment of debt issuance cost
(8,372)
—
Exercised warrants
57,232
—
Dividends
(4,261)
—
Distributions to members
—
(2,657)
Distribution to noncontrolling
interest
(181)
—
Net cash (used in) provided by financing
activities
(4,317)
7,815
Net decrease in cash and cash
equivalents
(42,811)
(9,422)
Cash and cash equivalents at beginning
of period
46,831
15,053
Cash and cash equivalents at end of
period
$
4,020
$
5,631
Reconciliation of Non-GAAP Financial
Measures to Reported Financial Measures
Net Sales and Pro Forma Net Sales
13-Weeks Ended
(dollars in millions)
April 4, 2021
March 29, 2020
Net Sales
$
269.2
$
228.0
HKA Pre-Acquisition Net Sales
—
2.3
Vitner's Pre-Acquisition Net Sales
—
3.9
Truco Pre-Acquisition Net Sales
—
41.0
Pro Forma Net Sales
$
269.2
$
275.2
Gross Profit, Adjusted Gross Profit, Pro Forma Gross Profit
and Pro Forma Adjusted Gross Profit
13-Weeks Ended
(dollars in millions)
April 4, 2021
March 29, 2020
Gross Profit
$
95.2
$
80.0
Depreciation and Amortization
8.1
5.3
Non-Cash, non-recurring adjustments
1.2
—
Adjusted Gross Profit
104.5
85.3
Adjusted Gross Profit as a % of Net
Sales
38.8
%
37.4
%
Depreciation and Amortization - COGS
(8.1)
(5.3)
HKA Pre-Acquisition Gross Profit
—
0.3
Vitner's Pre-Acquisition Gross Profit
—
1.9
Truco Pre-Acquisition Gross Profit
—
16.4
Pro Forma Gross Profit
96.4
98.6
Depreciation and Amortization - COGS
8.1
5.3
Pro Forma Adjusted Gross Profit
$
104.5
$
103.9
Pro Forma Adjusted Gross Profit as a % of
Pro Forma Net Sales
38.8
%
37.8
%
Adjusted Selling, General and Administrative Expense
13-Weeks Ended
(dollars in millions)
April 4, 2021
March 29, 2020
Selling, General and Administrative
Expense - Incl Depreciation and Amortization
$
86.7
$
68.3
Depreciation and Amortization in SG&A
Expense
(11.3)
(3.6)
Non-Cash, and/or Non-recurring
Adjustments
(8.2)
(7.7)
Adjusted Selling, General and
Administrative Expense
67.2
57.0
Vitner's Pre-Acquisition SG&A
Expense
—
1.5
Truco Pre-Acquisition SG&A Expense
—
6.8
Pro Forma Adjusted SG&A
Expense
$
67.2
$
65.3
Pro Forma Adjusted Selling, General and
Administrative Expense as % of Pro Forma Net Sales
25.0
%
23.7
%
Adjusted Net Income
13-Weeks Ended
(dollars in millions, except per share
data)
April 4, 2021
March 29, 2020
Net (Loss) Income
$
(23.3)
$
1.7
Deferred Financing Fees
2.7
0.8
Depreciation and Amortization
19.4
8.9
Non-Acquisition Related Depreciation and
Amortization
(6.7)
(6.4)
Acquisition Step-Up Depreciation and
Amortization:
12.7
2.5
Certain Non-Cash Adjustments
4.2
1.1
Acquisition and Integration
1.9
5.2
Business and Transformation
Initiatives
3.3
1.6
Financing-Related Costs
—
0.1
Loss on Remeasurement of Warrant
Liability
21.5
—
Other Non-Cash and/or Non-Recurring
Adjustments
30.9
8.0
Income Tax-Rate Adjustment(1)
(4.0)
(1.5)
Adjusted Net Income
$
19.0
$
11.5
Basic Shares Outstanding
136.3
Fully Diluted Shares on an As-Converted
Basis
142.0
Adjusted Earnings Per Share
$
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 an effective cash tax
rate, minus the actual tax provision recorded in the Consolidated
Statement of Operations and Comprehensive Income (Loss). The
effective cash tax rate includes corporate income tax payments plus
non-resident withholding and tax distributions, which are
considered equivalent to tax.
Depreciation & Amortization
13-Weeks Ended
(dollars in millions)
April 4, 2021
March 29, 2020
Core D&A - Non-Acquisition-related
included in Gross Profit
$
4.5
$
4.4
Step-Up D&A - Transaction-related
included in Gross Profit
3.6
0.9
Depreciation & Amortization -
included in Gross Profit
8.1
5.3
Core D&A - Non-Acquisition-related
included in SG&A Expense
2.2
2.0
Step-Up D&A - Transaction-related
included in SG&A Expense
9.1
1.6
Depreciation & Amortization -
included in SG&A Expense
11.3
3.6
Depreciation & Amortization -
Total
$
19.4
$
8.9
Core Depreciation and Amortization
$
6.7
$
6.4
Step-Up Depreciation and Amortization
12.7
2.5
Total Depreciation and
Amortization
$
19.4
$
8.9
EBITDA, Adjusted EBITDA and Further Adjusted EBITDA
13-Weeks Ended
(dollars in millions)
April 4, 2021
March 29, 2020
Net (Loss) Income
$
(23.3)
$
1.7
Plus non-GAAP adjustments:
Income Tax (Benefit) or Expense
1.0
1.5
Depreciation and Amortization
19.4
8.9
Interest Expense, Net
10.9
9.6
Interest Income (IO loans)(1)
(1.0)
(0.5)
EBITDA
7.0
21.2
Certain Non-Cash Adjustments(2)
4.2
1.1
Acquisition and Integration(3)
1.9
5.2
Business Transformation Initiatives(4)
3.3
1.6
Financing-Related Costs(5)
—
0.1
Loss on Remeasurement of Warrant
Liabilities(6)
21.5
—
Adjusted EBITDA
37.9
29.2
Adjusted EBITDA as a % of Net Sales
14.1
%
12.8
%
HKA Pre-Acquisition Adjusted EBITDA(7)
—
0.3
Vitner's Pre-Acquisition Adjusted
EBITDA(7)
—
0.4
Truco Pre-Acquisition Adjusted
EBITDA(7)
—
9.7
Further Adjusted EBITDA
$
37.9
$
39.6
Further Adjusted EBITDA as % of Pro Forma
Net Sales
14.1
%
14.4
%
(1)
Interest Income from IO Loans refers to
Interest Income that we earn from IO notes receivable that have
resulted from our initiatives to transition from RSP distribution
to IO distribution (“Business Transformation Initiatives”). There
is a Notes Payable recorded that mirrors 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 – Utz Quality Foods,
LLC, our wholly-owned subsidiary, established the 2018 Long-Term
Incentive Plan (the “2018 LTIP”) for employees in February 2018.
The Company recorded expense of $0.8 million for thirteen weeks
ended March 29, 2020 (Predecessor). Expenses incurred for the 2018
LTIP are non-operational in nature and are expected to decline upon
the vesting of the remaining phantom units from fiscal year 2018
and fiscal year 2019 at the end of fiscal year 2021. The phantom
units under the 2018 LTIP were converted into the 2020 LTIP RSUs as
part of the Business Combination. For the thirteen weeks ended
April 4, 2021 (Successor), the Company incurred $2.9 million of
share based compensation under the 2020 LTIP.
Purchase Commitments and Other Adjustments
– We have purchased 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
gains and losses. For the thirteen weeks ended April 4, 2021
(Successor) we recorded a loss of $0.0 million compared to a
benefit of $0.3 million for thirteen weeks ended March 29, 2020
(Predecessor).
(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 costs incurred
for the Vitner's acquisition, the Truco acquisition, the Kitchen
Cooked acquisition, and related integration expenditures where we
incurred costs of $1.9 million and $5.2 million for the thirteen
weeks ended April 4, 2021 (Successor) and the thirteen weeks ended
March 29, 2020 (Predecessor), respectively.
(4)
Business Transformation Initiatives
Adjustment – This adjustment is related to consultancy,
professional, and legal fees incurred for specific initiatives and
structural changes to the business that do not reflect the cost of
normal business operations. In addition, certain Rice/Lissette
family-related costs incurred but not part of normal business
operations, and 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 $3.3 million and $1.6 million for the thirteen weeks ended
April 4, 2021 (Successor) and the thirteen weeks ended March 29,
2020, 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 expensed of $0.1 million for the thirteen weeks ended
March 29, 2020 (Predecessor).
(6)
Losses (or gains) related to the changes
in the remeasurement of warrant liabilities are not expected to be
settled in cash, and if/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.
(7)
Pre-Acquisition Adjusted EBITDA – This
adjustment represents the adjusted EBITDA of acquired companies
prior to the acquisition date.
Normalized / Further Adjusted EBITDA
FY 2020
FY 2021
(dollars in millions)
Q1
Q2
Q3
Q4
FY 2020
Q1
TTM
Further Adjusted EBITDA
$
39.6
$
49.7
$
52.1
$
40.2
$
181.6
$
37.9
$
179.9
Acquisition Synergies(1)
2.9
2.6
2.0
1.5
9.0
1.3
7.4
Public Company Costs(2)
(0.8)
(0.7)
(0.6)
—
(2.1)
—
(1.3)
Normalized Further Adjusted
EBITDA
$
41.7
$
51.6
$
53.5
$
41.7
$
188.5
$
39.2
$
186.0
(1)
Represents identified integration-related
cost savings expected to be realized from the elimination of
certain procurement, manufacturing, and logistics as well as
selling, general and administrative expenses in connection with the
acquisition of Conagra Snacks, Kitchen Cooked, Truco Enterprises
and Vitner’s.
(2)
Represents estimated incremental costs of
operating as a public company following closing of the business
combination, including exchange listing and other fees; audit and
compliance costs; investor relations costs; additional D&O
insurance premium; legal expenses associated with public filings
and other items; and cash compensation for the Board of
Directors.
Net Debt and Leverage Ratio
(dollars in millions)
As of April 4, 2021
Term Loan
$
718.2
Revolving Credit Facility
15.0
Capital Leases(1)
8.6
Deferred Purchase Price
1.4
Gross Debt(2)
743.2
Cash and Cash Equivalents
4.0
Total Net Debt
$
739.2
Last 52-Weeks Normalized Further Adjusted
EBITDA
$
186.0
Net Leverage Ratio
4.0x
(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/20210513005342/en/
Investor Kevin Powers Utz Brands, Inc.
kpowers@utzsnacks.com
Media Kevin Brick Utz Brands, Inc.
kbrick@utzsnacks.com
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