UTZ
Utz Brands, INC
NYSE
8-K: Utz Brands Accelerates Supply Chain Transformation, Completes Term Loan Repricing
Sentiment:
Press Release
18 April 2024 9:00 AM
Utz Brands divests two manufacturing facilities to Our Home for $18.5 million and successfully reprices its $630 million term loan, reducing interest rates.
Better than expected
The company expects the plant disposition to be accretive to its Adjusted Earnings Per Share in 2024.
The term loan repricing is expected to save approximately $2 million annually in cash interest expense.
Summary
- Utz Brands has agreed to sell its Berlin, PA, and Fitchburg, MA manufacturing facilities to Our Home for $18.5 million.
- The transaction is expected to close on April 22, 2024, and includes a transition services agreement for up to 12 months.
- Our Home will co-manufacture certain Utz products and offer employment to Utz associates at the facilities.
- Utz expects to receive approximately $14 million in after-tax net proceeds, using $9 million to reduce long-term debt and $5 million to add to the balance sheet.
- The company anticipates the transaction will be accretive to its Adjusted Earnings Per Share in 2024.
- Utz has also completed a repricing of its $630 million term loan, reducing the interest rate by approximately 36 bps, resulting in an estimated $2 million in annual cash interest expense savings.
Sentiment
Score: 8
Explanation: The document conveys a positive sentiment due to the successful term loan repricing and the strategic sale of manufacturing facilities, which are expected to improve the company's financial position and operational efficiency. The management comments are also optimistic about the future.
Highlights
- Utz Brands is selling two manufacturing facilities to Our Home for $18.5 million.
- The sale is expected to generate approximately $14 million in after-tax net proceeds.
- Utz will use $9 million of the proceeds to reduce long-term debt and $5 million to add to the balance sheet.
- The company has successfully repriced its $630 million term loan, reducing the interest rate by approximately 36 bps.
- The term loan repricing is expected to save approximately $2 million annually in cash interest expense.
Positives
- The sale of manufacturing facilities will allow Utz to focus on optimization efforts and invest in remaining facilities.
- The transaction is expected to be accretive to Adjusted Earnings Per Share in 2024.
- The term loan repricing will result in significant annual cash interest expense savings.
- The company is continuing to execute its supply chain transformation strategy.
Negatives
- The company is reducing its manufacturing footprint from 16 facilities in 2021 to 8, which may impact production capacity.
Risks
- The transaction is subject to customary adjustments and may not close as expected.
- The company may not realize the full expected financial benefits from the plant disposition.
- The company may not achieve the targeted supply chain network optimization cost savings of approximately $45 million from 2024 through 2026.
Future Outlook
The company expects the plant disposition to be accretive to its Adjusted Earnings Per Share in 2024 and the debt reduction to modestly lower interest expense. Utz also expects to continue to deliver on its value creation initiatives and supply chain transformation strategy.
Management Comments
- Howard Friedman, Chief Executive Officer of Utz, stated that the transaction will allow the company to focus on the next phase of optimization efforts and invest in remaining facilities.
- Aaron Greenwald, Founder and Chief Executive Officer of Our Home, expressed excitement about the acquisition and its ability to scale Our Homes snacking platform.
Industry Context
This announcement reflects a trend in the food manufacturing industry towards optimizing supply chains and reducing operational costs. Utz is consolidating its manufacturing footprint to improve efficiency and leverage fixed costs, which is a common strategy among large food producers.
Comparison to Industry Standards
- The sale of manufacturing facilities and the term loan repricing are common strategies used by companies to improve their financial position and operational efficiency.
- Other companies in the food and beverage industry, such as Mondelez International and PepsiCo, have also undertaken similar initiatives to optimize their supply chains and reduce debt.
- The reduction in interest rates on the term loan is in line with current market trends, where companies are taking advantage of favorable conditions to lower their borrowing costs.
- The use of proceeds from asset sales to reduce debt is a common practice among companies looking to improve their balance sheets.
Stakeholder Impact
- Shareholders will benefit from the improved financial position and potential for increased profitability.
- Employees at the Berlin, PA, and Fitchburg, MA facilities will be offered employment by Our Home.
- Customers will continue to receive Utz products through the co-manufacturing agreement with Our Home.
Next Steps
- The sale of the manufacturing facilities is expected to close on April 22, 2024.
- Utz will operate under a Transition Services Agreement with Our Home for up to 12 months.
- Utz will continue to focus on its supply chain transformation strategy and value creation initiatives.
Key Dates
- April 18, 2024: Date of the press release announcing the plant disposition and term loan repricing.
- April 22, 2024: Expected closing date of the manufacturing facility sale.
Keywords
Utz Brands, supply chain transformation, manufacturing facilities, term loan repricing, debt reduction, interest expense savings, Our Home, asset sale, financial performance, salty snacks
UTZ
Utz Brands, INC
NYSE
Sector: TBD
Filings with Classifications
Worse than expected
1 May 2025 6:50 AM
Quarterly Report
- Gross profit margin decreased to 33.6% due to promotional investments and increased spending on capacity expansions and distribution growth.
Better than expected
20 February 2025 5:23 PM
Annual Results
- Gross profit margin increased significantly to 35.1% from 31.7%.
- Adjusted EBITDA increased to $200.2 million, representing 14.2% of net sales.
- Net income attributable to controlling interest was $15.974 million, compared to a net loss of $24.937 million in the previous year.
Worse than expected
6 November 2024 7:51 PM
SEC Form 4 Filing
- A large sale of shares by a major holder is generally viewed negatively by the market.
Better than expected
31 October 2024 7:09 AM
Quarterly Report
- The company's gross profit margin improved significantly, indicating better operational efficiency and cost management.
- The company's strategic divestitures generated substantial cash and reduced debt, improving its financial position.
Better than expected
31 October 2024 6:38 AM
Quarterly Report
- The company's adjusted earnings per share increased by 23.5%, which is a better result than the prior year period.
- The company's adjusted EBITDA margin expanded by 80 basis points, indicating improved profitability.
- The company reaffirmed its full-year outlook, suggesting confidence in future performance.
Better than expected
1 August 2024 6:46 AM
Quarterly Report
- The company's gross profit margin improved significantly, indicating better operational efficiency.
- The company generated substantial gains from strategic divestitures, improving overall profitability.
- The company's net income improved significantly compared to the same period last year.
Better than expected
1 August 2024 6:41 AM
Quarterly Report
- The company's adjusted earnings per share increased by 46.2%, significantly exceeding expectations.
- The company's adjusted EBITDA increased by 10.0%, demonstrating strong profitability improvements.
- The company raised its full-year adjusted earnings per share outlook from 23%-28% to 28%-32%.
Worse than expected
2 May 2024 6:57 AM
Quarterly Report
- The company's net sales decreased by 1.4% year-over-year, indicating a worse performance than expected.
- The company experienced a net loss attributable to controlling interest of $3.99 million, indicating a worse performance than expected.
Better than expected
2 May 2024 6:41 AM
Quarterly Report
- The company's net income improved significantly from a loss to a profit.
- Adjusted earnings per share increased by 27.3%, exceeding expectations.
- The company raised its adjusted earnings per share outlook for the full year.
Better than expected
18 April 2024 9:00 AM
Press Release
- The company expects the plant disposition to be accretive to its Adjusted Earnings Per Share in 2024.
- The term loan repricing is expected to save approximately $2 million annually in cash interest expense.
Worse than expected
14 March 2024 6:40 AM
Proxy Statement
- The company's GAAP net loss moved from $(14.0 million) to ($40.0 million) in fiscal year 2023.
- Sales results were below expectations set at the beginning of 2023.
Worse than expected
29 February 2024 6:41 AM
Quarterly Report
- The company reported a net loss of $33.2 million in Q4 2023 compared to a net income of $13.8 million in the same period last year, indicating worse than expected results.
- The full-year net loss of $40.0 million was also worse than the net loss of $14.0 million in the prior year.
Better than expected
31 January 2024 9:00 AM
Merger Announcement
- The transaction is expected to accelerate the company's deleveraging timeline by a full year.
- The company expects the transaction to be accretive to its Adjusted Earnings per Share in 2024.
- The company is narrowing its fiscal-year 2023 Adjusted EBITDA outlook range to growth of 9.5% to 10.0%.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.