Utz Brands, Inc. (NYSE: UTZ) (“Utz” or the “Company”), a leading
U.S. manufacturer of branded salty snacks and a small-cap growth
and value Staples equity, today reported financial results for the
Company’s fiscal first quarter ended March 31, 2024.
1Q’24 Summary(1)
- Net sales of $346.5 million
- Organic Net Sales increased 1.5%
- Gross Profit Margin expansion of 480 bps
- Adjusted Gross Margin expansion of 280 bps
- Net income of $2.4 million vs. net loss of $(14.5) million
- Adjusted EBITDA increased 7.4% to $43.4 million
- Basis loss per share of $(0.05)
- Adjusted Earnings per share increased 27.3% to $0.14
FY’24 Outlook
- Reaffirming Organic Net Sales and Adjusted EBITDA outlook
- Raising Adjusted Earnings per Share outlook
Recent Developments
- On April 17, 2024 completed repricing of $630 million Term Loan
due in January 2028 (“Term Loan”) resulting in a lower interest
rate
- On April 22, 2024 completed disposition of two manufacturing
facilities for total consideration of $18.5 million, subject to
customary adjustments
- Disposition and repricing transactions help further reduce net
debt and interest expense subsequent to the first quarter of
2024
“I’m pleased with our strong start to the year, as we gained
dollar, pound, and unit share in the Salty Snacks category in the
first quarter. In addition, we delivered our fifth consecutive
quarter of year-over-year Adjusted EBITDA Margin expansion, and we
drove 27% Adjusted Earnings per Share growth,” said Howard
Friedman, Chief Executive Officer of Utz. “As we continue to
execute our supply chain transformation strategy, our recent plant
dispositions will allow us to focus on the next phase of our
optimization efforts as we invest in our remaining facilities and
continue to deliver on our value creation initiatives. We are on
track to deliver our 2024 outlook and remain confident in
delivering the 2026 targets that we introduced at our Investor Day
in December.”
(1) All comparisons for the first quarter of 2024 are compared
to the first quarter ended April 2, 2023.
First Quarter 2024 Financial Highlights
13-Weeks Ended
(in $millions, except per share
amounts)
March 31, 2024
April 2, 2023
% Change
Net Sales
$
346.5
$
351.4
(1.4)%
Organic Net Sales
348.0
342.9
1.5%
Gross Profit
119.6
104.5
14.4%
Gross Profit Margin
34.5
%
29.7
%
480 bps
Adjusted Gross Profit
128.8
121.0
6.4%
Adjusted Gross Profit Margin
37.2
%
34.4
%
280 bps
Net Income (Loss)
2.4
(14.5
)
nm
Net Income (Loss) Margin
0.7
%
(4.1
)%
nm
Adjusted Net Income
20.8
15.0
38.7%
Adjusted EBITDA
43.4
40.4
7.4%
Adjusted EBITDA Margin
12.5
%
11.5
%
100 bps
Basic Loss Per Share(1)
$
(0.05
)
$
(0.11
)
nm
Adjusted Earnings Per Diluted Share(1)
$
0.14
$
0.11
27.3%
(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.
First Quarter 2024 Results
First quarter net sales were $346.5 million compared to $351.4
million in the prior year period. The divestiture of the R.W.
Garcia® and Good Health® brands impacted net sales growth by
(2.5%), and the Company’s continued shift to independent operators
(“IOs”) and the resulting increase in sales discounts impacted net
sales growth by an estimated (0.4%). Organic Net Sales increased
1.5% led by increased volume/mix of 1.1% driven by strong growth of
the Company’s Power Brands, and net price realization of 0.4%.
For the 13-week period ended March 31, 2024, the Company’s
retail sales, as measured by Circana MULO-C, increased 4.1% versus
the prior-year period led by volume growth of 4.6%. The Company’s
total Power Brands’ retail sales increased 4.9% versus the
prior-year period(1) and the Company’s Power Four Brands of Utz®,
On The Border®, Zapp’s® and Boulder Canyon® increased 6.0%.
(1) Circana Total US MULO-C, custom Utz Brands hierarchy, on a
pro forma basis.
Gross profit margin was 34.5% compared to 29.7% in the prior
year period. Adjusted Gross Profit Margin was 37.2% compared to
34.4% in the prior year period as the benefits from productivity,
favorable sales mix, and pricing, more than offset supply chain
cost inflation and investments to support the Company’s
productivity initiatives. The continued shift to IOs impacted
Adjusted Gross Profit Margin by approximately 40 basis points, but
with offsetting benefits in Selling, Distribution, and
Administrative (“SD&A”) expense.
SD&A expenses increased 3.1% compared to the prior year
period. Adjusted SD&A Expense increased 6.0% compared to the
prior year period primarily due to increased marketing spend,
higher distribution costs, and investments in capabilities. These
expenses were partially offset by a reduction in selling costs from
the shift to IO’s and productivity benefits.
The Company reported net income of $2.4 million compared to a
net loss of $(14.5) million in the prior year period. Adjusted Net
Income in the quarter increased 38.7% to $20.8 million compared to
$15.0 million in the prior year period. Adjusted Earnings per Share
increased 27.3% to $0.14 compared to $0.11 in the prior year
period. The Adjusted Earnings per Share growth in the first quarter
was the result of operating earnings growth, lower core
depreciation and amortization expense, and lower interest
expense.
Adjusted EBITDA increased 7.4% to $43.4 million, or 12.5% as a
percentage of net sales, compared to Adjusted EBITDA of $40.4
million, or 11.5% as a percentage of net sales, in the prior year
period. The Adjusted EBITDA margin improvement was driven by
Adjusted Gross Margin expansion primarily due to the Company’s
productivity programs and lower commodity costs.
Balance Sheet and Cash Flow Highlights
- As of March 31, 2024
- Total liquidity of $198.9 million, consisting of cash on hand
of $47.0 million and $151.9 million available under the Company’s
revolving credit facility.
- Net debt of $728.0 million resulting in a Net Leverage Ratio of
3.8x based on trailing twelve months Normalized Adjusted EBITDA of
$190.1 million.
- Subsequent to quarter-end, the Company:
- Used ~$9.0 million in net proceeds from its most recent
dispositions to pay down long-term debt and put ~$5.0 million on
the balance sheet resulting in a ~$14.0 million reduction of net
debt.
- Completed a repricing of its $630 million Term Loan which
reduced the applicable interest rate on the Term Loan by
approximately 36 bps (assuming one-month SOFR) from Term SOFR plus
a credit spread adjustment plus 3.00% to Term SOFR plus 2.75%.
- The Company estimates that the combination of the ~$9.0 million
debt paydown and the repricing of the Term Loam will result in cash
interest expense savings of ~$3.0 million annually.
- For the thirteen weeks ended March 31, 2024
- Cash flow used in operations was $(9.1) million, which reflects
the seasonal use of working capital.
- Capital expenditures were $13.6 million, and dividend and
distributions paid were $8.0 million.
Fiscal Year 2024 Outlook
The Company is reaffirming its outlook for Organic Net Sales and
Adjusted EBITDA growth, and raising its outlook for Adjusted
Earnings per Share growth.
- Organic Net Sales growth of ~3% or better driven by volume
growth, and assumes net sales to be impacted by ~$45 million
due to the sale of the Good Health® and R.W. Garcia® brands.
- 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 23% to 28% (previously 16% to
21%); the improved growth expectation in 2024 is the result of
a more favorable effective tax rate, lower interest expense after
factoring in the use of net proceeds to pay down long term debt
from the April 2024 manufacturing plant dispositions, and the
favorable repricing of the Company’s Term Loan.
The Company also expects:
- An effective tax rate (normalized GAAP basis tax expense, which
excludes one-time items) in the range of 18% to 20% (previously 19%
to 21%);
- Interest expense of ~$47 million (previously ~$50
million);
- Capital expenditures in the range of $80 to $90 million
(unchanged); and
- Net Leverage Ratio of ~3.6x (unchanged) at year-end fiscal
2024.
With respect to projected fiscal 2024 Organic Net Sales,
Adjusted EBITDA and Adjusted Earnings Per Share, a quantitative
reconciliation is not available without unreasonable efforts due to
the high variability, complexity, and low visibility with respect
to certain items which are excluded from Organic Net Sales,
Adjusted EBITDA and Adjusted Earnings Per Share, respectively. We
expect the variability of these items to have a potentially
unpredictable, and potentially significant, impact on our future
financial results.
Conference Call and Webcast Presentation
The Company 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, May 9, 2024, by dialing 1-800-770-2030, 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 product
mix; the Company’s ability to reduce debt and the anticipated
interest expense savings from the repricing of the $630 million
Term Loan ; the Company’s cost savings plans and the Company’s
logistics optimization efforts; the estimated or anticipated future
results and benefits of the Company’s plans and operations; the
effects of inflation or supply chain disruptions on the Company or
its business; the benefits of the Company’s productivity
initiatives, , the effects of the Company’s marketing and
innovation initiatives, future capital structure, future
opportunities for the Company, statements regarding the Company’s
projected balance sheet and liabilities, including net leverage,
and other statements that are not historical facts. These
statements are based on the current expectations of the Company’s
management and are not predictions of actual performance. These
statements are subject to a number of risks and uncertainties and
the Company’s business and actual results may differ materially.
Factors that may cause such differences include, but are not
limited to: the risk that the Company’s gross profit margins may be
adversely impacted by a variety of factors, including variations in
raw materials pricing, retail customer requirements and mix, sales
velocities and required promotional support; changes in consumers’
loyalty to the Company’s brands due to factors beyond the Company’s
control; including changes in consumer spending due to factors such
as increasing household debt; changes in demand for the Company’s
products affected by changes in consumer preferences and tastes or
if the Company is unable to innovate or market its products
effectively, particularly in the Company’s Expansion geographies;
costs associated with building brand loyalty and interest in the
Company’s products, which may be affected by actions by the
Company’s competitors’ that result in the Company’s products not
suitably differentiated from the products of their competitors;
consolidation of key suppliers to the Company; inability of the
Company to adopt efficiencies into its manufacturing processes,
including automation and labor optimization, its network, including
through plant consolidation and lowest landed cost for shipping its
products or its logistics operations; fluctuations in results of
operations of the Company from quarter to quarter because of
changes in promotional activities; the possibility that the Company
may be adversely affected by other economic, business or
competitive factors; the risk that recently completed business
combinations and other acquisitions recently completed by the
Company (collectively, the “Business Combinations”) or dispositions
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 to
understanding and assessing financial results. Therefore, these
measures should not be considered in isolation or as an alternative
to net income, cash flows from operations, earnings per share or
other measures of profitability, liquidity or performance under
GAAP. You should be aware that the presentation of these measures
may not be comparable to similarly titled measures used by other
companies.
Management believes that non-GAAP financial measures should be
considered as supplements to the GAAP measures reported, should not
be considered replacements for, or superior to, the GAAP measures
and may not be comparable to similarly named measures used by other
companies. The Company’s calculation of the non-GAAP financial
measures may differ from methods used by other companies. We
believe that these non-GAAP financial measures provide useful
information to investors regarding certain financial and business
trends relating to the financial condition and results of
operations of the Company to date when considered with both the
GAAP results and the reconciliations to the most comparable GAAP
measures, and that the presentation of non-GAAP financial measures
is useful to investors in the evaluation of our operating
performance compared to other companies in the salty snack
industry, as similar measures are commonly used by the companies in
this industry. These non-GAAP financial measures are subject to
inherent limitations as they reflect the exercise of judgments by
management about which expense and income are excluded or included
in determining these non-GAAP financial measures. The non-GAAP
financial measures are not recognized in accordance with GAAP and
should not be viewed as an alternative to GAAP measures. As new
events or circumstances arise, these definitions could change. When
the definitions change, we will provide the updated definitions and
present the related non-GAAP historical results on a comparable
basis.
Utz uses the following non-GAAP financial measures in its
financial communications, and in the future could use others:
- Organic Net Sales
- Adjusted Gross Profit
- Adjusted Gross Profit as % of Net Sales (Adjusted Gross Profit
Margin)
- Adjusted Selling, Distribution, and Administrative Expense
- Adjusted Selling, Distribution, and Administrative Expense as %
of Net Sales
- Adjusted Net Income
- Adjusted Earnings Per Share
- EBITDA
- Adjusted EBITDA
- Adjusted EBITDA as % of Net Sales (Adjusted EBITDA Margin)
- Normalized Adjusted EBITDA
- Net Leverage Ratio
Organic Net Sales is defined
as net sales excluding the impacts of acquisitions, divestitures
and IO route conversions.
Adjusted Gross Profit
represents Gross Profit excluding Depreciation and Amortization
expense, a non-cash item. In addition, Adjusted Gross Profit
excludes the impact of costs that fall within the categories of
non-cash adjustments and non-recurring items such as those related
to stock-based compensation, hedging and purchase commitments
adjustments, asset impairments, acquisition, and integration costs,
business transformation initiatives, and financing-related costs.
Adjusted Gross Profit is one of the key performance indicators that
our management uses to evaluate operating performance. We also
report Adjusted Gross Profit as a percentage of Net Sales as an
additional measure for investors to evaluate our Adjusted Gross
Profit Margin on Net Sales.
Adjusted Selling, Distribution, and
Administrative Expense is defined as all Selling,
Distribution, and Administrative expense excluding Depreciation and
Amortization expense, a non- cash item. In addition, Adjusted
Selling, Distribution, and Administrative Expense excludes the
impact of costs that fall within the categories of non-cash
adjustments and non-recurring items such as those related to
stock-based compensation, hedging and purchase commitments
adjustments, asset impairments, acquisition and integration costs,
business transformation initiatives, and financing-related costs.
We also report Adjusted Selling, Distribution, and Administrative
Expense as a percentage of Net Sales as an additional measure for
investors to evaluate our Adjusted Selling, Distribution, and
Administrative Margin on Net Sales.
Adjusted EBITDA is defined
as EBITDA further adjusted to exclude certain non-cash items, such
as stock-based compensation, hedging and purchase commitments
adjustments, asset impairments, acquisition and integration costs,
business transformation initiatives; and financing-related costs.
Adjusted EBITDA is one of the key performance indicators we use in
evaluating our operating performance and in making financial,
operating, and planning decisions. We believe Adjusted EBITDA is
useful to the users of this release because the financial
information contained in the release can be used in the evaluation
of Utz’s operating performance compared to other companies in the
salty snack industry, as similar measures are commonly used by
companies in this industry. We also provide in this release,
Adjusted EBITDA as a percentage of Net Sales, as an additional
measure for readers to evaluate our Adjusted EBITDA Margin on Net
Sales.
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.
Utz Brands, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME For the thirteen weeks ended March 31, 2024 and April
2, 2023 (In thousands, except share information)
(Unaudited)
Thirteen weeks ended March 31,
2024
Thirteen weeks ended April 2,
2023
Net sales
$
346,523
$
351,433
Cost of goods sold
226,950
246,937
Gross profit
119,573
104,496
Selling, distribution, and
administrative expenses
Selling and distribution
73,666
65,046
Administrative
35,782
41,040
Total selling, distribution, and
administrative expenses
109,448
106,086
Loss on sale of assets, net
(470
)
(508
)
Income (loss) from operations
9,655
(2,098
)
Other income (expense), net
Gain on sale of business
44,015
—
Interest expense
(13,831
)
(14,378
)
Other income
910
1,615
Loss on remeasurement of warrant
liability
(11,808
)
(2,232
)
Other income (expense), net
19,286
(14,995
)
Income (loss) before taxes
28,941
(17,093
)
Income tax expense (benefit)
26,544
(2,611
)
Net income (loss)
2,397
(14,482
)
Net (income) loss attributable to
noncontrolling interest
(6,387
)
5,355
Net loss attributable to controlling
interest
$
(3,990
)
$
(9,127
)
Loss per Class A Common stock: (in
dollars)
Basic
$
(0.05
)
$
(0.11
)
Diluted
$
(0.05
)
$
(0.11
)
Weighted-average shares of Class A
Common stock outstanding
Basic
81,389,465
80,978,008
Diluted
81,389,465
80,978,008
Net income (loss)
$
2,397
$
(14,482
)
Other comprehensive income
(loss):
Change in fair value of interest rate
swap
4,659
(10,325
)
Comprehensive income (loss)
7,056
(24,807
)
Net comprehensive (income) loss
attributable to noncontrolling interest
(8,352
)
9,722
Net comprehensive loss attributable to
controlling interest
$
(1,296
)
$
(15,085
)
Utz Brands, Inc.
CONSOLIDATED BALANCE SHEETS March 31, 2024 and December
31, 2023 (In thousands, except per share
information)
As of March 31,
2024
As of December 31,
2023
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents
$
47,004
$
52,023
Accounts receivable, less allowance of
$3,103 and $2,933, respectively
135,227
135,130
Inventories
104,586
104,666
Prepaid expenses and other assets
36,978
30,997
Current portion of notes receivable
4,987
5,237
Total current assets
328,782
328,053
Non-current Assets
Assets held for sale
3,253
7,559
Property, plant and equipment, net
295,836
318,881
Goodwill
870,695
915,295
Intangible assets, net
1,011,237
1,063,413
Non-current portion of notes
receivable
11,477
12,413
Other assets
103,972
101,122
Total non-current assets
2,296,470
2,418,683
Total assets
$
2,625,252
$
2,746,736
LIABILITIES AND EQUITY
Current Liabilities
Current portion of term debt
$
20,651
$
21,086
Current portion of other notes payable
7,696
7,649
Accounts payable
115,651
124,361
Accrued expenses and other
91,278
77,590
Total current liabilities
235,276
230,686
Non-current portion of term debt and
revolving credit facility
736,246
878,511
Non-current portion of other notes
payable
19,086
19,174
Non-current accrued expenses and other
73,691
76,720
Non-current warrant liability
55,080
43,272
Deferred tax liability
115,785
114,690
Total non-current liabilities
999,888
1,132,367
Total liabilities
1,235,164
1,363,053
Commitments and Contingencies
Shares of Class A Common Stock, $0.0001
par value; 1,000,000,000 shares authorized; 81,406,827 and
81,187,977 shares issued and outstanding as of March 31, 2024 and
December 31, 2023, respectively
8
8
Shares of Class V Common Stock, $0.0001
par value; 61,249,000 shares authorized; 59,349,000 shares issued
and outstanding as of March 31, 2024 and December 31, 2023
6
6
Additional paid-in capital
952,227
944,573
Accumulated deficit
(306,842
)
(298,049
)
Accumulated other comprehensive income
25,652
22,958
Total stockholders' equity
671,051
669,496
Noncontrolling interest
719,037
714,187
Total equity
1,390,088
1,383,683
Total liabilities and equity
$
2,625,252
$
2,746,736
Utz Brands, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS For the thirteen
weeks ended March 31, 2024 and April 2, 2023 (In
thousands) (Unaudited)
Thirteen weeks ended March 31,
2024
Thirteen weeks ended April 2,
2023
Cash flows from operating
activities
Net income (loss)
$
2,397
$
(14,482
)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Impairment and other charges
—
1,945
Depreciation and amortization
18,302
20,094
Gain on sale of business
(44,015
)
—
Loss on remeasurement of warrant
liability
11,808
2,232
Loss on sale of assets
470
508
Share-based compensation
3,913
4,634
Deferred taxes
6,159
357
Deferred financing costs
1,760
5
Changes in assets and liabilities:
Accounts receivable, net
(8,578
)
(71
)
Inventories
(6,190
)
(5,450
)
Prepaid expenses and other assets
(6,503
)
(2,123
)
Accounts payable and accrued expenses and
other
11,412
(16,092
)
Net cash used in operating activities
(9,065
)
(8,443
)
Cash flows from investing
activities
Purchases of property and equipment
(13,630
)
(13,906
)
Proceeds from sale of property and
equipment
6,006
451
Proceeds from sale of business
167,500
—
Proceeds from sale of routes
7,199
6,127
Proceeds from the sale of IO notes
855
867
Notes receivable
(9,919
)
(7,557
)
Net cash provided by (used in) investing
activities
158,011
(14,018
)
Cash flows from financing
activities
Borrowings on line of credit
37,000
20,000
Repayments on line of credit
(37,119
)
—
Borrowings on term debt and notes
payable
9,798
2,331
Repayments on term debt and notes
payable
(154,239
)
(6,244
)
Payments of tax withholding requirements
for employee stock awards
(1,397
)
(589
)
Dividends
(4,625
)
(4,663
)
Distribution to noncontrolling
interest
(3,383
)
(3,383
)
Net cash (used in) provided by financing
activities
(153,965
)
7,452
Net decrease in cash and cash
equivalents
(5,019
)
(15,009
)
Cash and cash equivalents at beginning
of period
52,023
72,930
Cash and cash equivalents at end of
period
$
47,004
$
57,921
Reconciliation of Non-GAAP Financial
Measures to Reported Financial Measures
Net Sales and Organic Net Sales
13-Weeks Ended
(dollars in millions)
March 31, 2024
April 2, 2023
Change
Net Sales as Reported
$
346.5
$
351.4
(1.4)%
Impact of Dispositions
—
(8.5
)
Impact of IO Conversions
1.5
—
Organic Net Sales (1)
$
348.0
$
342.9
1.5%
(1) Organic Net Sales excludes the Impact of Dispositions and
the Impact of IO Conversions that took place after Q1 2023.
Gross Profit and Adjusted Gross
Profit
13-Weeks Ended
(dollars in millions)
March 31, 2024
April 2, 2023
Gross Profit
$
119.6
$
104.5
Depreciation and Amortization
7.2
8.6
Non-Cash, Non-recurring adjustments
2.0
7.9
Adjusted Gross Profit
$
128.8
$
121.0
Adjusted Gross Profit as a % of Net
Sales
37.2
%
34.4
%
Adjusted Selling, Distribution, and
Administrative Expense
13-Weeks Ended
(dollars in millions)
March 31, 2024
April 2, 2023
Selling, Distribution, and
Administrative Expense
$
109.4
$
106.1
Depreciation and Amortization in SD&A
Expense
(11.1
)
(11.5
)
Non-Cash, and/or Non-recurring
Adjustments
(12.9
)
(14.0
)
Adjusted Selling, Distribution, and
Administrative Expense
$
85.4
$
80.6
Adjusted SD&A Expense as a % of Net
Sales
24.6
%
22.9
%
Adjusted Net Income
13-Weeks Ended
(dollars in millions, except per share
data)
March 31, 2024
April 2, 2023
Net Income (Loss)
$
2.4
$
(14.5
)
Income Tax Expense (Benefit)
26.5
(2.6
)
Income (loss) Before Taxes
28.9
(17.1
)
Deferred Financing Fees
1.8
—
Acquisition Step-Up Depreciation and
Amortization
11.5
11.9
Certain Non-Cash Adjustments
4.0
9.2
Acquisition, Divestiture and
Integration
(38.4
)
3.7
Business and Transformation
Initiatives
5.8
8.2
Financing-Related Costs
—
0.1
Loss on Remeasurement of Warrant
Liability
11.8
2.2
Other Non-Cash and/or Non-Recurring
Adjustments
(3.5
)
35.3
Adjusted Earnings before Taxes
25.4
18.2
Taxes on Earnings as Reported
(26.5
)
2.6
Income Tax Adjustments(1)
21.9
(5.8
)
Adjusted Taxes on Earnings
(4.6
)
(3.2
)
Adjusted Net Income
$
20.8
$
15.0
Average Weighted Basic Shares Outstanding
on an As-Converted Basis
140.7
140.3
Fully Diluted Shares on an As-Converted
Basis
144.0
142.8
Adjusted Earnings Per Share
$
0.14
$
0.11
(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
(dollars in millions)
March 31, 2024
April 2, 2023
Core D&A - Non-Acquisition-related
included in Gross Profit
$
4.6
$
5.8
Step-Up D&A - Transaction-related
included in Gross Profit
2.6
2.8
Depreciation & Amortization -
included in Gross Profit
7.2
8.6
Core D&A - Non-Acquisition-related
included in SD&A Expense
2.2
2.4
Step-Up D&A - Transaction-related
included in SD&A Expense
8.9
9.1
Depreciation & Amortization -
included in SD&A Expense
11.1
11.5
Depreciation & Amortization -
Total
$
18.3
$
20.1
Core Depreciation and Amortization
$
6.8
$
8.2
Step-Up Depreciation and Amortization
11.5
11.9
Total Depreciation and
Amortization
$
18.3
$
20.1
EBITDA and Adjusted EBITDA
13-Weeks Ended
(dollars in millions)
March 31, 2024
April 2, 2023
Net Income (Loss)
$
2.4
$
(14.5
)
Plus non-GAAP adjustments:
Income Tax Expense (Benefit)
26.5
(2.6
)
Depreciation and Amortization
18.3
20.1
Interest Expense, Net
13.8
14.4
Interest Income from IO loans(1)
(0.8
)
(0.4
)
EBITDA
60.2
17.0
Certain Non-Cash Adjustments(2)
4.0
9.2
Acquisition, Divestiture and
Integration(3)
(38.4
)
3.7
Business Transformation Initiatives(4)
5.8
8.2
Financing-Related Costs(5)
—
0.1
Loss on Remeasurement of Warrant
Liabilities(6)
11.8
2.2
Adjusted EBITDA
$
43.4
$
40.4
Net income (loss) as a % of Net
Sales
0.7
%
(4.1
)%
Adjusted EBITDA as a % of Net
Sales
12.5
%
11.5
%
(1)
Interest Income from IO loans refer to
Interest Income that we earn from IO notes receivable that have
resulted from our initiatives to transition from RSP distribution
to IO distribution ("Business Transformation Initiatives"). There
is a notes payable recorded that mirrors most of the IO notes
receivable, and the interest expense associated with the notes
payable is part of the Interest Expense, Net adjustment.
(2)
Certain Non-Cash Adjustments are comprised
primarily of the following:
Incentive programs – The Company incurred
$3.9 million and $4.6 million of share-based compensation expense,
that was awarded to associates and directors, and compensation
expense associated with the employee stock purchase plan for the
thirteen weeks ended March 31, 2024 and April 2, 2023,
respectively.
Asset Impairments and Write-Offs — For the
thirteen weeks ended April 2, 2023, the Company recorded an
adjustment for an impairment of $1.9 million related to fixed
assets.
Purchase Commitments and Other Adjustments
– We have purchase commitments for specific quantities at fixed
prices for certain of our products’ key ingredients. To facilitate
comparisons of our underlying operating results, this adjustment
was made to remove the volatility of purchase commitments related
to unrealized gains and losses. The adjustment related to Purchase
Commitments and Other Adjustments was $0.1 million and $2.7 million
for the thirteen weeks ended March 31, 2024 and April 2, 2023,
respectively.
(3)
Adjustment for Acquisition, Divestiture
and Integration Costs and (Gains) – This is comprised of
consulting, transaction services, and legal fees incurred for
acquisitions and divestitures and certain potential acquisitions
and divestitures, in addition to expenses associated with
integrating recent acquisitions. Such expenses were $5.6 million
for the thirteen weeks ended March 31, 2024. Also included for the
thirteen weeks ended March 31, 2024 was a gain of $44.0 million
related to the Good Health and R.W. Garcia Sale. These expenses
were $4.9 million for the thirteen weeks ended April 2, 2023,
offset by $1.2 million of income for the reduction of the Tax
Receivable Agreement Liability associated with the Business
Combination.
(4)
Business Transformation Initiatives
Adjustment – This adjustment is related to consultancy,
professional, and legal fees incurred for specific initiatives and
structural changes to the business that do not reflect the cost of
normal business operations. In addition, gains and losses realized
from the sale of distribution rights to IOs and the subsequent
disposal of trucks, severance costs associated with the elimination
of RSP positions, and enterprise resource planning system
transition costs, fall into this category. The Company incurred
such costs of $5.8 million and $8.2 million for the thirteen weeks
ended March 31, 2024 and April 2, 2023, respectively.
(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 2023
FY 2024
(dollars in millions)
Q1
Q2
Q3
Q4
FY 2023
Q1
TTM
Adjusted EBITDA
$
40.4
$
45.2
$
52.1
$
49.4
$
187.2
(1
)
$
43.4
$
190.1
Pre-Acquisition Adjusted EBITDA(1)
—
—
—
—
—
—
—
Normalized Adjusted EBITDA
$
40.4
$
45.2
$
52.1
$
49.4
$
187.2
(1
)
$
43.4
$
190.1
(1) Does not total due to rounding.
Net Debt and Leverage Ratio
(dollars in millions)
As of March 31, 2024
Term Loan
$
630.3
Real Estate Loan
70.9
ABL Facility
0.2
Capital Leases(1)
73.5
Deferred Purchase Price
0.1
Gross Debt(2)
775.0
Cash and Cash Equivalents
47.0
Total Net Debt
$
728.0
Last 52-Weeks Normalized Adjusted
EBITDA
$
190.1
Net Leverage Ratio(3)
3.8x
(1) Capital Leases include equipment term loans and exclude the
impact of step-up accounting. (2) Excludes amounts related to
guarantees on IO loans which are collateralized by routes. The
Company has the ability to recover substantially all of the
outstanding loan value in the event of a default scenario, which
historically has been uncommon. (3) Based on Normalized Adjusted
EBITDA of $190.1 million.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240502820494/en/
Investor Contact Kevin Powers Utz Brands, Inc.
kpowers@utzsnacks.com Media Contact Kevin Brick Utz Brands,
Inc. kbrick@utzsnacks.com
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