Utz Brands(UTZ) - 2022 Q2 - Quarterly Report

FORM 10-Q Filing Information This section details the filing specifics of the Quarterly Report on Form 10-Q for Utz Brands, Inc., including its classification and registered stock information - The report is a Quarterly Report on Form 10-Q for Utz Brands, Inc., covering the period ended July 4, 2021[2] Title of each class | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :--- | :--- | :--- | | Class A Common Stock, par value $0.0001 per share | UTZ | New York Stock Exchange | Large accelerated filer | Large accelerated filer | ☐ | Accelerated filer | ☒ | | :--- | :--- | :--- | :--- | | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | | Emerging growth company | ☒ | | | Introductory Note This section explains the accounting treatment of the business combination between Utz Brands, Inc. and Utz Brands Holdings, LLC, distinguishing between Predecessor and Successor financial reporting - On August 28, 2020, Utz Brands, Inc. (formerly Collier Creek Holdings) consummated a business combination with Utz Brands Holdings, LLC (UBH)[8] - The Company's financial statements distinguish UBH as the 'Predecessor' for periods through the Closing Date and Utz Brands, Inc. as the 'Successor' for periods after, with Successor financials presented on a full step-up basis due to acquisition method accounting, making them not comparable to Predecessor financials[10] Cautionary Note Regarding Forward-Looking Statements This section advises that the report contains forward-looking statements subject to various risks and uncertainties, which the company does not commit to update - The report contains forward-looking statements based on current expectations, forecasts, and assumptions, which involve judgments, known and unknown risks, and uncertainties outside the Company's control[12] - The Company does not undertake to update forward-looking statements to reflect future events or new information, except as required by applicable securities laws[12] - Key risk factors include potential impacts on gross profit margins from raw material pricing and retail customer requirements, changes in consumer loyalty and preferences, intense competition in the snack food industry, and reliance on direct-store-delivery (DSD) and third-party distributor networks[13][15] PART I – FINANCIAL INFORMATION This part encompasses the unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements This section presents the unaudited consolidated financial statements of Utz Brands, Inc. for the periods ended July 4, 2021, and January 3, 2021, including balance sheets, statements of operations, equity, and cash flows, along with comprehensive notes detailing accounting policies, acquisitions, debt, and other financial disclosures Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity as of specific reporting dates Metric | Metric | As of July 4, 2021 (in thousands) | As of January 3, 2021 (in thousands) | | :--- | :--- | :--- | | Total Assets | $2,643,626 | $2,584,164 | | Total Liabilities | $1,164,355 | $1,199,262 | | Total Equity | $1,479,271 | $1,384,902 | - Current assets increased by $19.3 million, primarily driven by increases in accounts receivable and inventories[19] - Current liabilities decreased by $46.2 million, mainly due to the elimination of current warrant liability[19] Consolidated Statements of Operations and Comprehensive Income (Loss) This section outlines the company's financial performance, including net sales, gross profit, and net income (loss) for the reported periods Thirteen Weeks Ended Financial Performance | Metric | July 4, 2021 (Successor, in thousands) | June 28, 2020 (Predecessor, in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $297,919 | $241,977 | +23.1% | | Gross profit | $95,560 | $84,881 | +12.6% | | Income from operations | $4,369 | $17,451 | -75.0% | | Net income (loss) | $16,179 | $6,552 | +146.9% | | Basic EPS | $0.22 | N/A | N/A | Twenty-six Weeks Ended Financial Performance | Metric | July 4, 2021 (Successor, in thousands) | June 28, 2020 (Predecessor, in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $567,101 | $470,006 | +20.7% | | Gross profit | $190,801 | $164,895 | +15.7% | | Income from operations | $13,668 | $29,664 | -53.9% | | Net income (loss) | $(7,170) | $8,244 | N/A (loss vs. income) | | Basic EPS | $(0.07) | N/A | N/A | - Net income (loss) attributable to controlling interest for the twenty-six weeks ended July 4, 2021, was a loss of ($4.9 million), compared to an income of $8.2 million in the prior year Predecessor period[23] Consolidated Statements of Equity (Deficit) This section details changes in the company's equity, including contributions from warrant conversions and net income, and distributions like dividends - Total equity increased from $1.38 billion as of January 3, 2021, to $1.48 billion as of July 4, 2021[25] - The increase in equity was primarily driven by the conversion of warrants ($144.7 million to additional paid-in capital) and net income attributable to controlling interest for the thirteen weeks ended July 4, 2021 ($17.6 million)[25] - Cash dividends of $7.6 million were paid during the period[25] Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities for the reported periods Cash Flow Summary (Twenty-six weeks ended) | Cash Flow Activity | July 4, 2021 (Successor, in thousands) | June 28, 2020 (Predecessor, in thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(44) | $20,313 | | Net cash used in investing activities | $(70,543) | $(18,011) | | Net cash provided by (used in) financing activities | $50,501 | $(7,384) | | Net decrease in cash and cash equivalents | $(20,086) | $(5,082) | - The significant increase in cash used in investing activities was primarily due to acquisitions, net of cash acquired, totaling $66.6 million[27] - Net cash provided by financing activities was driven by borrowings on term debt and notes payable ($808 million) and exercised warrants ($57.2 million), partially offset by repayments[27] Notes to the Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements, covering accounting policies, acquisitions, and other financial specifics Operations and Summary of Significant Accounting Policies This note describes the company's business, its status as an emerging growth company, and the key accounting principles applied in its financial reporting - The Company is an 'emerging growth company' but will no longer qualify as of the last day of fiscal year 2021 due to exceeding $700.0 million in aggregate worldwide market value of common equity securities held by non-affiliates[34][36] - The Company is a premier producer, marketer, and distributor of salty snack products in the United States, selling through direct-store-delivery, direct to warehouse, and third-party distributors[37] - Revenue is recognized when control of goods is transferred to customers, net of variable consideration such as discounts, returns, and trade promotions, with reserves for promotional activities at $25.3 million as of July 4, 2021[52][54] [Acquisitions](index=16