Snack manufacturer Utz Brands Announces Continued Acceleration of Supply Chain Transformation Strategy

Utz Brands, Inc. (NYSE: UTZ) ("Utz" or the "Company"), a leading U.S. manufacturer of branded salty snacks, today announced that certain of its subsidiaries including Utz Quality Foods, LLC have entered into a definitive agreement for the sale of certain assets to Our Home™ ("Our Home").

Under the agreement, affiliates of Our Home have agreed to purchase the Company’s Berlin, PA, and Fitchburg, MA manufacturing facilities and certain related assets. This follows a separate transaction in February 2024, in which Our Home purchased three manufacturing facilities and two brands from Utz.

Following the closing of the transactions, Utz and Our Home will operate under a Transition Services Agreement for up to 12 months. The total consideration for the transactions is USD 18.5 million, subject to customary adjustments, and the transactions are expected to close on April 22, 2024.

In addition, post-closing, Our Home will co-manufacture certain Utz products for a while under the terms of a co-manufacturing agreement. Our Home plans to continue to operate and grow the manufacturing facilities under its platform while offering employment to Utz associates working in those facilities as part of the transition.

Howard Friedman, Chief Executive Officer of Utz:
 

"This transaction 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 now operate eight primary manufacturing facilities, down from 16 in 2021, allowing us to allocate more volume to our larger manufacturing facilities and better leverage our fixed costs. This is all consistent with the supply chain transformation strategy we outlined at our 2023 Investor Day."

Aaron Greenwald, Founder and Chief Executive Officer of Our Home:
 

"We are thrilled to announce this acquisition from Utz as it further scales Our Home’s snacking platform and manufacturing footprint, providing us the ability to manufacture potato chips, puffed snacks and popcorn across our better-for-you brands."

Financial Benefits of the Plant Disposition Transactions and Advisors

The transactions are expected to provide approximately $14 million in after-tax net proceeds, which Utz will use to pay down its long-term debt (~USD 9M) and add cash to the balance sheet (~USD 5M). The debt reduction is expected to modestly lower interest expense in fiscal 2024 based on the Company’s current outlook for interest rates.

The Company expects the impact of the transactions to be accretive to its Adjusted Earnings Per Share on a full-year basis in 2024, reflecting the benefit of the transition services agreement and the use of net proceeds from the sale to pay down long-term debt and reduce interest expense.

Relative to the update we provided on our fiscal year 2023 earnings call in February 2024, the Company does not expect this transaction to materially change the pacing of targeted supply chain network optimization cost savings of approximately USD 45 million to be achieved from 2024 through 2026. 

RBC Capital Markets LLC is serving as the exclusive financial advisor and Cozen O’Connor P.C. is serving as the legal advisor to Utz Brands, Inc. Winston & Strawn LLP is serving as legal advisor to Our Home.

Term Loan Repricing

Utz announced today that it has successfully completed a repricing of its USD 630 million Term Loan ("Term Loan") due in January 2028. The repricing reduces 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%.

There are no changes to the maturity of the Term Loan following this repricing, and all other terms are substantially unchanged. Under the amended terms of the Term Loan, the Company estimates that the repricing of debt will produce cash interest expense savings of approximately USD 2 million annually.