Utz Brands(UTZ) - 2025 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This part presents the unaudited consolidated financial statements and management's discussion and analysis for Utz Brands, Inc Item 1. Financial Statements This section presents the unaudited consolidated financial statements of Utz Brands, Inc., including the balance sheets, statements of operations and comprehensive income (loss), statements of equity, and statements of cash flows, along with their accompanying notes, for the period ended March 31, 2024 Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of March 31, 2024, and December 31, 2023 | Metric | As of March 31, 2024 (in thousands) | As of December 31, 2023 (in thousands) | Change (QoQ) | | :----------------------------------------- | :---------------------------------- | :----------------------------------- | :----------- | | Total Assets | $2,625,252 | $2,746,736 | -$121,484 | | Total Liabilities | $1,235,164 | $1,363,053 | -$127,889 | | Total Equity | $1,390,088 | $1,383,683 | +$6,405 | | Cash and cash equivalents | $47,004 | $52,023 | -$5,019 | | Goodwill | $870,695 | $915,295 | -$44,600 | | Intangible assets, net | $1,011,237 | $1,063,413 | -$52,176 | | Total current liabilities | $235,276 | $230,686 | +$4,590 | | Non-current portion of term debt and revolving credit facility | $736,246 | $878,511 | -$142,265 | Consolidated Statements of Operations and Comprehensive Income (Loss) This section presents the company's financial performance, including net sales, gross profit, and net income (loss) for the thirteen weeks ended March 31, 2024, and April 2, 2023 | Metric | Thirteen weeks ended March 31, 2024 (in thousands) | Thirteen weeks ended April 2, 2023 (in thousands) | Change (YoY) | | :--------------------------------- | :--------------------------------------- | :-------------------------------------- | :----------- | | Net sales | $346,523 | $351,433 | -$4,910 | | Cost of goods sold | $226,950 | $246,937 | -$19,987 | | Gross profit | $119,573 | $104,496 | +$15,077 | | Income (loss) from operations | $9,655 | $(2,098) | +$11,753 | | Gain on sale of business | $44,015 | — | +$44,015 | | Net income (loss) | $2,397 | $(14,482) | +$16,879 | | Net loss attributable to controlling interest | $(3,990) | $(9,127) | +$5,137 | | Basic Loss per Class A Common stock | $(0.05) | $(0.11) | +$0.06 | Consolidated Statements of Equity This section details changes in the company's equity, including total stockholders' equity, net income (loss) attributable to controlling interest, share-based compensation, and cash dividends | Metric | As of March 31, 2024 (in thousands) | As of April 2, 2023 (in thousands) | | :------------------------------------ | :---------------------------------- | :--------------------------------- | | Total Stockholders' Equity | $671,051 | $692,050 | | Total Equity | $1,390,088 | $1,430,866 | | Net (loss) income attributable to controlling interest | $(3,990) | $(9,127) | | Share-based compensation | $3,913 | $4,634 | | Cash dividends declared | $(4,803) | $(56) | Consolidated Statements of Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities for the thirteen weeks ended March 31, 2024, and April 2, 2023 | Metric | Thirteen weeks ended March 31, 2024 (in thousands) | Thirteen weeks ended April 2, 2023 (in thousands) | Change (YoY) | | :----------------------------------------- | :--------------------------------------- | :-------------------------------------- | :----------- | | Net cash used in operating activities | $(9,065) | $(8,443) | -$622 | | Net cash provided by (used in) investing activities | $158,011 | $(14,018) | +$172,029 | | Net cash (used in) provided by financing activities | $(153,965) | $7,452 | -$161,417 | | Net decrease in cash and cash equivalents | $(5,019) | $(15,009) | +$9,990 | | Cash and cash equivalents at end of period | $47,004 | $57,921 | -$10,917 | Notes to the Consolidated Financial Statements This section provides detailed explanations and additional information supporting the consolidated financial statements, covering accounting policies, divestitures, and other financial disclosures 1. Operations and Summary of Significant Accounting Policies This section outlines the basis of presentation for the financial statements, details revenue recognition policies, and discusses recently issued accounting standards, including updates on income tax and segment reporting disclosures - The consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial statements and SEC rules, not including all information required for annual statements[27] - The Consolidated Statement of Cash Flows for the thirteen weeks ended April 2, 2023, was corrected for comparability regarding borrowings and repayments of lines of credit[28] - Revenue is primarily from salty snack sales, recognized upon transfer of control to customers, net of variable consideration like discounts and promotions[29][30] - The company is evaluating the impact of ASU 2023-09 (Income Taxes) and ASU 2023-07 (Segment Reporting), effective for fiscal years beginning after December 15, 2024, and December 15, 2023, respectively[32][33] 2. Divestiture On February 5, 2024, the company sold its Good Health and R.W. Garcia brands, manufacturing facilities, and related assets to Our Home™ for $167.5 million, recognizing a $44.0 million gain on the sale - Sold Good Health and R.W. Garcia brands, Lincolnton, NC, and Lititz, PA manufacturing facilities, and related assets to Our Home™ for $167.5 million on February 5, 2024[34] - Recognized a gain on the sale of $44.0 million[35] Net Assets Sold | Net Assets Sold | Amount (in thousands) | | :--------------------------------- | :-------------------- | | Property, plant, and equipment, net | $27,483 | | Goodwill | $44,600 | | Intangible assets, net | $44,327 | | Net working capital adjustments | $7,075 | | Total Net Assets Sold | $123,485 | - Entered into a 12-month transition services agreement and reciprocal co-manufacturing agreements with Our Home™[36] 3. Inventories This section provides a breakdown of inventory components, showing a slight decrease in total inventories, and notes the sale of $6.3 million in inventory as part of the Good Health and R.W. Garcia Sale Inventory Components | (in thousands) | As of March 31, 2024 | As of December 31, 2023 | | :----------------- | :--------------------- | :----------------------- | | Finished goods | $68,271 | $65,673 | | Raw materials | $27,328 | $29,757 | | Maintenance parts | $8,987 | $9,236 | | Total inventories | $104,586 | $104,666 | - Sold $6.3 million of inventory in connection with the Good Health and R.W. Garcia Sale in February 2024[37] 4. Property, Plant and Equipment, Net This section details the composition of property, plant, and equipment, net, which decreased due to the sale of manufacturing facilities and related assets, and notes a reduction in depreciation expense Property, Plant and Equipment, Net | (in thousands) | As of March 31, 2024 | As of December 31, 2023 | | :------------------------- | :--------------------- | :----------------------- | | Land | $26,891 | $28,561 | | Buildings | $117,134 | $123,603 | | Machinery and equipment | $221,848 | $248,886 | | Less: accumulated depreciation | $(115,150) | $(126,752) | | Property, plant and equipment, net | $295,836 | $318,881 | - Depreciation expense was $8.7 million for the thirteen weeks ended March 31, 2024, down from $10.4 million in the prior year period[38] - Sold Lincolnton, NC, and Lititz, PA manufacturing facilities (book value $27.5 million) and the Birmingham, AL manufacturing facility (proceeds $6.0 million) during Q1 2024[39] 5. Goodwill and Intangible Assets, Net This section presents the changes in goodwill and intangible assets, net, primarily reflecting a decrease due to the divestiture of the Good Health and R.W. Garcia brands, including related customer relationships and trademarks - Goodwill decreased by $44.6 million due to the Good Health and R.W. Garcia Sale, from $915.3 million (Dec 31, 2023) to $870.7 million (March 31, 2024)[40] Intangible Assets, Net | (in thousands) | As of March 31, 2024 | As of December 31, 2023 | | :--------------------------------- | :--------------------- | :----------------------- | | Distributor/customer relationships | $647,712 | $677,930 | | Trademarks | $59,920 | $63,850 | | Trade names (not subject to amortization) | $419,513 | $434,513 | | Intangible assets, net | $1,011,237 | $1,063,413 | - Sold $26.0 million in customer relationships and $18.3 million in trademarks related to the Good Health and R.W. Garcia Sale[41] - Amortization expense for distributor/customer relationships, technology, and trade names was $9.2 million for Q1 2024, down from $9.4 million for Q1 2023[42] 6. Notes Receivable This section details the outstanding notes receivable from Independent Operators (IOs) for the sale of product distribution routes, which are collateralized by the routes themselves - Notes receivable from IOs totaled $16.4 million as of March 31, 2024, down from $17.6 million as of December 31, 2023[43] - These notes bear interest at rates ranging from 4.50% to 10.31% with terms generally from two to ten years and are collateralized by the routes[43] 7. Accrued Expenses and Other This section provides a detailed breakdown of current and non-current accrued expenses and other liabilities, highlighting increases in accrued federal income tax payable and deferred transition services fees Current Accrued Expenses and Other | (in thousands) | As of March 31, 2024 | As of December 31, 2023 | | :------------------------------------ | :--------------------- | :----------------------- | | Accrued compensation and benefits | $14,278 | $21,466 | | Accrued Federal income tax payable | $18,534 | — | | Deferred transition services and other fees | $12,727 | — | | Total current accrued expenses and other | $91,278 | $77,590 | Non-Current Accrued Expenses and Other | (in thousands) | As of March 31, 2024 | As of December 31, 2023 | | :------------------------------------ | :--------------------- | :----------------------- | | Operating right of use liability | $42,745 | $43,928 | | Tax Receivable Agreement liability | $24,198 | $24,297 | | Total non-current accrued expenses and other | $73,691 | $76,720 | 8. Term Debt, Revolving Credit Facility and Other Notes Payable This section outlines the company's debt structure, including term loans, equipment loans, and the ABL facility, detailing significant debt repayments made using proceeds from the recent divestiture, which reduced overall long-term debt Debt Breakdown | Debt (in thousands) | As of March 31, 2024 | As of December 31, 2023 | | :-------------------------- | :------------------- | :-------------------- | | Term Loan B | $630,335 | $771,335 | | Real Estate Term Loan | $70,891 | $80,184 | | Equipment loans | $62,435 | $56,482 | | ABL facility | $248 | $368 | | Total long-term debt (net of current portion) | $736,246 | $878,511 | - Made a $141.0 million payment on Term Loan B and an $8.5 million payment on Real Estate Term Loan during Q1 2024, utilizing proceeds from the Good Health and R.W. Garcia Sale[47] Interest Expense | (in thousands) | Thirteen weeks ended March 31, 2024 | Thirteen weeks ended April 2, 2023 | | :--------------- | :---------------------------------- | :--------------------------------- | | Interest expense | $13,831 | $14,378 | 9. Derivative Financial Instruments, Purchase Commitments, Warrants and Fair Value This section discusses the company's use of interest rate swaps to manage exposure, the increase in warrant liabilities due to remeasurement, and outstanding purchase commitments, along with the fair value measurements of its financial assets and liabilities - Uses interest rate swaps to manage interest rate exposure on Term Loan B and Real Estate Term Loan. De-designated a hedge on Real Estate Term Loan effective February 1, 2024, reclassifying $0.3 million to earnings[48][49] - Fair value of warrant liabilities increased to $55.1 million as of March 31, 2024, from $43.3 million as of December 31, 2023, due to an $11.8 million loss on remeasurement[51] - Purchase commitments for key ingredients totaled $97.1 million as of March 31, 2024 (up from $66.7 million at Dec 31, 2023), with $0.8 million in gains recorded for Q1 2024 (vs. $(2.7) million losses in Q1 2023)[52] Fair Value Measurements | (in thousands) | As of March 31, 2024 | As of December 31, 2023 | | :---------------------- | :------------------- | :-------------------- | | Assets: | | | | Cash and cash equivalents | $47,004 | $52,023 | | Commodity contracts | $563 | $211 | | Interest rate swaps | $36,451 | $33,332 | | Liabilities: | | | | Commodity contracts | $1,269 | $2,094 | | Private placement warrants | $55,080 | $43,272 | | Debt | $756,897 | $899,597 | 10. Contingencies This section addresses ongoing litigation matters, which management deems immaterial, and details the company's partial guarantees on loans made to Independent Operators (IOs) for route purchases, noting that these loans are collateralized - Management believes current litigation is not likely to be material to the company's financial condition, results of operations, or cash flows[55] - The company partially guarantees loans made to IOs by Bank of America ($56.3 million outstanding at March 31, 2024) and two other banks ($2.5 million outstanding)[56][57] - The maximum amount of future payments under these guarantees equates to 25% of the outstanding loan balance, and all IO loans are collateralized by the routes[56][58] 11. Supplementary Cash Flow Information This section provides additional details on cash payments for interest and income taxes, and finance lease additions for the thirteen weeks ended March 31, 2024, compared to the prior year Supplementary Cash Flow Data | (in thousands) | Thirteen weeks ended March 31, 2024 | Thirteen weeks ended April 2, 2023 | | :--------------- | :---------------------------------- | :--------------------------------- | | Cash paid for interest | $24,424 | $14,408 | | Payments for income taxes | $15 | $6 | | Finance lease additions | $1,763 | $308 | 12. Income Taxes This section explains the company's income tax structure, the significant increase in income tax expense for Q1 2024, and the factors affecting its effective tax rate, including the impact of the divestiture and valuation allowances on deferred tax assets - The company recorded income tax expense of $26.5 million for Q1 2024, compared to a benefit of $2.6 million for Q1 2023[61] - The effective tax rate was 91.7% for Q1 2024 (vs. 15.3% for Q1 2023), primarily impacted by a $26.1 million discrete tax expense from the Good Health and R.W. Garcia Sale and $0.5 million from state tax rate changes[61] - A valuation allowance has been recorded against certain Deferred Tax Assets (DTAs) due to uncertainty regarding future realization, considering a twelve-quarter cumulative loss[62] Tax Receivable Agreement Liability This subsection details the company's obligation under a Tax Receivable Agreement (TRA) to pay 85% of realized tax benefits, noting the current TRA liability - The company is obligated under a Tax Receivable Agreement (TRA) to pay 85% of tax benefits realized from increases in the tax basis of UBH net assets and tax amortization deductions[66] - The TRA liability was $24.2 million as of March 31, 2024, slightly down from $24.3 million as of December 31, 2023[67] 13. Loss Per Share This section reconciles the numerators and denominators used in computing basic and diluted loss per share, noting an improvement in net loss attributable to common stockholders and the exclusion of anti-dilutive securities from diluted EPS calculations Loss Per Share Data | (in thousands, except share data) | Thirteen weeks ended March 31, 2024 | Thirteen weeks ended April 2, 2023 | | :-------------------------------- | :---------------------------------- | :--------------------------------- | | Net loss attributable to common stockholders | $(3,990) | $(9,127) | | Basic loss per share | $(0.05) | $(0.11) | | Diluted loss per share | $(0.05) | $(0.11) | - Anti-dilutive securities, including warrants (2.5 million), RSUs (417 thousand), PSUs (264 thousand), and stock options (34 thousand), were excluded from diluted earnings per share calculation for Q1 2024[69] 14. Subsequent Events This section reports on significant events that occurred after the reporting period, including the sale of two manufacturing facilities and the refinancing of the Term Loan B to reduce interest rates - In April 2024, the company sold its Berlin, PA and Fitchburg, MA manufacturing facilities and certain related assets for $18.5 million[70] - On April 17, 2024, the company amended its Term Loan B to refinance $630.0 million outstanding term loans, reducing the interest rate from SOFR + 3.00% to SOFR + 2.75%[71] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Utz Brands, Inc.'s financial condition and results of operations for the thirteen weeks ended March 31, 2024, discussing key developments, market trends, and the impact of recent strategic actions like divestitures and IO conversions Overview This overview describes Utz Brands, Inc. as a leading U.S. salty snack manufacturer with a century of heritage, a diverse portfolio of iconic brands, and a national distribution network, holding the second-largest market position in its core geographies - Utz Brands, Inc. is a leading U.S. manufacturer of branded salty snacks, founded in 1921, with over 100 years of brand awareness[74] - The company's portfolio includes iconic brands like Utz®, ON THE BORDER®, Zapp's®, Golden Flake®, Boulder Canyon®, Hawaiian® Brand, and TORTIYAHS!®[74] - As of March 31, 2024, the company operates 11 manufacturing facilities and distributes nationally through direct shipments, distributors, and approximately 2,300 direct-store delivery (DSD) routes[74] Key Developments and Trends This section discusses the market dynamics, competitive landscape, operating cost management strategies, and the impact of financing costs and interest rate changes on the company's revenue and profitability objectives - The company participates in the growing $38 billion U.S. salty snacks category, which saw U.S. retail sales increase by 1.4% year-over-year for the thirteen weeks ended March 31, 2024[76] - Snacking occasions are on the rise, with 54% of consumers eating snacks for excitement and 49% snacking three or more times per day[76] - Operating costs are managed through annual cost saving and productivity initiatives, sourcing and hedging programs, pricing actions, refinancing, and tax optimization[78] - Variable rate indebtedness was $701.2 million as of March 31, 2024 (down from $851.5 million at Dec 31, 2023), with $547.0 million covered by interest rate hedges. The weighted average interest rate for Q1 2024 was 6.6%, up from 5.6% in Q1 2023[79] Recent Developments and Significant Items Affecting Comparability This section highlights the impact of the recent divestiture of certain brands and facilities, ongoing commodity cost trends, and the near-completion of the Independent Operator (IO) conversion strategy on the company's financial comparability - The sale of Good Health and R.W. Garcia brands and manufacturing facilities for $167.5 million on February 5, 2024, is a significant item affecting comparability[80] - Commodity costs, after rising in fiscal year 2022, stabilized in fiscal year 2023 and early 2024, but rising fuel, freight, and labor costs continue to impact profitability[81] - The multi-year strategy to convert company-owned route sales professional (RSP) routes to the Independent Operator (IO) model is substantially complete, leading to reduced selling, distribution, and administrative costs but increased IO discounts[83] Results of Operations This section provides a detailed analysis of the company's financial performance for the thirteen weeks ended March 31, 2024, compared to the prior year, explaining the drivers behind changes in net sales, gross profit, and various expense categories Overview (Results of Operations) This overview presents a summary table of key financial metrics for the thirteen weeks ended March 31, 2024, and April 2, 2023 Key Financial Metrics | Metric | Thirteen weeks ended March 31, 2024 (in thousands) | Thirteen weeks ended April 2, 2023 (in thousands) | | :--------------------------------- | :--------------------------------------- | :-------------------------------------- | | Net sales | $346,523 | $351,433 | | Gross profit | $119,573 | $104,496 | | Selling, distribution, and administrative expenses | $109,448 | $106,086 | | Income (loss) from operations | $9,655 | $(2,098) | | Net income (loss) | $2,397 | $(14,482) | Thirteen weeks ended March 31, 2024 versus thirteen weeks ended April 2, 2023 This subsection provides a comparative analysis of financial performance between the current and prior year periods, detailing changes in sales, costs, and expenses Net sales This section analyzes the changes in net sales, attributing shifts to divestitures, IO conversions, volume/mix, and pricing for the current period compared to the prior year - Net sales decreased by $4.9 million (1.4%) to $346.5 million for Q1 2024, primarily due to the Good Health and R.W. Garcia Sale (2.5% decrease) and IO conversions (0.4% decrease)[86] - The decrease was partially offset by favorable volume/mix (1.1% increase) and pricing (0.4% increase)[86] - Power brand sales increased by approximately 3.9% (83% of net sales), while Foundation brand sales decreased by approximately 8.4% (17% of net sales)[87] Cost of goods sold and Gross profit This section examines the changes in cost of goods sold and gross profit, highlighting the impact of productivity, sales mix, pricing, and cost inflation - Gross profit increased to $119.6 million for Q1 2024 (from $104.5 million in Q1 2023), with gross profit margin improving to 34.5% (from 29.7%)[89] - The increase in gross profit and margin was primarily driven by productivity, favorable sales mix, and pricing, partially offset by cost inflation and supply chain investments[89] - IO conversions contributed to a $1.5 million decline in gross profit[89] Selling, distribution, and administrative expense This section details the changes in selling, distribution, and administrative expenses, noting the influence of marketing spend, distribution costs, and IO conversions - Total selling, distribution, and administrative expenses increased by $3.4 million (3.2%) to $109.4 million for Q1 2024[90] - The increase was primarily due to increased marketing spend, higher distribution costs, and investments in capabilities, partially offset by reduced selling costs from the shift to IOs and productivity benefits[90] Loss on sale of assets This section reports on the consistency of loss on sale of assets for the current and prior year periods - Loss on sale of assets remained consistent at $0.5 million for both the thirteen weeks ended March 31, 2024, and April 2, 2023[91] Other income (expense), net This section analyzes the significant improvement in other income (expense), net, primarily driven by the gain on the Good Health and R.W. Garcia Sale - Other income (expense), net, significantly improved to $19.3 million income for Q1 2024, from $(15.0) million expense for Q1 2023[92] - This improvement was primarily driven by a $44.0 million gain on the Good Health and R.W. Garcia Sale, partially offset by an $9.6 million increase in the loss on remeasurement of warrant liability[92] Income taxes This section discusses the income tax expense for the period, primarily attributing the increase to the Good Health and R.W. Garcia Sale - Income tax expense was $26.5 million for Q1 2024, compared to a $2.6 million benefit for Q1 2023, primarily attributable to the Good Health and R.W. Garcia Sale[93] Non-GAAP Financial Measures This section explains the company's use of non-GAAP financial measures, specifically EBITDA and Adjusted EBITDA, to provide investors with additional insights into operating performance and facilitate comparisons by excluding certain non-cash, acquisition, divestiture, transformation, and financing-related costs - Non-GAAP financial measures like EBITDA and Adjusted EBITDA are used to evaluate operating performance, identify trends, and make decisions, excluding certain non-cash items, acquisition/divestiture costs, business transformation initiatives, and financing-related costs[94][96] EBITDA and Adjusted EBITDA This subsection presents a reconciliation of net loss to EBITDA and Adjusted EBITDA, highlighting key adjustments for the current and prior year periods EBITDA and Adjusted EBITDA Reconciliation | (dollars in millions) | Thirteen weeks ended March 31, 2024 | Thirteen weeks ended April 2, 2023 | | :---------------------------------- | :---------------------------------- | :--------------------------------- | | Net loss | $2.4 | $(14.5) | | EBITDA | $60.2 | $17.0 | | Adjusted EBITDA | $43.4 | $40.4 | | Adjusted EBITDA as a % of Net Sales | 12.5 % | 11.5 % | - Key adjustments for Q1 2024 include $(38.4) million for Acquisition, Divestiture and Integration (reflecting the $44.0 million gain on sale of business), $11.8 million for Loss on Remeasurement of Warrant Liability, and $5.8 million for Business Transformation Initiatives[98][102] Liquidity and Capital Resources This section discusses the company's sources and uses of cash, financing strategy, ABL facility availability, cash requirements, and off-balance sheet arrangements, emphasizing its ability to meet financial obligations and maintain a prudent capital structure - Cash provided by operating activities, the revolving credit facility, term loans, and derivative financial instruments are expected to provide sufficient liquidity for working capital, capital expenditures, and contractual obligations[103] - The company's financing strategy aims to maintain a prudent capital structure, using short-term debt for operations and a combination of equity and long-term debt for base working capital and non-current assets[104] - Availability under the ABL facility was $151.9 million as of March 31, 2024, down from $158.4 million at December 31, 2023[105] - Cash requirements include funding operations, acquisitions, stockholder returns (dividends), property/plant/equipment, long-term debt repayments, deferred taxes, and operating lease liabilities[107] Off-Balance Sheet Arrangements This subsection details the company's outstanding purchase commitments for key ingredients and partial guarantees on Independent Operator (IO) loans - Outstanding purchase commitments for key ingredients totaled $97.1 million as of March 31, 2024, used to economically hedge commodity input prices[108] - The company partially guarantees loans made to IOs by Bank of America ($56.3 million outstanding) and two other banks ($2.5 million outstanding) for route purchases, with maximum exposure of 25% of the outstanding loan balance. These loans are collateralized by the routes[109] Cash Flow This subsection analyzes the net cash flows from operating, investing, and financing activities, highlighting the impact of the recent divestiture and debt paydown - Net cash used in operating activities was $(9.1) million for Q1 2024, slightly higher than $(8.4) million for Q1 2023, primarily due to changes in accounts payable and accrued expenses[111] - Net cash provided by investing activities was $158.0 million for Q1 2024 (vs. $(14.0) million used in Q1 2023), primarily driven by $167.5 million in proceeds from the sale of business[112] - Net cash used in financing activities was $(154.0) million for Q1 2024 (vs. $7.5 million provided in Q1 2023), primarily due to debt paydown utilizing divestiture proceeds[113] Debt Covenants This subsection confirms the company's compliance with financial covenants for its Term Loan B and ABL facility as of March 31, 2024 - UBH and its subsidiaries were in compliance with their financial covenants for the Term Loan B and ABL facility as of March 31, 2024[114] New Accounting Pronouncements This subsection refers to Note 1 for details on recently issued accounting standards - Refer to Note 1. Operations and Summary of Significant Accounting Policies for details on recently issued accounting standards[115] Application of Critical Accounting Policies and Estimates This subsection states that there were no material changes to critical accounting policies and estimates from the prior annual report - There were no material changes to critical accounting policies and estimates from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[116] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section refers to the company's Annual Report on Form 10-K for detailed quantitative and qualitative disclosures about market risk, stating that there have been no material changes to these exposures since the previous filing - For detailed disclosures about market risk, refer to Item 7A of the Annual Report on Form 10-K for the year ended December 31, 2023[117] - There have been no material changes to the company's exposures to market risk since the filing of the Annual Report on Form 10-K for December 31, 2023[117] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures and reports that there were no material changes in internal control over financial reporting during the most recent fiscal quarter Evaluation of Disclosure Controls and Procedures This subsection confirms the effectiveness of the company's disclosure controls and procedures at a reasonable assurance level - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective at a level of reasonable assurance[118] Changes in Internal Control Over Financial Reporting This subsection reports no material changes in the company's internal control over financial reporting during the most recent fiscal quarter - There were no material changes in the company's internal control over financial reporting during the most recent fiscal quarter[119] PART II – OTHER INFORMATION This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings This section states that the company is involved in routine legal actions incidental to its business but does not anticipate any currently pending proceedings to have a material adverse effect on its financial condition or operations - The company is involved in litigation and other matters incidental to its normal business activities[120] - Management believes that no currently pending legal proceeding is likely to have a material adverse effect on the company's business, prospects, financial condition, cash flows, or results of operations[120] Item 1A. Risk Factors This section refers readers to the company's Annual Report on Form 10-K for a comprehensive list of risk factors, confirming that no material changes have occurred since that filing - Risk factors are set forth in Item 1A. 'Risk Factors' of the Annual Report on Form 10-K for the year ended December 31, 2023[121] - There have been no material changes to the company's risk factors since the filing of the Annual Report on Form 10-K[121] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports that there were no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities and use of proceeds occurred during the period[122] Item 3. Defaults Upon Senior Securities This section reports that there were no defaults upon senior securities during the period - No defaults upon senior securities occurred during the period[123] Item 4. Mine Safety Disclosures This section reports that there were no mine safety disclosures - No mine safety disclosures were reported[124] Item 5. Other Information This section discloses that a trust affiliated with a director adopted a Rule 10b5-1 trading plan for the potential sale of Class A Common Stock - The Roger K. Deromedi Revocable Trust, affiliated with Lead Independent Director Roger Deromedi, adopted a Rule 10b5-1 trading plan[126] - The plan provides for the potential sale of up to 506,270 shares of Class A Common Stock between June 11, 2024, and February 7, 2025[127] Item 6. Exhibits This section lists all exhibits furnished as part of the report, including various agreements, corporate documents, certifications, and XBRL data files - The exhibit index includes the Purchase Agreement, Certificate of Domestication, Certificate of Incorporation, Bylaws, Amendment No. 5 to First Lien Credit Agreement, CEO/CFO Certifications, and Inline XBRL documents[130] Signatures This section contains the signature of Ajay Kataria, Executive Vice President, Chief Financial Officer and Chief Officer, certifying the report on behalf of Utz Brands, Inc - The report is signed by Ajay Kataria, Executive Vice President, Chief Financial Officer and Chief Officer, on May 2, 2024[132]