Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 27, 2020 | Nov. 03, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 27, 2020 | |
Entity Registrant Name | Utz Brands, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity File Number | 001-38686 | |
Entity Tax Identification Number | 98-1425274 | |
Entity Address, Address Line One | 900 High Street | |
Entity Address, City or Town | Hanover | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 17331 | |
City Area Code | 717 | |
Local Phone Number | 637-6644 | |
Entity Information, Former Legal or Registered Name | Collier Creek Holdings | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001739566 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-03 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 | |
Warrants | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants to purchase one share of Class A Common Stock | |
Trading Symbol | UTZ.WS | |
Security Exchange Name | NYSE | |
Common Class A | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Class A Common Stock, par value $0.0001 per share | |
Trading Symbol | UTZ | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding (in shares) | 59,371,175 | |
Common Class V | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding (in shares) | 61,249,000 | |
Former Address | ||
Document Information [Line Items] | ||
Entity Address, Address Line One | 200 Park Avenue | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10166 | |
Entity Address, Address Line Two | 58th Floor |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Current Assets | ||
Cash and cash equivalents | $ 32,024 | $ 15,053 |
Accounts receivable, less allowance of $0 and $1,353, respectively | 123,236 | 106,816 |
Inventories, net | 57,164 | 50,894 |
Prepaid expenses and other assets | 8,431 | 4,563 |
Current portion of notes receivable | 5,856 | 6,754 |
Total current assets | 226,711 | 184,080 |
Non-current Assets | ||
Property, plant and equipment, net | 285,481 | 171,717 |
Goodwill | 664,335 | 202,407 |
Intangible assets, net | 854,909 | 184,014 |
Non-current portion of notes receivable | 23,125 | 28,636 |
Other assets | 6,918 | 7,693 |
Total non-current assets | 1,834,768 | 594,467 |
Total assets | 2,061,479 | 778,547 |
Current Liabilities | ||
Current portion of term debt | 740 | 6,299 |
Current portion of other notes payable | 7,909 | 7,984 |
Accounts payable | 56,066 | 49,028 |
Accrued expenses and other | 61,789 | 44,206 |
Total current liabilities | 126,504 | 107,517 |
Noncurrent Liabilities | ||
Non-current portion of term debt | 410,711 | 633,826 |
Non-current portion of other notes payable | 26,186 | 31,800 |
Non-current accrued expenses and other | 60,641 | 19,633 |
Deferred tax liability | 22,958 | 19,123 |
Total non-current liabilities | 520,496 | 704,382 |
Total liabilities | 647,000 | 811,899 |
Commitments and contingencies | ||
Equity (Deficit) | ||
Members' equity (deficit) | (27,446) | |
Additional paid-in capital (Successor) | 479,028 | |
Accumulated deficit (Successor) | (10,172) | |
Accumulated other comprehensive income | 252 | 1,408 |
Total stockholders' equity and members' equity (deficit) | 469,120 | |
Noncontrolling interest | 945,359 | |
Total stockholders' equity and members' equity (deficit) | (26,038) | |
Noncontrolling interest | (7,314) | |
Total equity (deficit) | 1,414,479 | |
Total equity (deficit) | (33,352) | |
Total liabilities and equity (deficit) | 2,061,479 | 778,547 |
Noncontrolling Interest | ||
Equity (Deficit) | ||
Total equity (deficit) | 945,359 | |
Total equity (deficit) | $ (7,314) | |
Common Class A | ||
Equity (Deficit) | ||
Common stock | 6 | |
Common Class V | ||
Equity (Deficit) | ||
Common stock | $ 6 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 27, 2020 | Dec. 29, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, less allowance | $ 0 | $ 1,353 |
Common Class A | ||
Common stock, par value (in dollars per share) | $ 0.0001 | |
Common stock authorized (in shares) | 1,000,000,000 | |
Common stock issued (in shares) | 59,369,050 | |
Common stock outstanding (in shares) | 59,369,050 | |
Common Class V | ||
Common stock, par value (in dollars per share) | $ 0.0001 | |
Common stock authorized (in shares) | 61,249,000 | |
Common stock issued (in shares) | 61,249,000 | |
Common stock outstanding (in shares) | 61,249,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended |
Sep. 27, 2020 | Aug. 28, 2020 | Sep. 29, 2019 | Aug. 28, 2020 | Sep. 29, 2019 | |
Income Statement [Abstract] | |||||
Net sales | $ 79,372 | $ 168,656 | $ 199,628 | $ 638,662 | $ 566,472 |
Cost of goods sold | 55,305 | 106,484 | 129,793 | 411,595 | 378,290 |
Gross profit | 24,067 | 62,172 | 69,835 | 227,067 | 188,182 |
Selling and administrative expenses | |||||
Selling | 16,859 | 33,648 | 40,490 | 131,579 | 113,950 |
Administrative | 8,451 | 25,626 | 10,432 | 64,050 | 33,908 |
Total selling and administrative expenses | 25,310 | 59,274 | 50,922 | 195,629 | 147,858 |
Gain on sale of assets | |||||
Gain (loss) on disposal of property, plant and equipment | 5 | (14) | 4,790 | 79 | 5,806 |
Gain on sale of routes, net | 59 | 233 | 1,179 | 1,264 | 6,419 |
Total gain on sale of assets | 64 | 219 | 5,969 | 1,343 | 12,225 |
(Loss) income from operations | (1,179) | 3,117 | 24,882 | 32,781 | 52,549 |
Other (expense) income | |||||
Interest expense | (1,818) | (7,029) | (12,617) | (26,659) | (38,012) |
Other (expense) income | (2,323) | 432 | (921) | 1,271 | (1,125) |
Other (expense) income, net | (4,141) | (6,597) | (13,538) | (25,388) | (39,137) |
(Loss) income before taxes | (5,320) | (3,480) | 11,344 | 7,393 | 13,412 |
Income tax (benefit) expense | (2,889) | 1,344 | 1,021 | 3,973 | 2,787 |
Net (loss) income | (2,431) | (4,824) | 10,323 | 3,420 | 10,625 |
Net loss (income) attributable to noncontrolling interest | 2,320 | (723) | (1,420) | ||
Net (loss) income attributable to controlling interest | $ (111) | (4,824) | 9,600 | 3,420 | 9,205 |
Earnings per share of Class A Common stock: (in dollars) | |||||
Basic (in dollars per share) | $ 0 | ||||
Diluted (in dollars per share) | $ 0 | ||||
Weighted-average shares of Class A Common stock outstanding | |||||
Basic (in shares) | 59,369,050 | ||||
Diluted (in shares) | 68,271,930 | ||||
Other comprehensive loss | |||||
Interest rate swap | $ 252 | 454 | 912 | (7,463) | |
Comprehensive income (loss) | $ 141 | $ (4,370) | $ 10,512 | $ (4,043) | $ 9,205 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT) - USD ($) | Total | Common Class V | AOCI Attributable to Parent | Noncontrolling Interest | Common StockCommon Class A | Common StockCommon Class V | Additional Paid-in Capital | Retained Earnings | Parent |
Beginning balance at Dec. 30, 2018 | $ (131,316,000) | $ (11,345,000) | $ (119,971,000) | ||||||
Net (loss) income | 302,000 | 1,420,000 | (1,118,000) | ||||||
Distributions to members and noncontrolling interest | (4,830,000) | (1,339,000) | (3,491,000) | ||||||
Ending balance at Jun. 30, 2019 | (135,844,000) | (11,264,000) | (124,580,000) | ||||||
Beginning balance at Dec. 30, 2018 | (131,316,000) | (11,345,000) | (119,971,000) | ||||||
Net (loss) income | 10,625,000 | ||||||||
Ending balance at Sep. 29, 2019 | (130,497,000) | $ 912,000 | (11,101,000) | (120,308,000) | |||||
Beginning balance at Jun. 30, 2019 | (135,844,000) | (11,264,000) | (124,580,000) | ||||||
Net (loss) income | 10,323,000 | 723,000 | 9,600,000 | ||||||
Distributions to members and noncontrolling interest | (5,888,000) | (560,000) | (5,328,000) | ||||||
Other comprehensive loss | 912,000 | 912,000 | |||||||
Ending balance at Sep. 29, 2019 | (130,497,000) | 912,000 | (11,101,000) | (120,308,000) | |||||
Beginning balance at Dec. 29, 2019 | (33,352,000) | 1,408,000 | (7,314,000) | (27,446,000) | |||||
Net (loss) income | 8,244,000 | 8,244,000 | |||||||
Distributions to members and noncontrolling interest | (5,196,000) | (5,196,000) | |||||||
Other comprehensive loss | (7,917,000) | (7,917,000) | |||||||
Merger of noncontrolling interest | 7,314,000 | (7,314,000) | |||||||
Ending balance at Jun. 28, 2020 | (38,221,000) | (6,509,000) | (31,712,000) | ||||||
Beginning balance at Dec. 29, 2019 | (33,352,000) | 1,408,000 | (7,314,000) | (27,446,000) | |||||
Ending balance (in shares) at Sep. 27, 2020 | 59,369,050 | 61,249,000 | |||||||
Ending balance at Sep. 27, 2020 | 1,414,479,000 | 252,000 | 945,359,000 | $ 6,000 | $ 6,000 | $ 479,028,000 | $ (10,172,000) | 469,120,000 | |
Beginning balance at Jun. 28, 2020 | (38,221,000) | (6,509,000) | (31,712,000) | ||||||
Net (loss) income | (4,824,000) | (4,824,000) | |||||||
Distributions to members and noncontrolling interest | (1,219,000) | (1,219,000) | |||||||
Other comprehensive loss | 454,000 | 454,000 | |||||||
Ending balance at Aug. 28, 2020 | (43,810,000) | (6,055,000) | (37,755,000) | ||||||
Beginning balance (in shares) at Aug. 29, 2020 | 57,369,050 | 57,765,978 | |||||||
Beginning balance at Aug. 29, 2020 | 1,421,657,000 | 0 | 950,768,000 | $ 6,000 | $ 6,000 | 477,970,000 | (7,093,000) | 470,889,000 | |
Net (loss) income | (2,431,000) | (2,320,000) | (111,000) | (111,000) | |||||
Distributions to members and noncontrolling interest | (3,089,000) | (3,089,000) | |||||||
Other comprehensive loss | 252,000 | 252,000 | 252,000 | ||||||
Conversion of Restricted Sponsor Shares (in shares) | 2,000,000 | ||||||||
Conversion of Continuing Members' Retained Restricted Units (in shares) | 3,483,022 | 3,483,022 | |||||||
Share-based compensation | 1,058,000 | 1,058,000 | 1,058,000 | ||||||
Dividends declared ($0.05 per share of Class A Common Stock) | (2,968,000) | (2,968,000) | (2,968,000) | ||||||
Ending balance (in shares) at Sep. 27, 2020 | 59,369,050 | 61,249,000 | |||||||
Ending balance at Sep. 27, 2020 | $ 1,414,479,000 | $ 252,000 | $ 945,359,000 | $ 6,000 | $ 6,000 | $ 479,028,000 | $ (10,172,000) | $ 469,120,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 1 Months Ended | 8 Months Ended | 9 Months Ended |
Sep. 27, 2020 | Aug. 28, 2020 | Sep. 29, 2019 | |
Cash flows from operating activities | |||
Net (loss) income | $ (2,431) | $ 3,420 | $ 10,625 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | |||
Depreciation and amortization | 5,538 | 24,055 | 20,589 |
Amortization of step-up of inventory | 5,795 | 0 | 0 |
Gain on disposal of property and equipment | (5) | (79) | (5,806) |
Gain on sale of routes | (59) | (1,264) | (6,419) |
Stock based compensation | 1,058 | ||
Loss on debt extinguishment | 2,500 | ||
Deferred taxes | (752) | 3,583 | 2,787 |
Deferred financing costs | 0 | 1,742 | 1,557 |
Changes in assets and liabilities: | |||
Accounts receivable, net | (3,929) | (11,786) | (10,884) |
Inventories, net | 904 | (6,883) | (951) |
Prepaid expenses and other assets | (2,131) | (3,456) | 972 |
Accounts payable and accrued expenses and other | (34,236) | 21,295 | (8,385) |
Net cash (used in) provided by operating activities | (27,748) | 30,627 | 4,085 |
Cash flows from investing activities | |||
Acquisitions, net of cash acquired | (185,467) | (8,816) | |
Purchases of property and equipment | (2,972) | (11,828) | (13,245) |
Purchases of intangibles | (650) | ||
Proceeds on sale of property and equipment | 62 | 615 | 11,474 |
Proceeds from sale of routes | 8 | 2,774 | 2,311 |
Proceeds on the sale of IO notes | 31,916 | ||
Notes receivable, net | (132) | (3,611) | (5,209) |
Net cash (used in) provided by investing activities | (188,501) | (21,516) | 27,247 |
Cash flows from financing activities | |||
Borrowings on term debt and notes payable | 2,650 | ||
Repayments on term debt and notes payable | (239,370) | (6,686) | (5,218) |
Distributions to members | (6,415) | (8,819) | |
Distribution to noncontrolling interest | (29) | (1,899) | |
Net cash used in financing activities | (239,399) | (10,451) | (15,936) |
Net (decrease) increase in cash and cash equivalents | (455,648) | (1,340) | 15,396 |
Cash and cash equivalents at beginning of period | 487,672 | 15,053 | 6,914 |
Cash and cash equivalents at end of period | $ 32,024 | $ 13,713 | $ 22,310 |
OPERATIONS AND SUMMARY OF SIGNI
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Policies [Abstract] | |
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation – The accompanying unaudited consolidated financial statements comprise the financial statements of Utz Brands, Inc. ("UBI", the "Company", or "Successor", formerly Collier Creek Holdings ("CCH")) and its wholly owned subsidiaries. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"). They do not include all information and notes required by U.S. GAAP for annual financial statements. The balance sheet as of December 29, 2019 has been derived from the audited combined financial statements as of and for the year ended December 29, 2019 of Utz Brands Holdings, LLC ("UBH", or the "Predecessor"). In the opinion of management, such financial information reflects all normal and recurring adjustments necessary for a fair presentation of the financial position and the results of operations for such interim periods in accordance with the U.S. GAAP. Operating results for the interim period are not necessarily indicative of the results that may be expected for any future period or for the full year. The consolidated interim financial statements, including our significant accounting policies, should be read in conjunction with the audited combined financial statements of UBH (formerly UM-U Intermediate, LLC, or "Intermediate U") and notes thereto for the year ended December 29, 2019 that was included in the definitive proxy statement that was filed with the SEC on August 7, 2020 for the Business Combination that is described below. CCH was incorporated in the Cayman Islands on April 30, 2018 as a blank check company. CCH was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses that the Company had not then identified. CCH’s sponsor was Collier Creek Partners LLC, a Delaware limited liability company. On August 28, 2020, CCH domesticated into a Delaware corporation and changed its name to "Utz Brands, Inc." (the “Domestication”) and consummated the acquisition of certain limited liability company units of UBH, the parent of Utz Quality Foods, LLC (“UQF”), as a result of a new issuance by UBH and purchases from UBH’s existing equity holders pursuant to a Business Combination Agreement, dated as of June 5, 2020 (the “Business Combination Agreement”) among CCH, UBH and Series U of UM Partners, LLC (“Series U”) and Series R of UM Partners, LLC (“Series R” and together with Series U, the “Continuing Members”) (the Domestication and the transactions contemplated by the Business Combination Agreement, collectively, the “Business Combination”), following the approval at the extraordinary general meeting of the shareholders of CCH held on August 27, 2020. The statements include the accounts of the Predecessor, prior to the Business Combination, which was determined to be consolidated UBH, which includes the accounts of its wholly-owned subsidiary, Utz Quality Foods, LLC (“UQF”). UQF is consolidated with its wholly-owned subsidiaries: UTZTRAN, LLC; Heron Holding Corporation (“Heron”), with its wholly-owned subsidiaries Golden Flake Snack Foods, Inc. (“Golden Flake”), Inventure Foods, Inc. and its subsidiaries (“Inventure Foods”), and Kitchen Cooked Inc. (“Kitchen Cooked”); Kennedy Endeavors, LLC (“Kennedy”); and GH Pop Holdings, LLC, with its wholly-owned subsidiaries Good Health Natural Products, LLC (“Good Health”), Condor Snack Foods, LLC, and Snikiddy, LLC (“Snikiddy”). SRS Leasing LLC and its subsidiaries (“SRS”) were companies formed to acquire, hold and lease real estate to UQF. In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation of Variable Interest Entities, UQF was determined to be the primary beneficiary of SRS, an entity under common ownership. The accounts of SRS have been consolidated with those of UQF as of and for the fiscal year ended December 29, 2019. On December 30, 2019, the first day of the fiscal year of 2020, SRS were merged into UQF, with UQF surviving the transaction. The accumulated (deficit) equity of SRS was presented on the noncontrolling interest line of the consolidated balance sheet as of December 29, 2019 and was moved to members’ (deficit) equity on December 30, 2019, the date of the merger. Rice Investments, L.P. (“RILP”) was formed as a limited partnership pursuant to the Delaware Revised Uniform Limited Partnership Act on January 30, 2004 for the purpose of acquiring, owning, managing, and selling or otherwise disposing of intellectual property (namely trade names) that are used by UQF. RILP had one general partner, UQF, and one limited partner, UM-R Intermediate, LLC (“Intermediate R”). UQF, in accordance with ASC 810, was determined to be the primary beneficiary of RILP, an entity under common ownership. The accounts of RILP have been consolidated with those of UQF as of and for the fiscal year ended December 29, 2019. On December 30, 2019 Intermediate R was merged into Intermediate U with Intermediate U surviving the transaction. Finally, and immediately following that merger, RILP merged into UQF, with UQF being the surviving entity and Intermediate U remaining the sole member of UQF. Prior to these mergers the statements of SRS, RILP, and Intermediate R were combined within the statements of Intermediate U. On March 18, 2020, Intermediate U changed its name to Utz Brands Holdings, LLC upon filing a Certificate of Amendment with the Secretary of State of the State of Delaware. All intercompany transactions and balances have been eliminated in combination/consolidation. Operating Entities Holding Entities Utz Quality Foods, LLC Utz Brands, Inc. UTZTRAN, LLC Utz Brands Holdings, LLC Golden Flake Snack Foods, Inc. GH Pop Holdings, LLC Inventure Foods, Inc. and its subsidiaries Heron Holding Corporation Kennedy Endeavors, LLC Good Health Natural Products, LLC Condor Snack Foods, LLC Snikiddy, LLC Kitchen Cooked, Inc. Emerging Growth Company – The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the "Securities Act"), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act"), reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act") are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is either not an emerging growth company or is an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used. Operations – The Company through its wholly owned subsidiary UQF, is a premier producer, marketer and distributor of snack food products since 1921. The Company has steadily expanded its distribution channels to where it now sells products to supermarkets, mass merchants, club stores, dollar and discount stores, convenience stores, independent grocery stores, drug stores, food service, vending, military, and other channels in most regions of the United States through routes to market that include direct-store-delivery, direct to warehouse, and third-party distributors. With the acquisition of Golden Flake in September 2016, Inventure Foods in December 2017 and Kennedy in October 2019, the Company expanded its national production and distribution capabilities. The Company manufactures and distributes a full line of high-quality salty snack items, such as potato chips, pretzels, cheese balls, pork skins, party mixes, tortilla chips, and popcorn. The Company also sell dips, crackers, dried meat products and other snack food items packaged by other manufacturers. Income Taxes – The Company accounts for income taxes pursuant to the asset and liability method of ASC 740, Income Taxes, which requires it to recognize current tax liabilities or receivables for the amount of taxes it estimates are payable or refundable for the current year, and deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts and their respective tax bases of assets and liabilities and the expected benefits of net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted. A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. The Company follows the provisions of ASC 740-10 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740-10 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The benefit of tax positions taken or expected to be taken in the Company’s income tax returns is recognized in the financial statements if such positions are more likely than not of being sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits”. A liability is recognized (or amount of net operating loss carryover or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740-10. Interest costs and related penalties related to unrecognized tax benefits are required to be calculated, if applicable. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as selling and administrative expenses. As of September 27, 2020 and December 29, 2019, no liability for unrecognized tax benefits was required to be reported. The Company does not expect any significant changes in its unrecognized tax benefits in the next fiscal year. Distribution Route Acquisition and Sale Transactions – The Company acquires and sells distribution routes as a part of the Company’s maintenance of its direct-store delivery (“DSD”) network. As new independent operators (“IOs”) are identified, the Company either sells its newly-created or existing Company-managed routes to the IOs or sells routes that were previously acquired by the Company to the IOs. Gain/loss from the sale of a distribution route is recorded upon the completion of the sale transaction, and is calculated based on the difference between the sale price of the distribution route and the asset carrying value of the distribution route as of the date of sale. The Company records intangible assets for distribution routes that it purchases based on the payment that the Company makes to acquire the route, and records the purchased distribution routes as indefinite-lived intangible assets under FASB ASC 350, Intangibles – Goodwill and Other. The indefinite lived intangible assets are subject to annual impairment testing. Goodwill and Other Identifiable Intangible Assets – The Company allocates the cost of acquired companies to the identifiable tangible and intangible assets acquired and liabilities assumed, with the remaining amount classified as goodwill. The identification and valuation of these intangible assets and the determination of the estimated useful lives at the time of acquisition, as well as the completion of impairment tests, require significant management judgments and estimates. These estimates are made based on, among other factors, review of projected future operating results and business plans, economic projections, anticipated highest and best use of future cash flows and the cost of capital. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of goodwill and other intangible assets, and potentially result in a different impact to the Company’s results of operations. Further, changes in business strategy and/or market conditions may significantly impact these judgments and thereby impact the fair value of these assets, which could result in an impairment of the goodwill or intangible assets. Finite-lived intangible assets consist of distribution/customer relationships, technology and trademarks. These assets are being amortized over their estimated useful lives. Finite-lived intangible assets are tested for impairment only when management has determined that potential impairment indicators are present. Goodwill and other indefinite-lived intangible assets (including certain trade names, master distribution rights and company-owned sales routes) are not amortized but are tested for impairment at least annually and whenever events or circumstances change that indicate impairment may have occurred. The Company tests goodwill for impairment at the reporting unit level. The Company has identified the existing snack food operations as its sole reporting unit. As the Company has early adopted the FASB Accounting Standards Updated (“ASU”) No. 2017-04, Intangibles - Goodwill and Other (“Topic 350”): Simplifying the Test for Goodwill Impairment, the Company is required to record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. ASU No. 2017-04, Topic 350, also permits an entity to first assess qualitative factors to determine whether it is necessary to perform quantitative impairment tests for goodwill and indefinite-lived intangibles. If an entity believes, as a result of each qualitative assessment, it is more likely than not that goodwill or an indefinite-lived intangible asset is not impaired, a quantitative impairment test is not required. Share-Based Compensation – Share-based compensation is rewarded to employees and directors of the Company and accounted for in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”). Share-based compensation expense is recognized for equity awards over the vesting period based on their grant-date fair value. During the Successor period, the Company uses various forms of long-term incentives including, but not limited to, Stock Options, Restricted Stock Units (“RSUs”) and Performance Share Units (“PSUs”), provided that the exercise of such stock options was contingent upon the Company filing a Registration Statement on Form S-8 ("Form S-8") with the SEC and the issuance of the RSUs and PSUs was contingent upon the Company filing a Form S-8 with the SEC, which occurred on November 2, 2020. The fair value of stock options is estimated at the date of grant using the Black-Scholes valuation model. The exercise price of each stock option equals or exceeds the estimated fair value of the Company’s stock price on the date of grant. Stock options can generally be exercised over a maximum term of ten years. The grant date fair value of the PSUs is determined using the Monte Carlo simulation model. The grant date fair value of the RSUs is determined using the Company’s share price on the grant date. Share-based compensation expense is included within the same financial statement caption where the recipient’s other compensation is reported. The Company accounts for forfeitures as they occur. Revenue Recognition – The Company’s revenues primarily consist of the sale of salty snack items to customers, including supermarkets, mass merchants, club stores, dollar and discount stores, convenience stores, independent grocery stores, drug stores, food service, vending, military, and other channels. The Company sells its products in most regions of the United States primarily through its DSD network, direct to warehouse shipments, and third-party distributors. These revenue contracts generally have a single performance obligation. Revenue, which includes shipping and handling charges billed to the customer, is reported net of variable consideration and consideration payable to customers, including applicable discounts, returns, allowances, trade promotion, consumer coupon redemption, unsaleable product, and other costs. Amounts billed and due from customers are classified as accounts receivables and require payment on a short-term basis and, therefore, the Company does not have any significant financing components. The Company recognizes revenue when (or as) performance obligations are satisfied by transferring control of the goods to customers. Control is transferred upon delivery of the goods to the customer. Shipping and/or handling costs that occur before the customer obtains control of the goods are deemed to be fulfillment activities and are accounted for as fulfillment costs. Applicable shipping and handling are included in customer billing and are recorded as revenue as the products’ control is transferred to customers. The Company assesses the goods promised in customer purchase orders and identifies a performance obligation for each promise to transfer a good that is distinct. The Company offers various forms of trade promotions and the methodologies for determining these provisions are dependent on local customer pricing and promotional practices, which range from contractually fixed percentage price reductions to provisions based on actual occurrence or performance. The Company’s promotional activities are conducted either through the retail trade or directly with consumers and include activities such as in store displays and events, feature price discounts, consumer coupons, and loyalty programs. The costs of these activities are recognized at the time the related revenue is recorded, which normally precedes the actual cash expenditure. The recognition of these costs therefore requires management judgment regarding the volume of promotional offers that will be redeemed by either the retail trade or consumer. These estimates are made using various techniques including historical data on performance of similar promotional programs. The Company has reserves in place of $18.0 million as of September 27, 2020 and $16.4 million as of December 29, 2019. Differences between estimated expense and actual redemptions are recognized as a change in management estimate as actual redemptions are incurred. Business Combinations – The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs which would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets. The Company uses the acquisition method of accounting for acquired businesses. Under the acquisition method, the Company’s financial statements reflect the operations of an acquired business starting from the completion of the acquisition. The assets acquired and liabilities assumed are recorded at their respective estimated fair values at the date of the acquisition. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. Use of Estimates – Management uses estimates and assumptions in preparing the consolidated financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Examples include sales and promotional allowances, customer returns, allowances for doubtful accounts, inventory valuations, useful lives of fixed assets and related impairment, long-term investments, hedge transactions, goodwill and intangible asset valuations and impairments, incentive compensation, income taxes, self-insurance, contingencies and litigation. Actual results could vary materially from the estimates that were used. Recently Issued Accounting Standards – In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes. This ASU is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying certain aspects of the current guidance to promote consistency among reporting entities. For non-public business entities or emerging growth companies, ASU 2019-12 is effective for annual periods beginning after December 15, 2021 and interim periods within those annual periods, with early adoption permitted. An entity that elects early adoption must adopt all the amendments in the same period. Most amendments within this ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (“Topic 842”), which requires a lessee to recognize in its balance sheet an asset and liability for most leases with a term greater than 12 months. Lessees should recognize a liability to make lease payments and a right-of-use asset representing the lessee’s right to use the underlying asset for the lease term. On June 3, 2020, the FASB deferred the effective date of ASC 842 for private or emerging growth companies to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements, but believes that there will be assets and liabilities recognized on the Company’s consolidated balance sheet and an immaterial impact on the Company’s consolidated statements of operations. In June 2016, ASU No. 2016-13 Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (“Topic 326”) was issued. This ASU requires entities to measure the impairment of certain financial instruments, including accounts receivables, based on expected losses rather than incurred losses. For non-public business entities or emerging growth companies, this ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted, and will be effective for the Company beginning in 2023. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements and related disclosures. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (“Topic 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The amendments of this ASU should be applied on a prospective basis. The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (“Subtopic350-40”): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). For non-public business entities or emerging growth companies, this ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted. The Company adopted Subtopic 350-40 on the first day of fiscal 2020, and the adoption of this standard did not have a material impact on the consolidated financial statements. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 27, 2020 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS Utz Brands Holdings, LLC On June 5, 2020, UBH entered into a definitive Business Combination Agreement with CCH and the Continuing Members. At the closing of the Business Combination (the "Closing") on August 28, 2020 (the "Closing Date"), the Company domesticated into a Delaware corporation and changed its name to "Utz Brands, Inc." At the Closing, the Company (i) acquired certain common and preferred interests of the Continuing Members from third party members (“UPA Seller”), and the Continuing Members then redeemed such common and preferred interests for, and the Company received, an equivalent value of common limited liability company units of UBH, (ii) contributed cash in exchange for additional common limited liability company units of UBH, and (iii) purchased additional common limited liability company units and 100% of the managing interests of UBH from the Continuing Members. As part of the Business Combination, the Continuing Members (a) received certain cash considerations for the common limited liability company units that they sold to the Company, (b) received such number of shares of newly issued non-economic Class V Common Stock in the Company equal to the common limited liability company units that the Continuing Members retained in UBH, and a unit of limited liability company units of UBH and a share of Class V Common Stock are exchangeable for one share of Class A Common Stock of the Company, (c) received certain restricted common limited liability company units in UBH (the "Retained Restricted Units") that would be vested under certain market conditions, which were vested as of the Closing, and (d) entered into a Tax Receivable Agreement (“TRA”) that requires the Company to pay to the Continuing Members 85% of the applicable cash savings, if any, in U.S. federal and state income tax determined based on certain attributes as defined in the TRA. In connection with the Closing, UBH and the Company converted all of the outstanding phantom unit awards issued under the Utz Quality Foods, LLC 2018 Long-Term Incentive Plan ("2018 LTIP") into restricted stock units (“2020 LTIP RSUs”) issued by the Company under the Utz Quality Foods, LLC 2020 Long-Term Incentive Plan (the "2020 LTIP"). Refer to later part of this footnote for further discussion of the purchase consideration of the Business Combination. The Company was determined to be the accounting acquirer and UBH was determined to be the accounting acquiree, in accordance with ASC 810, as the Company is considered to be the primary beneficiary of UBH after the Business Combination. Under the ASC 805, Business Combinations, acquisition method of accounting, purchase price allocation of assets acquired and liabilities assumed of UBH are presented based on their estimated fair values as of the Closing. ASC 805 establishes a measurement period to provide the Company with a reasonable amount of time to obtain the information necessary to identify and measure various items in a business combination and cannot extend beyond one year from the acquisition date. As a result of the Business Combination, the Company’s financial statement presentation distinguishes UBH as the “Predecessor” through the Closing Date. The Company, which includes consolidation of UBH subsequent to the Business Combination, is the “Successor” for periods after the Closing Date. As a result of the application of the acquisition method of accounting in the Successor period, the financial statements for the Successor period are presented on a full step-up basis as a result of the Business Combination, and are therefore not comparable to the financial statements of the Predecessor period that are not presented on the same full step-up basis due to the Business Combination. The following table summarizes the provisional total business enterprise value, comprised of the fair value of certain purchase consideration paid by the Company to the Continuing Members, the fair value of the noncontrolling interest and the fair value of certain net debt assumed by the Company at Closing: (in thousands) Total cash consideration $ 199,161 Tax Receivable Agreement obligations to the Continuing Members (1) 51,393 Replaced Awards (2) 11,175 Continuing Members’ Retained Restricted Units in UBH (3) 54,067 Total purchase consideration 315,796 Noncontrolling interest (4) 896,701 Net debt assumed 648,150 Total business enterprise value $ 1,860,647 (1) Under the terms of the TRA, the Company generally will be required to pay to the Continuing Members 85% of the applicable cash savings, if any, in U.S. federal and state income tax based on its ownership in UBH that the Company is deemed to realize in certain circumstances as a result of the increases in tax basis and certain tax attributes resulting from the Business Combination. The fair value of these contingent payments at the Closing was $51.4 million which has been recorded as a non-current accrued expense. Refer to Note 15. "Income Taxes" for additional information on the TRA. (2) Represents the fair value of the Phantom Units associated with the pre-combination requisite service period and issued under the 2018 LTIP that were converted into 2020 LTIP RSUs of the Company issued under the 2020 LTIP at the Closing. The difference between the fair value of the Phantom Units and the fair values of the 2020 LTIP RSUs represents the fair value of the compensation expenses for the post-combination requisite service period for the replacement awards. Compensation expenses will be recorded evenly during the post-combination requisite service period through the end of fiscal 2021, which is the cliff vest date of the replacement awards. Refer to Note 11. "Share Based Compensation" for additional information on the 2020 LTIP RSUs. (3) A total of 3,483,022 common limited liability company units that were initially subject to certain restrictions (the "Retained Restricted Units") in UBH were received by the Continuing Members at the Closing. These Retained Restricted Units were vested and converted to common limited liability company units of UBH at the Closing, as the vesting conditions were all met as of the Closing. The fair value of the Retained Restricted Units was calculated based on the stock price of the Company at the August 28, 2020 Closing, less a 5% lack of marketability discount due to a restriction on the exchange of the Continuing Members’ common limited liability company units to Class A Common Stock of the Company for a period not to exceed 12 months from the Closing. (4) The noncontrolling interest represents the common limited liability company units of UBH held by the Continuing Members. The fair value of these units was determined based on the Class A Common Stock price of the Company at the August 28, 2020 Closing, less a 5% lack of marketability discount due to a restriction on the exchange of the Continuing Members’ common limited liability company units to Class A Common Stock of the Company for a period not to exceed 12 months from the Closing. The following table summarizes the provisional fair values of the assets acquired and liabilities assumed of UBH at Closing: (in thousands) Assets acquired: Cash and cash equivalents $ 13,713 Accounts receivable, net 119,339 Inventory, net 63,862 Prepaid expenses and other assets 6,116 Notes receivable 29,453 Property, plant and equipment, net 286,038 Identifiable intangible assets (1) 856,606 Other assets 7,055 Total assets acquired: 1,382,182 Liabilities assumed: Accounts payable 49,531 Accrued expenses 78,082 Notes payable 34,547 Deferred tax liability 23,710 Total liabilities assumed: 185,870 Net identifiable assets acquired 1,196,312 Goodwill (2) $ 664,335 (1) The Company has determined that certain of the acquired trade names included in Intangible assets, net will be amortized over a period of 15 years, and the customer relationships asset will be amortized over a period of 25 years on a straight-line basis commensurate with the acquisition date expectations for the economic value (i.e. net cash flow generating capability) that is to be provided by the trade names and customer relationships, respectively. The provisional fair values allocated to identifiable intangible assets and their estimated useful lives are as follows: Fair Value Useful Life (In Thousands) (In Years) Indefinite lived trade names $ 355,500 Indefinite Finite lived trade names 56,000 15 Customer relationships 426,500 25 Technology 43 5 Master distribution rights 4,677 Indefinite Company owned routes 13,886 Indefinite Total $ 856,606 (2) The goodwill of $664,335 million represents the excess of the gross consideration transferred over the fair value of the underlying net tangible and identifiable intangible assets acquired. Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill. Intangible assets not recognized apart from goodwill consist primarily of the strong market position and the assembled workforce of UBH. A portion of the goodwill recognized is expected to be deductible for income tax purposes. As of September 27, 2020, the purchase price allocation has not been finalized. The predecessor financial statements of UBH include $18.0 million and $25.0 million of transaction costs from June 28, 2020 to August 28, 2020 and December 30, 2019 to August 28, 2020, respectively. These transaction costs are recorded within administrative expenses within the consolidated statements of operations and comprehensive income. Prior to the Closing Date, CCH incurred $13.4 million of transaction costs related to the Business Combination, which are not reported in the predecessor consolidated statements of operations and comprehensive income as CCH is not the predecessor. The following unaudited pro forma financial information presents the results of operations as if the Business Combination had occurred on January 1, 2019. These unaudited pro forma results may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations. The unaudited pro forma information reflects the step-up depreciation and amortization adjustments for the fair value of the assets acquired, the adjustment in interest expense due to the reduction in long term debt as a result of the Business Combination, and the related adjustment to the income tax provision. In addition, the pro forma net income is not adjusted to exclude transaction expenses and other non-recurring costs. For the 13 weeks ended September 27, 2020 For the 13 weeks ended September 29, 2019 For the 39 weeks ended September 27, 2020 For the 39 weeks ended September 29, 2019 (in thousands) (unaudited) (unaudited) (unaudited) (unaudited) Pro forma net sales $ 248,028 $ 231,341 $ 718,034 $ 653,311 Pro forma net (loss) income (9,382) 5,993 (5,880) (62) Pro forma net (loss) income attributable to controlling interest (3,481) 2,536 (1,210) 43 Pro forma net (loss) income attributable to noncontrolling interest (5,901) 3,457 (4,670) (105) Kitchen Cooked On November 19, 2019 UBH entered into a stock purchase agreement to acquire all of the outstanding shares of common stock of Kitchen Cooked, an Illinois corporation. UBH acquired Kitchen Cooked to expand its distribution and production capacity in Illinois and the surrounding area. UBH closed the acquisition of Kitchen Cooked on December 30, 2019. At the closing, UBH made a cash payment of $6.9 million and recorded $2.0 million in deferred payment obligations for the acquisition of the outstanding shares of Kitchen Cooked as well as certain real estate supporting its operations. The $2.0 million in deferred payments are payable in installments of $1.0 million each on the first two anniversaries following the closing, with $1.0 million payable within fiscal year 2020 and $1.0 million payable within fiscal year 2021. The following table summarizes the fair values of the assets acquired and liabilities assumed at the Kitchen Cooked acquisition date: (in thousands) Purchase consideration $ 8,946 Assets acquired: Cash 130 Accounts receivable 737 Inventory, net 291 Prepaid expenses and other assets 37 Income tax prepayments 212 Property, plant and equipment 672 Other assets 255 Trademarks 1,623 Customer relationships 2,109 Total assets acquired: 6,066 Liabilities assumed: Accounts payable 173 Accrued expenses 2 Deferred tax liability 1,005 Total liabilities assumed: 1,180 Net identifiable assets acquired 4,886 Goodwill $ 4,060 As of September 27, 2020, the purchase price allocation has not been finalized. The Company has determined that all the acquired customer relationships and trademarks will be amortized over a period of 15 years on a straight-line basis commensurate with the acquisition date expectations for the economics that are to be provided by the trademarks and customer relationships. The goodwill of $4.1 million arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations and intangible assets that do not qualify for separate recognition. None of the goodwill recognized is expected to be deductible for income tax purposes. The following unaudited pro forma financial information presents the results of operations for the thirteen weeks and thirty-nine weeks ended September 29, 2019, as if the acquisition of Kitchen Cooked had occurred on December 31, 2018, the beginning of fiscal year 2019. These unaudited pro forma results may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations. 13 weeks ended 39 weeks ended September 29, 2019 September 29, 2019 (in thousands) (unaudited) Pro forma net sales $ 2,224 $ 6,314 Pro forma net income (loss) 22 (25) There were no material adjustments to the pro forma results. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 27, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories consisted of the following: Successor Predecessor (in thousands) As of September 27, 2020 As of December 29, 2019 Finished goods $ 28,081 $ 24,447 Raw materials 23,817 22,122 Maintenance parts 5,266 4,575 57,164 51,144 Less: inventory reserve — (250) Total inventories $ 57,164 $ 50,894 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 9 Months Ended |
Sep. 27, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net, consisted of the following: Successor Predecessor (in thousands) As of September 27, 2020 As of December 29, 2019 Land $ 22,840 $ 14,970 Buildings 77,633 104,736 Machinery and equipment 164,460 297,666 Land improvements 8,280 1,174 Building improvements 1,104 3,561 Construction-in-progress 14,940 7,341 289,257 429,448 Less: accumulated depreciation (3,776) (257,731) Property, plant and equipment, net $ 285,481 $ 171,717 Depreciation expense was $3.8 million for the Successor period from August 29, 2020 to September 27, 2020, $4.8 million for the Predecessor period from June 29, 2020 to August 28, 2020, and was $5.5 million for the 13 week period ended September 29, 2019. Depreciation expenses for the Predecessor period from December 30, 2019 to August 28, 2020 was $19.0 million and $16.5 million for the 39 weeks ended September 29, 2019. Depreciation expense is classified in cost of goods sold, selling expenses, and administrative expenses on the consolidated statements of operations and comprehensive income (loss). |
GOODWILL AND INTANGIBLE ASSETS,
GOODWILL AND INTANGIBLE ASSETS, NET | 9 Months Ended |
Sep. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS, NET | GOODWILL AND INTANGIBLE ASSETS, NET A rollforward of goodwill is as follows: Predecessor (in thousands) Balance as of December 29, 2019 $ 202,407 Acquisition of Kitchen Cooked 4,060 Kennedy acquisition adjustment 989 June 28, 2020 207,456 August 28, 2020 $ 207,456 Successor (in thousands) Balance as of August 29, 2020 $ 664,335 September 27, 2020 $ 664,335 For the first fiscal quarter 2020, the change to goodwill was attributable to the acquisition of Kitchen Cooked and a measurement period adjustment to the Kennedy opening balance sheet. For the second fiscal quarter 2020, the change to goodwill was attributable to a measurement period adjustment to the Kitchen Cooked opening balance sheet. For the successor period, the balance of goodwill was attributable to the business combination with CCH as described in the "Note 1 Operations and Summary of Significant Accounting Policies" and "Note 2 Acquisitions". Intangible assets, net, consisted of the following: Successor Predecessor (in thousands) As of September 27, 2020 As of December 29, 2019 Subject to amortization: Distributor/customer relationships $ 426,500 $ 107,100 Technology 43 1,250 Trade names 56,000 22,610 Unfavorable lease — (85) Amortizable assets, gross 482,543 130,875 Accumulated amortization (1,768) (20,425) Amortizable assets, net 480,775 110,450 Not subject to amortization: Trade names 355,500 66,580 Master distribution rights 4,677 4,677 Company owned routes 13,957 2,307 Intangible assets, net $ 854,909 $ 184,014 Amortizable trademark intangible assets increased by $1.6 million and distributor/customer relationships increased by $2.1 million during the first quarter of fiscal 2020 due to the acquisition of Kitchen Cooked. Trade names increased by $0.7 million due to the purchase of the rights for certain intellectual property. For the successor period, the balance of the intangible assets were recorded at fair value and the historical accumulated amortization was recognized as a result of the business combination with CCH as described in the Note 1 " Operations and summary of significant accounting policies" and Note 2 "Acquisitions". These changes resulted in additional amortization of $1.1 million in the successor period from August 29, 2020 to September 27, 2020. There were no other changes to intangible assets during the thirteen weeks ended September 27, 2020 other than that which arises from the regular buying and selling of Company owned routes and amortization. Amortization of the distributor/customer relationships, technology, and trade names amounted to $1.8 million for the Successor period from August 29, 2020 to September 27, 2020, $1.3 million for the Predecessor period from June 29, 2020 to August 28, 2020, and was $1.4 million for the 13 week period ended September 29, 2019. Amortization expenses for the Predecessor period from December 30, 2019 to August 28, 2020 was $5.1 million, and $4.1 million for the 39 weeks ended September 29, 2019. Amortization expense is classified in administrative expenses on the consolidated statements of operations and comprehensive income (loss). Estimated future amortization expense is as follows: Successor (in thousands) As of September 27, 2020 2020 (Q4) $ 5,311 2021 20,793 2022 20,793 2023 20,793 2024 20,793 2025 20,793 Thereafter 371,499 Total $ 480,775 |
NOTES RECEIVABLE
NOTES RECEIVABLE | 9 Months Ended |
Sep. 27, 2020 | |
Receivables [Abstract] | |
NOTES RECEIVABLE | NOTES RECEIVABLE The Company has undertaken a program in recent years to sell company-managed DSD distribution routes to IOs. Contracts are executed between the Company and the IO for the sale of the product distribution route, including a note in favor of the Company, in certain cases. The notes bear interest at rates ranging from 0.00% to 8.55% with terms ranging generally from one ten Other notes receivable totaled $0.8 million and $1.4 million as of September 27, 2020 and December 29, 2019, respectively. |
ACCRUED EXPENSES AND OTHER
ACCRUED EXPENSES AND OTHER | 9 Months Ended |
Sep. 27, 2020 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER | ACCRUED EXPENSES AND OTHER Accrued expenses and other consisted of the following: Successor Predecessor (in thousands) As of September 27, 2020 As of December 29, 2019 Accrued compensation and benefits $ 24,499 $ 14,198 Insurance liabilities 7,541 7,880 Accrued distributions 6,031 — Accrued freight and manufacturing related costs 3,437 4,930 Short term interest rate hedge liability 2,797 — Accrued interest 1,826 4,184 Accrued business combination transaction fees 1,683 — Accrued sales tax 1,300 1,300 Other accrued expenses 12,675 11,714 Total accrued expenses and other $ 61,789 $ 44,206 As of September 27, 2020, the long term accrued expenses and other primarily consists of $51.4 million related to the TRA, described in "Note 2 Acquisitions", $6.4 million related to supplemental retirement and salary continuation plans, $2.8 million related the long term portion of an interest rate hedge liability and $0.1 million of other long term accrued. As of December 29, 2019, the long term accrued expenses and other primarily consists of $14.4 million related to the 2018 LTIP, $5.2 million related to supplemental retirement and salary continuation plans. |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Sep. 27, 2020 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT Revolving Credit Facility On November 21, 2017, UBH entered into an asset based revolving credit facility (the “ABL facility”) in an initial aggregate principal amount of $100.0 million. The ABL facility was set to expire on the fifth anniversary of closing, or November 21, 2022. On April 1, 2020, the ABL facility was amended to increase the credit limit up to $116.0 million and to extend the maturity through August 22, 2024. No amounts were outstanding under this facility as of September 27, 2020 or December 29, 2019. Availability under the ABL facility is based on a monthly accounts receivable and inventory borrowing base certification, which is net of outstanding letters of credit. As of September 27, 2020 and December 29, 2019, $101.8 million and $83.0 million, respectively, was available for borrowing, net of letters of credit. The facility bears interest at an annual rate based on LIBOR plus an applicable margin of 1.50% (ranging from 1.50% to 2.00% based on availability) or the prime rate plus an applicable margin of 0.50% (ranging from 0.50% to 1.00%). Under the Prime rate, had there been outstanding balances, the interest rate on the facility as of September 27, 2020 and September 29, 2019 would have been 3.75% and 5.50%, respectively. Had there been outstanding balances and the Company elected to use the LIBOR rate, the interest rate on the ABL facility as of September 27, 2020 and September 29, 2019 would have been 1.68% and 3.48%, respectively. The ABL facility is also subject to unused line fees (0.5% at September 27, 2020) and other fees and expenses. The Company incurred interest expense of $0.1 million for the Successor period from August 29, 2020 to September 27, 2020, $0.1 million for the Predecessor period from June 29, 2020 to August 28, 2020, and was $0.4 million for the 13 week period ended September 29, 2019. The Company incurred interest expense of $0.5 million for the Predecessor period from December 30, 2019 to August 28, 2020 and $0.9 million for the 39 weeks ended September 29, 2019. Standby letters of credit in the amount of $14.1 million have been issued as of September 27, 2020 and December 29, 2019. The standby letters of credit are primarily issued for insurance purposes. Term Loans On November 21, 2017, the Company entered into a First Lien Term Loan Credit Agreement (the “First Lien Term Loan”) in a principal amount of $535.0 million and a Second Lien Term Loan Credit Agreement (the “Second Lien Term Loan”, and collectively with the First Lien Term Loan, the “Term Loans”) in a principal amount of $125.0 million. The proceeds of the Term Loans were used to refinance the Company’s January 2017 credit facility and fund the acquisition of Inventure Foods and the repurchase of the predecessor membership units held by a minority investor. The First Lien Term Loan requires quarterly principal payments of $1.3 million beginning March 2018, with a balloon payment due for any remaining balance on the seventh anniversary of closing, or November 21, 2024. On August 28, 2020, as part of the Business Combination (as described in Note 1 " Operations and Summary of Significant Accounting Policies" and Note 2 "Acquisitions") an advance payment of principal was made on the First Lien Term Loan of $111.6 million, as such no principal payments are due until November 21, 2024. The First Lien Term Loan bears interest at an annual rate based on either LIBOR plus an applicable margin of 3.50%, or prime rate plus an applicable margin of 2.50%. The interest rate on the First Lien Term Loan as of September 27, 2020 and September 29, 2019 was 3.70% and 5.60%, respectively. The Company incurred closing and other costs associated with the Term Loans, which were allocated to each loan on a specific identification basis based on original principal amounts. Finance fees allocated to the First Lien Term Loan and the Second Lien Term Loan were $10.7 million and $4.1 million, respectively, which are presented net within “non-current portion of debt” on the consolidated balance sheets for the predecessor periods. Deferred fees are amortized ratably over the respective lives of each term loan. Deferred fees associated with the term loans under the January 2017 credit agreement were fully expensed during 2017 and deferred financing fees were derecognized as a result of the Business Combination as described in the Note 1 " Operations and Summary of Significant Accounting Policies" and Note 2 "Acquisitions". On October 1, 2019, the Company repaid the Second Lien Term Loan with the proceeds of the sale of preferred and common units by Series U, Series R, and SRS. The Company accounted for the repayment of the Second Lien Term Loan as a debt extinguishment as the investors who purchased the preferred stock and common units were not parties to the Second Lien Term Loan. The total repayment was $126.3 million, and resulted in a loss on early extinguishment of approximately $4.3 million. Separately, on October 21, 2019, the Company entered into a Senior Secured First Lien Floating Rate Note (the “Secured First Lien Note”) in a principal amount of $125.0 million. Proceeds from the Secured First Lien Note were used primarily to finance the Kennedy acquisition. The Secured First Lien Note requires quarterly interest payments, with a repayment of principal on the maturity date of November 21, 2024. The Secured First Lien Note bears interest at an annual rate based on 3 month LIBOR plus an applicable margin of 5.25%. The interest rate on the Secured First Lien Note on August 28, 2020, prior to payoff was 6.7%. On August 28, 2020, as part of the Business Combination Agreement with CCH (as described in Note 1 " Operations and Summary of Significant Accounting Policies" and Note 2 "Acquisitions", the Senior Secured First Lien Floating Rate Note was paid off. The total repayment was $128.8 million, which includes a $2.5 million early termination fee included within other expense (income), net in the Successor period and $1.3 million of interest expense which had been accrued in the Predecessor period. The First Lien Term Loan, the Secured First Lien Note and the ABL facility are collateralized by substantially all of the assets and liabilities of the Company. The credit agreements contain certain affirmative and negative covenants as to operations and the financial condition of the Company. The Company was in compliance with its financial covenant as of September 27, 2020. Other Notes Payable and Capital Leases During the first fiscal quarter of 2020, the Company closed on the acquisition of Kitchen Cooked, as described in Note 2 "Acquisitions" and the acquisition included a deferred purchase price of $2.0 million. Additionally, during the first fiscal quarter of 2020, the Company purchased intellectual property that include a deferred purchase price of $0.5 million. Amounts outstanding under notes payable consisted of the following: Successor Predecessor (in thousands) As of September 27, 2020 As of December 29, 2019 Note payable – IO notes $ 25,565 $ 33,700 Capital lease 6,051 6,055 Other 2,479 29 Total notes payable 34,095 39,784 Less: current portion (7,909) (7,984) Long term portion of notes payable $ 26,186 $ 31,800 During fiscal 2019, the Company sold $33.2 million of notes receivable from IOs on its books for $34.1 million in a series of transactions to a financial institution. Due to the structure of the transaction, the sale did not qualify for sale accounting treatment and the Company has recorded the notes payable obligation owed by the IOs to the financial institution on its books; the corresponding notes receivable also remained on the Company’s books. The Company services the loans for the financial institution by collecting principal and interest from the IOs and passing it through to the institution. The underlying notes have various maturity dates through December 2028. The Company partially guarantees the outstanding loans, as discussed in further detail within “Note 12. Contingencies”. These loans are collateralized by the routes for which the loans are made. Accordingly, the Company has the ability to recover substantially all of the outstanding loan value upon default. Interest expense for the Successor period from August 29, 2020 to September 27, 2020 was $1.8 million, $1.7 million of which was related to the Company’s credit facility and other long-term debt and $0.1 million of which was related to IO loans. Interest expense for the Predecessor period from June 29, 2020 to August 28, 2020 was $7.0 million, $6.2 million of which was related to the Company’s credit facility and other long-term debt, $0.4 million of which was related to amortization of deferred financing fees, and $0.4 million of which was related to IO loans. Interest expense for the 13 week period ended September 29, 2019 was $12.6 million, $11.4 million of which was related to the Company’s credit facility and other long-term debt, $0.5 million of which was related to amortization of deferred financing fees, and $0.7 million of which was related to IO loans. The interest expense on IO loans is a pass-through expense that has an offsetting interest income within Other Income (Expense). Interest expense for the Predecessor period from December 30, 2019 to August 28, 2020 was $26.7 million, $23.3 million of which was related to the Company’s credit facility and other long-term debt, $1.7 million of which was related to amortization of deferred financing fees, and $1.7 million of which was related to IO loans. Interest expense for the 39 weeks ended September 29, 2019 was $38.0 million, $34.9 million of which was related to the Company’s credit facility and other long-term debt, $1.5 million of which was related to amortization of deferred financing fees, and $1.6 million of which was related to IO loans. The interest expense on IO loans is a pass-through expense that has an offsetting interest income within Other Income (Expense). |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS AND PURCHASE COMMITMENTS | 9 Months Ended |
Sep. 27, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS AND PURCHASE COMMITMENTS | DERIVATIVE FINANCIAL INSTRUMENTS AND PURCHASE COMMITMENTS Derivative Financial Instruments To reduce the effect of interest rate fluctuations, the Company entered into an interest rate swap contract on September 6, 2019, with an effective date of September 30, 2019, with a counter party to make a series of payments based on a fixed interest rate of 1.339% and receive a series of payments based on the greater of LIBOR or 0.00%. Both the fixed and floating payment streams are based on a notional amount of $250 million. The Company entered into this transaction to reduce its exposure to changes in cash flows associated with its variable rate debt and has designated this derivative as a cash flow hedge. At September 27, 2020, the effective fixed interest rate on the long-term debt hedged by this contract was 4.2%. For further treatment of the Company’s interest rate swap, refer to “Note 10. Fair Value Measurements” and “Note 13. Accumulated Other Comprehensive (Loss) Income.” Purchase Commitments Additionally, the Company has outstanding purchase commitments for specific quantities at fixed prices for certain key ingredients to economically hedge commodity input prices. These purchase commitments totaled $53.0 million as of September 27, 2020. The Company has recorded purchase commitment gain (losses) totaling $0.2 million for the Successor period from August 29, 2020 to September 27, 2020, $0.3 million for the Predecessor period from June 29, 2020 to August 28, 2020, and $(0.5) million for the 13 week period ended September 29, 2019. The Company has recorded purchase commitment losses totaling $(0.7) million for the Predecessor period from December 30, 2019 to August 28, 2020 and $(0.8) million for the 39 weeks ended September 29, 2019. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 27, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The Company follows the guidance relating to fair value measurements and disclosures with respect to financial assets and liabilities that are re-measured and reported at fair value each reporting period, and with respect to non-financial assets and liabilities that are not required to be measured at fair value on a recurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to the valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I) and the lowest priority to unobservable pricing inputs (Level III). A financial asset or liability’s level within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are described below: Level I - Valuations are based on unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities; Level II - Valuations are based on quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active. Financial asset or liabilities which are included in this category are securities where all significant inputs are observable, either directly or indirectly; and Level III - Prices or valuations that are unobservable and where there is little, if any, market activity for these financial assets or liabilities. The inputs into the determination of fair value inputs for these investments require significant management judgment or estimation. The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors. To the extent that valuation is based on inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. The fair values of the Company’s Level 2 derivative instruments were determined using valuation models that use market observable inputs including interest rate curves and both forward and spot prices for commodities. Derivative assets and liabilities included in Level 2 primarily represent commodity and interest rate swap contracts. The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of September 27, 2020: (in thousands) Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 32,024 $ — $ — $ 32,024 Total assets $ 32,024 $ — $ — $ 32,024 Liabilities: Commodity contracts $ — $ 1,016 $ — $ 1,016 Interest rate swaps — 5,802 — 5,802 Debt — 411,451 — 411,451 Total liabilities $ — $ 418,269 $ — $ 418,269 The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of December 29, 2019: (in thousands) Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 15,053 $ — $ — $ 15,053 Interest rate swaps — 1,486 — 1,486 Total assets $ 15,053 $ 1,486 $ — $ 16,539 Liabilities: Commodity contracts $ — $ 494 $ — $ 494 Debt — 640,125 — 640,125 Total liabilities $ — $ 640,619 $ — $ 640,619 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended |
Sep. 27, 2020 | |
Share-based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION 2020 Omnibus Equity Incentive Plan In August 2020, CCH’s shareholders approved the Company’s 2020 Omnibus Equity Incentive Plan (the “2020 Plan”). The 2020 Plan provides for the grant of various equity-based incentive awards to eligible employees and directors of the Company and its subsidiaries. The types of equity-based awards currently outstanding under the 2020 Plan include RSUs, PSUs, and stock options. There are 9,500,000 shares of Class A Common Stock reserved for issuance under the 2020 Plan. All awards currently issued under the 2020 Plan may be settled only in shares of Class A Common Stock. Restricted Stock Units 2020 LTIP RSUs In connection with the Business Combination, the Phantom Units issued under the 2018 LTIP were converted into the RSUs issued under the 2020 Long-Term Incentive Plan (the “2020 LTIP RSUs”), with each RSU vesting on December 31, 2021, provided that if a change in control of Utz, under the terms of the 2020 LTIP occurs prior to December 31, 2021, the 2020 LTIP RSUs will become 100% vested, unless earlier forfeited under their terms, and representing an unfunded, unsecured promise by the Company to issue a participant one share of Class A Common Stock. Holders of 2020 LTIP RSUs are subject to substantially similar terms to the holders of Phantom Units, including requisite service period and vesting conditions. The conversion of the 2018 LTIP Phantom Units was accounted for as a modification under ASC 718. The 2020 LTIP RSUs are equity-classified due to settlement being in shares. As a result of the Business Combination, the Company converted the Phantom Units under the 2018 LTIP into 2020 LTIP RSUs, which may settle into up to 1,479,445 shares of Class A Common Stock plus such number of shares the Company may deliver, in its discretion, to satisfy certain gross-up obligations, under the 2020 LTIP at a fair value of $16.34 per unit to holders of the Phantom Units. The fair value of the Phantom Units being replaced was approximately $11.2 million at the Closing, which was attributable to the pre-combination service period and was included in the purchase price of the Business Combination. The fair value of the 2020 LTIP RSUs at the Closing of the Business Combination in excess of the fair value of the replaced Phantom Units attributable to the pre-combination period was approximately $13.9 million and is attributable to the post-combination requisite service period. Unrecognized compensation expense related to the 2020 LTIP RSUs was $13.0 million at September 27, 2020, which is expected to be recognized as expense over the remaining post-combination service period of approximately 1.3 years. The Company incurred $0.9 million of share-based compensation expense from August 29, 2020 through September 27, 2020. There were no forfeitures of 2020 LTIP RSUs during the Successor period. Initial Grant RSUs Under the 2020 Plan, the Company has granted certain employees and directors RSUs as a result of their significant contributions. These grants will settle upon vesting into shares of the Company’s Class A Common Stock, subject to continued employment. The Initial Grant RSUs for directors will vest on May 6, 2021, while the Initial Grant RSUs for certain employees will vest in equal installments on December 31, 2022 and December 31, 2023. The Initial Grant RSUs will participate in dividends of the Company beginning with the fiscal 2020 end-of-year dividend declaration, which is expected to be paid out in the first quarter of fiscal 2021. During the period from August 29, 2020 through September 27, 2020, the Company granted 128,935 Initial Grant RSUs at a grant date fair value of $18.40 per unit, which is the closing share price of the Company’s Class A Common Stock on the grant date, provided that the issuance of the Initial Grant RSUs was contingent upon the Company filing a Form S-8 with the SEC, which occurred on November 2, 2020. All such RSUs remained unvested at September 27, 2020. Unrecognized compensation expense related to unvested Initial Grant RSUs was $2.3 million at September 27, 2020, which is expected to be recognized as expense over the weighted-average period of 2.3 years. The Company incurred $0.1 million of share-based compensation expense from August 29, 2020 through September 27, 2020. There were no forfeitures of Initial Grant RSUs during the Successor period. Performance Share Units The Company issued PSUs as part of the 2020 Plan, which settle into shares of the Company’s Class A Common Stock subject to the continued employment of the grantees and achievement of certain performance criteria, provided that the issuance of the PSUs was contingent upon the Company filing a Form S-8 with the SEC, which occurred on November 2, 2020. The number of PSUs that will vest is determined by the Company’s Class A Common Stock achieving a certain Total Shareholder Return (“TSR”) for the Company, relative to the TSR of a specified peer group. Depending on the Company’s TSR relative to the peer group TSR, the actual number of shares that will be vested can range from zero and up to 200% of the initial grant. The awards will vest 50% on December 31, 2022 and 50% on December 31, 2023, subject to the market condition described above. The PSUs will participate in dividends of the Company beginning with the fiscal 2020 end-of-year dividend declaration, which is expected to be paid out in the first quarter of fiscal 2021. Since the PSUs vest based on market conditions, a Monte Carlo simulation model was used to determine the grant-date fair value of the PSUs. The assumptions used in the Monte Carlo simulation model included a weighted average expected term of 2.8 years, weighted average expected volatility of 53.6%, and weighted average risk-free rate of 0.2%. During the period from August 29, 2020 through September 27, 2020, the Company granted 140,076 PSUs at a weighted average grant date fair value of $23.67 per unit, all of which remained unvested at September 27, 2020. As of September 27, 2020, the Company had 3.2 million of total unrecognized compensation cost related to PSUs that will be recognized over a weighted average period of 2.8 years. The Company incurred $0.1 million in share-based compensation expense from August 29, 2020 through September 27, 2020 related to the PSUs. There were no forfeitures of PSUs during the period. Stock Options The Company granted its Executive Leadership Team stock options exercisable for Class A Common Stock of the Company, provided that the exercise of such stock options was contingent upon the Company filing a Form S-8 with the SEC, which occurred on November 2, 2020. Subject to continued employment, 50% of these options will vest on December 31, 2022 and 50% on December 31, 2023. The Company granted 286,268 stock options on August 28, 2020 and the exercise price of the options is the Company’s closing share price of $16.34 on August 28, 2020. The stock options have a maximum contractual life of 10 years from the grant date. No options were exercised or forfeited during the period, and no stock options were granted prior to the Business Combination. The fair value of each stock option granted was determined to be $7.38 using the Black-Scholes Option Pricing Model based on an expected volatility of 46.8%, expected option term of approximately 6.4 years, and risk-free rate of return of 0.4%. The risk-free rates are based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term. The expected option term was determined based on the simplified method as allowable under ASC 718 due to a lack of sufficient trading history for the Company’s common stock. The use of this method effectively assumes that exercise occurs evenly over the period from vesting until expiration, and therefore the expected term is the midpoint between the service period and the contractual term of the award. As of September 27, 2020, the Company had $1.7 million of total unrecognized compensation cost related to stock options that will be recognized over a weighted average period of 2.8 years. For the period from August 29, 2020 through September 27, 2020, the stock compensation expense related to the stock options was $0.0 million. |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 27, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES Litigation Matters The Company is involved in litigation and other matters incidental to the conduct of its business, the results of which, in the opinion of management, are not likely to be material to the Company’s financial condition, results of operations or cash flows. Tax Matters The Company received an assessment from the Commonwealth of Pennsylvania pursuant to a sales and use tax audit for the period from January 1, 2014 through December 31, 2016. As of September 27, 2020 and December 29, 2019, the Company had a reserve of $1.3 million, to cover the assessment. Guarantees The Company partially guarantees loans made to IOs by Cadence Bank for the purchase of routes. The outstanding balance of loans guaranteed was $4.2 million and $5.1 million at September 27, 2020 and December 29, 2019, respectively, all of which was recorded by the Company as an off balance sheet arrangement. The maximum amount of future payments the Company could be required to make under the guarantees equates to 25% of the outstanding loan balance up to $2.0 million. These loans are collateralized by the routes for which the loans are made. Accordingly, the Company has the ability to recover substantially all of the outstanding loan value upon default. The Company partially guarantees loans made to IOs by Bank of America for the purchase of routes. The outstanding balance of loans guaranteed that were issued by Bank of America was $4.3 million and $0.7 million at September 27, 2020 and December 29, 2019, respectively, which are off balance sheet. As discussed in “Note 8. Long-Term Debt”, the Company also sold notes receivable on its books to Bank of America during fiscal 2019, which the Company partially guarantees. The outstanding balance of notes purchased by Bank of America at September 27, 2020 and December 29, 2019 was $18.3 million and $25.1 million, respectively. Due to the structure of the transaction, the sale did not qualify for sale accounting treatment, as such the Company records the notes payable obligation owed by the IOs to the financial institution on its books; the corresponding note receivable also remained on the Company’s books. The maximum amount of future payments the Company could be required to make under these guarantees equates to 25% of the outstanding loan balance on the first day of each calendar year plus 25% of the amount of any new loans issued during such calendar year. These loans are collateralized by the routes for which the loans are made. Accordingly, the Company has the ability to recover substantially all of the outstanding loan value upon default. The Company guarantees loans made to IOs by M&T Bank for the purchase of routes. The agreement with M&T Bank was amended in January 2020 so that the Company guaranteed up to 25% of the greater of the aggregate principal amount of loans outstanding on the payment date or January 1st of the subject year. The outstanding balance of loans guaranteed was $7.2 million and $8.6 million at September 27, 2020 and December 29, 2019, respectively, all of which was on balance sheet. These loans are collateralized by the routes for which the loans are made. Accordingly, the Company has the ability to recover substantially all of the outstanding loan value upon default. Unclaimed Property The Company was notified in September 2016 that several states requested an audit of the Company’s unclaimed property practices. The states initiating the audit include Connecticut, Idaho, Maryland, Massachusetts, New Hampshire, New York, South Dakota, and Tennessee but was later expanded to include a total of 22 states. The audit is limited to UQF and does not include any other legal entities. The audit consists of three components including accounts payable, payroll, and accounts receivable customer over-payments. The Company estimates that the potential liability for the accounts payable and payroll components is approximately $0.2 million, which has been included in the other accrued expenses section of the balance sheet as of September 27, 2020 and December 29, 2019. As of the date of these financial statements, the Company is not able to reasonably estimate the potential liability for the accounts receivable customer over-payments. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME | 9 Months Ended |
Sep. 27, 2020 | |
Equity [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME | ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME Total accumulated other comprehensive income was $0.3 million as of September 27, 2020 and $1.4 million as of December 29, 2019. Total accumulated other comprehensive (loss) income consists solely of unrealized gains (losses) from the Company’s derivative financial instruments accounted for as cash flow hedges. During the period ended September 27, 2020, changes to the balance in accumulated other comprehensive (loss) income were as follows: Predecessor (in thousands) Gains/(Losses) on Balance as of December 29, 2019 $ 1,408 Unrealized gain (loss) on cash flow hedges (7,917) Balance as of June 28, 2020 (6,509) Unrealized gain (loss) on cash flow hedges 454 Balance as of August 28, 2020 $ (6,055) Successor (in thousands) Gain on Balance as of August 29, 2020 $ — Unrealized gain on cash flow hedges 252 Balance as of September 27, 2020 $ 252 |
SUPPLEMENTARY CASH FLOW INFORMA
SUPPLEMENTARY CASH FLOW INFORMATION | 9 Months Ended |
Sep. 27, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTARY CASH FLOW INFORMATION | SUPPLEMENTARY CASH FLOW INFORMATION Cash paid for interest was $1.6 million for the Successor period from August 29, 2020 to September 27, 2020, $28.8 million for the Predecessor period from December 30, 2019 to August 28, 2020, and $40.2 million for the 39 weeks ended September 29, 2019. Refunds related to income related taxes were $0.0 million for the Successor period from August 29, 2020 to September 27, 2020, $0.2 million for the Predecessor period from December 30, 2019 to August 28, 2020, and $0.1 million for the 39 weeks ended September 29, 2019. Payments made for income-related taxes were $0.3 million for the Successor period from August 29, 2020 to September 27, 2020, $0.5 million for the Predecessor period from December 30, 2019 to August 28, 2020, and $1.8 million for the thirty-nine weeks ended September 29, 2019. The following non cash considerations were part of the Business Combination Agreement with CC H; Continuing Members' retained restricted units totaling $54.1 million, TRA totaling $51.4 million, and LTIP RSU awards totaling $11.2 million. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 27, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES UBI is taxed as a corporation and is subject to corporate federal, state and local taxes on the income allocated to it from UBH, based upon UBI’s economic interest in UBH, as well as any stand-alone income or loss it generates. UBH wholly-owns UQF, UTZTRAN LLC, Kennedy, GH Pop Holdings LLC, Good Health, Condor Snack Foods LLC, and Snikiddy, which are disregarded entities for federal and most applicable state and local tax purposes. UBH and its disregarded subsidiaries are treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, UBH is not subject to U.S. federal and certain state and local income taxes. UBH’s members, including UBI, are liable for federal, state and local income taxes based on their allocable share of UBH’s pass-through taxable income, which includes income of UBH's subsidiaries that are treated as disregarded entities separate from UBH for income tax purposes. UBH wholly-owns Heron Holding Corporation ("Heron"), which wholly-owns Golden Flake, Inventure Foods, and Kitchen Cooked. Heron and its subsidiaries are subject to corporate federal, state and local taxes on income they generate. As such, the consolidated tax provision of UBI addresses corporate taxes that it incurs based on its flow-through income from UBH as well as corporate taxes that are incurred by Heron and its subsidiaries. The Company accounts for income taxes in accordance with ASC 740, Income Taxes. The Company’s effective tax rates for the period August 29, 2020 through September 27, 2020 and June 29, 2020 through August 28, 2020 were 54.3% and (38.6)%, respectively. The Company’s effective tax rate for December 29, 2019 through August 28, 2020 was 53.7%. The Company’s effective tax rates for the thirteen and thirty-nine week periods ended September 29, 2019 were 9.0% and 20.8%, respectively. The Company’s effective rates differ from the federal statutory rate of 21% primarily due to the impact of UBH, which is a partnership, is not taxed at the Company level, and is required to allocate some of its taxable results to the Continuing Members, as well as state taxes. As a result of the Business Combination, the Company recognized a deferred tax asset (“DTA”) in the amount of $52.5 million to account for the difference between the Company’s book and tax basis in its UBH limited liability company units. At the Closing, the Company concluded, based on the weight of all positive and negative evidence, that the DTA is not likely to be realized. As such, a full valuation allowance was recorded. The financial statements reflect a net deferred tax liability (“DTL”) of $23.0 million, the detail of which is outlined in the following table. Deferred Tax (in thousands) Asset or (Liability) UBI Investment in UBH partnership $ 52,538 Valuation Allowance - non-reversing temporary differences (52,538) Subtotal - UBI — Heron and Subsidiaries Fixed assets (10,915) Intangible assets (26,069) Federal and state net operating losses 14,029 Other temporary differences 1,551 Subtotal (21,404) Valuation allowance - state net operating losses (1,554) Subtotal - Heron and Subsidiaries (22,958) Total $ (22,958) The Company files federal and state tax returns. These returns are generally open to examination by the relevant tax authorities from three to four years from the date they are filed, although there is variation by jurisdiction. The tax filings relating to the Company's US federal tax returns are currently open to examination for years beginning in 2017 and state tax returns are open to examination for tax years beginning in 2015. Upon audit, tax authorities may challenge all or part of a tax position. The Company regularly assesses the outcome of a potential examination in each tax jurisdiction and does not expect to record any material changes during 2020 to the balance of unrecognized tax benefits of $0 reported at December 29, 2019. Tax receivable agreement liability Pursuant to an election under section 754 of the Internal Revenue Code, the Company obtained an increase in its share of the tax basis in the net assets of UBH when it was deemed to purchase UBH units from the Continuing Members and UPA Seller per the Business Combination. The Continuing Members have the option to exchange UBH units for UBI common stock post-Business Combination. The Company intends to treat any such exchanges as direct purchases for U.S. federal income tax purposes, which is expected to further increase its share of the tax basis in the net assets of UBH. The increases in tax basis may reduce the amounts the Company would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. Pursuant to the Business Combination Agreement, the Company entered into the TRA, which provides for the payment by the Company of 85% of the amount of any tax benefits realized as a result of (i) increases in the share of the tax basis in the net assets of UBH resulting from the Business Combination and any future exchanges by the Continuing Members of UBH units for UBI common stock; (ii) tax basis increases attributable to payments made under the TRA; and (iii) tax amortization deductions attributable to the acquisition of Kennedy and the election to treat the transaction as an asset deal for tax purposes (the "TRA Payments"). The rights of each party under the TRA other than the Company are assignable, subject to certain restrictions. The timing and amount of aggregate payments due under the TRA may vary based on a number of factors, including the timing and amount of taxable income generated by the Company each year, as well as the tax rate then applicable, among other factors. As of September 27, 2020, the Company had a liability of $51.4 million related to its projected obligations under the TRA, which is reflected as a non-current accrued expense in the consolidated balance sheet. |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 9 Months Ended |
Sep. 27, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
VARIABLE INTEREST ENTITIES | VARIABLE INTEREST ENTITIESPrior to the merger of SRS and UQF described in “Note 1. Operations and Summary of Significant Accounting Policies”, UQF held a variable interest in SRS a commonly controlled entity, for which UQF is the primary beneficiary since UQF had the power to direct the activities of SRS and the obligation to absorb losses and the right to receive benefits. UQF leased properties owned by SRS. The acquisitions of these properties were funded by UQF through notes receivable. As the primary beneficiary of this variable interest entity, the assets, liabilities and results of operations are included in UQF’s consolidated financial statements. The equity holders’ interests were reflected in “Net income attributable to noncontrolling interest” in the consolidated statements of operations and comprehensive income (loss) and “Noncontrolling interest” in the consolidated balance sheets. The total amount of lease expense/income between SRS and UQF for the thirteen and thirty-nine weeks ended September 29, 2019 was $1.1 million and $3.3 million, respectively, which was eliminated in consolidation. When SRS merged with UQF, UQF assumed all assets and liabilities of SRS and any notes receivable or payable between the two companies were relieved. |
BUSINESS RISK
BUSINESS RISK | 9 Months Ended |
Sep. 27, 2020 | |
Unusual or Infrequent Items, or Both [Abstract] | |
BUSINESS RISK | BUSINESS RISKThe novel coronavirus, or COVID-19, outbreak began to impact consumption, distribution and production of the Company’s products in March 2020. The Company is taking necessary preventive actions and implementing additional measures to protect its employees who are working on site. The Company continues to experience higher demand for its products versus the prior year, and we are servicing that demand by increasing production and distribution activities. Generally, producers of food products, including salty snacks, have been deemed “essential industries” by federal, state, and local governments and are exempt from certain COVID-19-related restrictions on business operations. The Company’s strategic manufacturing capabilities and DSD distribution network have allowed it to effectively service increases in demand and be responsive to evolving market dynamics driven by changes in consumer behavior. The Company continues to monitor customer and consumer demands, and intends to adapt its plans as needed to continue to meet these demands. The event is still ongoing, and the Company is in the process of evaluating the financial impact. |
EQUITY
EQUITY | 9 Months Ended |
Sep. 27, 2020 | |
Equity [Abstract] | |
EQUITY | EQUITY Class A Common Stock The Company is authorized to issue 1,000,000,000 shares of Class A Common Stock, par value $0.0001 per share, of which 59,369,050 shares of UBI were issued and outstanding on September 27, 2020. Upon the Closing of the Business Combination, all shares of CCH Class A ordinary shares, including 3,500,000 Forward Purchase Class A Ordinary Shares of CCH that were issued at the Closing of the Business Combination as part of the Forward Purchase Agreement discussed below, and Class B ordinary shares, less shareholder redemptions, were converted on a one-for-one basis into shares of Class A Common Stock, including 2,000,000 shares of Class B Common Stock initially issued to the Sponsor, which immediately vested upon the Closing of the Business Combination and converted into shares of Class A Common Stock of the Company. Class V Common Stock The Company is also authorized to issue 61,249,000 shares of Class V Common Stock, par value of $0.0001 all of which were issued to the Continuing Members in connection with the Closing of the Business Combination, as described in Note 2 “Acquisitions”. Each of the Continuing Members' common limited liability company units of UBH along with a share of Class V Common Stock may be exchanged for one share of Class A Common Stock of the Company upon certain restrictions being satisfied, as described in Note 2 “Acquisitions”. All 61,249,000 shares of Class V Common Stock were outstanding as of September 27, 2020. Warrants Prior to the Business Combination, CCH issued 15,833,332 public warrants, including 1,166,666 Forward Purchase Warrants that were issued at the Closing as part of the Forward Purchase Agreement discussed below, and 7,200,000 private placement warrants. As a result of the Business Combination, the Company assumed the CCH equity warrants and such warrants are now exercisable for shares of UBI Class A Common Stock instead of Class A ordinary shares of CCH. All other features of the warrants remain unchanged. As of September 27, 2020, there were 15,833,332 public warrants and 7,200,000 private placement warrants outstanding. Forward Purchases In connection with the Closing of the Business Combination and pursuant to a Forward Purchase Agreement entered into between CCH, CCH’s Sponsor, and CCH’s independent directors, CCH consummated the sale and issuance of 3,500,000 Forward Purchase Shares and Forward Purchase Warrants to acquire up to 1,166,666 Class A ordinary shares of CCH at $11.50 per share, for aggregate proceeds of $35,000,000 that were used to fund the Business Combination. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 27, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share is based on the weighted average number of shares of Class A Common Stock issued and outstanding during the Successor period. Diluted earnings per share is based on the weighted average number shares of Class A Common Stock issued and outstanding and the effect of all dilutive common stock equivalents and potentially dilutive share-based awards outstanding during the Successor period. Refer to Note 11. Share-Based Compensation for further information on the share based awards considered in the diluted EPS computation. Given the historical partnership equity structure of UBH, the Company determined that the calculation of earnings per membership unit results in values that are not a valuable metric to users of these consolidated financial statements. Therefore, EPS information is omitted for the Predecessor periods. The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share: Successor (in thousands, except share data) From August 29, 2020 through September 27, 2020 Basic earnings per share: Numerator: Net loss attributable to controlling interest $ (111) Denominator: Weighted average Class A Common Stock shares, basic 59,369,050 Basic earnings per share $ — Diluted earnings per share: Numerator: Net loss attributable to controlling interest $ (111) Denominator: Weighted average Class A Common Stock shares, basic 59,369,050 Effect of dilutive securities: Warrants 7,928,050 2020 LTIP RSUs 815,224 PSUs 140,076 Stock options 19,530 Weighted average Class A Common Stock shares, diluted 68,271,930 Diluted earnings per share $ — Class V Common Stock not subject to earnings per share calculation 61,249,000 Net loss attributable to noncontrolling interest $ 2,320 The diluted earnings per share computation excludes the effect of certain RSUs granted to Directors and Management which convert to Class A Common Stock upon vesting 50% at December 31, 2022 and 50% at December 31, 2023, as their inclusion would have been anti-dilutive. Shares of the Company’s Class V Common Stock do not participate in earnings or losses of the Company and, therefore, are not participating securities. Additionally, none of the share based compensation awards participated in earnings or losses of the Company during the Successor period from August 29, 2020 through September 27, 2020. As such, basic and diluted earnings per share calculations under the two-class method were not required. At September 27, 2020, the Continuing Members held all 61,249,000 shares of Class V Common Stock issued and outstanding and also held an equal number of common limited liability company units of UBH, which comprise the noncontrolling interest. The net loss attributable to the noncontrolling interest was $2.3 million for the Successor period from August 29, 2020 through September 27, 2020. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 27, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTSOn November 2, 2020, the Company, through its subsidiary UQF acquired certain assets of the H.K. Anderson business, a leading brand of peanut butter-filled pretzels, from Conagra Brands, Inc. for less than $10 million (including the price of certain inventory on hand at the closing of such acquisition). The acquisition includes certain intangible assets and inventory and is intended to broaden the Company's product offering to include filled pretzels. |
OPERATIONS AND SUMMARY OF SIG_2
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation – The accompanying unaudited consolidated financial statements comprise the financial statements of Utz Brands, Inc. ("UBI", the "Company", or "Successor", formerly Collier Creek Holdings ("CCH")) and its wholly owned subsidiaries. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"). They do not include all information and notes required by U.S. GAAP for annual financial statements. The balance sheet as of December 29, 2019 has been derived from the audited combined financial statements as of and for the year ended December 29, 2019 of Utz Brands Holdings, LLC ("UBH", or the "Predecessor"). In the opinion of management, such financial information reflects all normal and recurring adjustments necessary for a fair presentation of the financial position and the results of operations for such interim periods in accordance with the U.S. GAAP. Operating results for the interim period are not necessarily indicative of the results that may be expected for any future period or for the full year. The consolidated interim financial statements, including our significant accounting policies, should be read in conjunction with the audited combined financial statements of UBH (formerly UM-U Intermediate, LLC, or "Intermediate U") and notes thereto for the year ended December 29, 2019 that was included in the definitive proxy statement that was filed with the SEC on August 7, 2020 for the Business Combination that is described below. CCH was incorporated in the Cayman Islands on April 30, 2018 as a blank check company. CCH was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses that the Company had not then identified. CCH’s sponsor was Collier Creek Partners LLC, a Delaware limited liability company. |
Consolidation | The statements include the accounts of the Predecessor, prior to the Business Combination, which was determined to be consolidated UBH, which includes the accounts of its wholly-owned subsidiary, Utz Quality Foods, LLC (“UQF”). UQF is consolidated with its wholly-owned subsidiaries: UTZTRAN, LLC; Heron Holding Corporation (“Heron”), with its wholly-owned subsidiaries Golden Flake Snack Foods, Inc. (“Golden Flake”), Inventure Foods, Inc. and its subsidiaries (“Inventure Foods”), and Kitchen Cooked Inc. (“Kitchen Cooked”); Kennedy Endeavors, LLC (“Kennedy”); and GH Pop Holdings, LLC, with its wholly-owned subsidiaries Good Health Natural Products, LLC (“Good Health”), Condor Snack Foods, LLC, and Snikiddy, LLC (“Snikiddy”). SRS Leasing LLC and its subsidiaries (“SRS”) were companies formed to acquire, hold and lease real estate to UQF. In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation of Variable Interest Entities, UQF was determined to be the primary beneficiary of SRS, an entity under common ownership. The accounts of SRS have been consolidated with those of UQF as of and for the fiscal year ended December 29, 2019. On December 30, 2019, the first day of the fiscal year of 2020, SRS were merged into UQF, with UQF surviving the transaction. The accumulated (deficit) equity of SRS was presented on the noncontrolling interest line of the consolidated balance sheet as of December 29, 2019 and was moved to members’ (deficit) equity on December 30, 2019, the date of the merger. Rice Investments, L.P. (“RILP”) was formed as a limited partnership pursuant to the Delaware Revised Uniform Limited Partnership Act on January 30, 2004 for the purpose of acquiring, owning, managing, and selling or otherwise disposing of intellectual property (namely trade names) that are used by UQF. RILP had one general partner, UQF, and one limited partner, UM-R Intermediate, LLC (“Intermediate R”). UQF, in accordance with ASC 810, was determined to be the primary beneficiary of RILP, an entity under common ownership. The accounts of RILP have been consolidated with those of UQF as of and for the fiscal year ended December 29, 2019. On December 30, 2019 Intermediate R was merged into Intermediate U with Intermediate U surviving the transaction. Finally, and immediately following that merger, RILP merged into UQF, with UQF being the surviving entity and Intermediate U remaining the sole member of UQF. Prior to these mergers the statements of SRS, RILP, and Intermediate R were combined within the statements of Intermediate U. On March 18, 2020, Intermediate U changed its name to Utz Brands Holdings, LLC upon filing a Certificate of Amendment with the Secretary of State of the State of Delaware. All intercompany transactions and balances have been eliminated in combination/consolidation. Operating Entities Holding Entities Utz Quality Foods, LLC Utz Brands, Inc. UTZTRAN, LLC Utz Brands Holdings, LLC Golden Flake Snack Foods, Inc. GH Pop Holdings, LLC Inventure Foods, Inc. and its subsidiaries Heron Holding Corporation Kennedy Endeavors, LLC Good Health Natural Products, LLC Condor Snack Foods, LLC Snikiddy, LLC Kitchen Cooked, Inc. |
Income Taxes | Income Taxes – The Company accounts for income taxes pursuant to the asset and liability method of ASC 740, Income Taxes, which requires it to recognize current tax liabilities or receivables for the amount of taxes it estimates are payable or refundable for the current year, and deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts and their respective tax bases of assets and liabilities and the expected benefits of net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted. A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. The Company follows the provisions of ASC 740-10 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740-10 prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The benefit of tax positions taken or expected to be taken in the Company’s income tax returns is recognized in the financial statements if such positions are more likely than not of being sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits”. A liability is recognized (or amount of net operating loss carryover or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740-10. Interest costs and related penalties related to unrecognized tax benefits are required to be calculated, if applicable. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as selling and administrative expenses. As of September 27, 2020 and December 29, 2019, no liability for unrecognized tax benefits was required to be reported. The Company does not expect any significant changes in its unrecognized tax benefits in the next fiscal year. |
Distribution Route Acquisition and Sale Transactions | Distribution Route Acquisition and Sale Transactions – The Company acquires and sells distribution routes as a part of the Company’s maintenance of its direct-store delivery (“DSD”) network. As new independent operators (“IOs”) are identified, the Company either sells its newly-created or existing Company-managed routes to the IOs or sells routes that were previously acquired by the Company to the IOs. Gain/loss from the sale of a distribution route is recorded upon the completion of the sale transaction, and is calculated based on the difference between the sale price of the distribution route and the asset carrying value of the distribution route as of the date of sale. The Company records intangible assets for distribution routes that it purchases based on the payment that the Company makes to acquire the route, and records the purchased distribution routes as indefinite-lived intangible assets under FASB ASC 350, Intangibles – Goodwill and Other. The indefinite lived intangible assets are subject to annual impairment testing. |
Goodwill and Other Identifiable Intangible Assets | Goodwill and Other Identifiable Intangible Assets – The Company allocates the cost of acquired companies to the identifiable tangible and intangible assets acquired and liabilities assumed, with the remaining amount classified as goodwill. The identification and valuation of these intangible assets and the determination of the estimated useful lives at the time of acquisition, as well as the completion of impairment tests, require significant management judgments and estimates. These estimates are made based on, among other factors, review of projected future operating results and business plans, economic projections, anticipated highest and best use of future cash flows and the cost of capital. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of goodwill and other intangible assets, and potentially result in a different impact to the Company’s results of operations. Further, changes in business strategy and/or market conditions may significantly impact these judgments and thereby impact the fair value of these assets, which could result in an impairment of the goodwill or intangible assets. Finite-lived intangible assets consist of distribution/customer relationships, technology and trademarks. These assets are being amortized over their estimated useful lives. Finite-lived intangible assets are tested for impairment only when management has determined that potential impairment indicators are present. Goodwill and other indefinite-lived intangible assets (including certain trade names, master distribution rights and company-owned sales routes) are not amortized but are tested for impairment at least annually and whenever events or circumstances change that indicate impairment may have occurred. The Company tests goodwill for impairment at the reporting unit level. The Company has identified the existing snack food operations as its sole reporting unit. As the Company has early adopted the FASB Accounting Standards Updated (“ASU”) No. 2017-04, Intangibles - Goodwill and Other (“Topic 350”): Simplifying the Test for Goodwill Impairment, the Company is required to record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. ASU No. 2017-04, Topic 350, also permits an entity to first assess qualitative factors to determine whether it is necessary to perform quantitative impairment tests for goodwill and indefinite-lived intangibles. If an entity believes, as a result of each qualitative assessment, it is more likely than not that goodwill or an indefinite-lived intangible asset is not impaired, a quantitative impairment test is not required. |
Share-Based Compensation | Share-Based Compensation – Share-based compensation is rewarded to employees and directors of the Company and accounted for in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”). Share-based compensation expense is recognized for equity awards over the vesting period based on their grant-date fair value. During the Successor period, the Company uses various forms of long-term incentives including, but not limited to, Stock Options, Restricted Stock Units (“RSUs”) and Performance Share Units (“PSUs”), provided that the exercise of such stock options was contingent upon the Company filing a Registration Statement on Form S-8 ("Form S-8") with the SEC and the issuance of the RSUs and PSUs was contingent upon the Company filing a Form S-8 with the SEC, which occurred on November 2, 2020. The fair value of stock options is estimated at the date of grant using the Black-Scholes valuation model. The exercise price of each stock option equals or exceeds the estimated fair value of the Company’s stock price on the date of grant. Stock options can generally be exercised over a maximum term of ten years. The grant date fair value of the PSUs is determined using the Monte Carlo simulation model. The grant date fair value of the RSUs is determined using the Company’s share price on the grant date. Share-based compensation expense is included within the same financial statement caption where the recipient’s other compensation is reported. The Company accounts for forfeitures as they occur. |
Revenue Recognition | Revenue Recognition – The Company’s revenues primarily consist of the sale of salty snack items to customers, including supermarkets, mass merchants, club stores, dollar and discount stores, convenience stores, independent grocery stores, drug stores, food service, vending, military, and other channels. The Company sells its products in most regions of the United States primarily through its DSD network, direct to warehouse shipments, and third-party distributors. These revenue contracts generally have a single performance obligation. Revenue, which includes shipping and handling charges billed to the customer, is reported net of variable consideration and consideration payable to customers, including applicable discounts, returns, allowances, trade promotion, consumer coupon redemption, unsaleable product, and other costs. Amounts billed and due from customers are classified as accounts receivables and require payment on a short-term basis and, therefore, the Company does not have any significant financing components. The Company recognizes revenue when (or as) performance obligations are satisfied by transferring control of the goods to customers. Control is transferred upon delivery of the goods to the customer. Shipping and/or handling costs that occur before the customer obtains control of the goods are deemed to be fulfillment activities and are accounted for as fulfillment costs. Applicable shipping and handling are included in customer billing and are recorded as revenue as the products’ control is transferred to customers. The Company assesses the goods promised in customer purchase orders and identifies a performance obligation for each promise to transfer a good that is distinct. The Company offers various forms of trade promotions and the methodologies for determining these provisions are dependent on local customer pricing and promotional practices, which range from contractually fixed percentage price reductions to provisions based on actual occurrence or performance. The Company’s promotional activities are conducted either through the retail trade or directly with consumers and include activities such as in store displays and events, feature price discounts, consumer coupons, and loyalty programs. The costs of these activities are recognized at the time the related revenue is recorded, which normally precedes the actual cash expenditure. The recognition of these costs therefore requires management judgment regarding the volume of promotional offers that will be redeemed by either the retail trade or consumer. These estimates are made using various techniques including historical data on performance of similar promotional programs. The Company has reserves in place of $18.0 million as of September 27, 2020 and $16.4 million as of December 29, 2019. Differences between estimated expense and actual redemptions are recognized as a change in management estimate as actual redemptions are incurred. |
Business Combinations | Business Combinations – The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs which would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets. |
Use of Estimates | Use of Estimates – Management uses estimates and assumptions in preparing the consolidated financial statements in accordance with U.S. GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Examples include sales and promotional allowances, customer returns, allowances for doubtful accounts, inventory valuations, useful lives of fixed assets and related impairment, long-term investments, hedge transactions, goodwill and intangible asset valuations and impairments, incentive compensation, income taxes, self-insurance, contingencies and litigation. Actual results could vary materially from the estimates that were used. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards – In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (“Topic 740”): Simplifying the Accounting for Income Taxes. This ASU is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying certain aspects of the current guidance to promote consistency among reporting entities. For non-public business entities or emerging growth companies, ASU 2019-12 is effective for annual periods beginning after December 15, 2021 and interim periods within those annual periods, with early adoption permitted. An entity that elects early adoption must adopt all the amendments in the same period. Most amendments within this ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, Leases (“Topic 842”), which requires a lessee to recognize in its balance sheet an asset and liability for most leases with a term greater than 12 months. Lessees should recognize a liability to make lease payments and a right-of-use asset representing the lessee’s right to use the underlying asset for the lease term. On June 3, 2020, the FASB deferred the effective date of ASC 842 for private or emerging growth companies to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements, but believes that there will be assets and liabilities recognized on the Company’s consolidated balance sheet and an immaterial impact on the Company’s consolidated statements of operations. In June 2016, ASU No. 2016-13 Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (“Topic 326”) was issued. This ASU requires entities to measure the impairment of certain financial instruments, including accounts receivables, based on expected losses rather than incurred losses. For non-public business entities or emerging growth companies, this ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted, and will be effective for the Company beginning in 2023. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements and related disclosures. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (“Topic 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The amendments of this ASU should be applied on a prospective basis. The Company is currently evaluating the effects adoption of this guidance will have on the consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (“Subtopic350-40”): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). For non-public business entities or emerging growth companies, this ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, with early adoption permitted. The Company adopted Subtopic 350-40 on the first day of fiscal 2020, and the adoption of this standard did not have a material impact on the consolidated financial statements. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Business Combinations [Abstract] | |
Fair Value of Assets Acquired and Liabilities Assumed | The following table summarizes the provisional total business enterprise value, comprised of the fair value of certain purchase consideration paid by the Company to the Continuing Members, the fair value of the noncontrolling interest and the fair value of certain net debt assumed by the Company at Closing: (in thousands) Total cash consideration $ 199,161 Tax Receivable Agreement obligations to the Continuing Members (1) 51,393 Replaced Awards (2) 11,175 Continuing Members’ Retained Restricted Units in UBH (3) 54,067 Total purchase consideration 315,796 Noncontrolling interest (4) 896,701 Net debt assumed 648,150 Total business enterprise value $ 1,860,647 (1) Under the terms of the TRA, the Company generally will be required to pay to the Continuing Members 85% of the applicable cash savings, if any, in U.S. federal and state income tax based on its ownership in UBH that the Company is deemed to realize in certain circumstances as a result of the increases in tax basis and certain tax attributes resulting from the Business Combination. The fair value of these contingent payments at the Closing was $51.4 million which has been recorded as a non-current accrued expense. Refer to Note 15. "Income Taxes" for additional information on the TRA. (2) Represents the fair value of the Phantom Units associated with the pre-combination requisite service period and issued under the 2018 LTIP that were converted into 2020 LTIP RSUs of the Company issued under the 2020 LTIP at the Closing. The difference between the fair value of the Phantom Units and the fair values of the 2020 LTIP RSUs represents the fair value of the compensation expenses for the post-combination requisite service period for the replacement awards. Compensation expenses will be recorded evenly during the post-combination requisite service period through the end of fiscal 2021, which is the cliff vest date of the replacement awards. Refer to Note 11. "Share Based Compensation" for additional information on the 2020 LTIP RSUs. (3) A total of 3,483,022 common limited liability company units that were initially subject to certain restrictions (the "Retained Restricted Units") in UBH were received by the Continuing Members at the Closing. These Retained Restricted Units were vested and converted to common limited liability company units of UBH at the Closing, as the vesting conditions were all met as of the Closing. The fair value of the Retained Restricted Units was calculated based on the stock price of the Company at the August 28, 2020 Closing, less a 5% lack of marketability discount due to a restriction on the exchange of the Continuing Members’ common limited liability company units to Class A Common Stock of the Company for a period not to exceed 12 months from the Closing. (4) The noncontrolling interest represents the common limited liability company units of UBH held by the Continuing Members. The fair value of these units was determined based on the Class A Common Stock price of the Company at the August 28, 2020 Closing, less a 5% lack of marketability discount due to a restriction on the exchange of the Continuing Members’ common limited liability company units to Class A Common Stock of the Company for a period not to exceed 12 months from the Closing. The following table summarizes the provisional fair values of the assets acquired and liabilities assumed of UBH at Closing: (in thousands) Assets acquired: Cash and cash equivalents $ 13,713 Accounts receivable, net 119,339 Inventory, net 63,862 Prepaid expenses and other assets 6,116 Notes receivable 29,453 Property, plant and equipment, net 286,038 Identifiable intangible assets (1) 856,606 Other assets 7,055 Total assets acquired: 1,382,182 Liabilities assumed: Accounts payable 49,531 Accrued expenses 78,082 Notes payable 34,547 Deferred tax liability 23,710 Total liabilities assumed: 185,870 Net identifiable assets acquired 1,196,312 Goodwill (2) $ 664,335 (1) The Company has determined that certain of the acquired trade names included in Intangible assets, net will be amortized over a period of 15 years, and the customer relationships asset will be amortized over a period of 25 years on a straight-line basis commensurate with the acquisition date expectations for the economic value (i.e. net cash flow generating capability) that is to be provided by the trade names and customer relationships, respectively. The provisional fair values allocated to identifiable intangible assets and their estimated useful lives are as follows: Fair Value Useful Life (In Thousands) (In Years) Indefinite lived trade names $ 355,500 Indefinite Finite lived trade names 56,000 15 Customer relationships 426,500 25 Technology 43 5 Master distribution rights 4,677 Indefinite Company owned routes 13,886 Indefinite Total $ 856,606 (2) The goodwill of $664,335 million represents the excess of the gross consideration transferred over the fair value of the underlying net tangible and identifiable intangible assets acquired. Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill. Intangible assets not recognized apart from goodwill consist primarily of the strong market position and the assembled workforce of UBH. A portion of the goodwill recognized is expected to be deductible for income tax purposes. As of September 27, 2020, the purchase price allocation has not been finalized. The following table summarizes the fair values of the assets acquired and liabilities assumed at the Kitchen Cooked acquisition date: (in thousands) Purchase consideration $ 8,946 Assets acquired: Cash 130 Accounts receivable 737 Inventory, net 291 Prepaid expenses and other assets 37 Income tax prepayments 212 Property, plant and equipment 672 Other assets 255 Trademarks 1,623 Customer relationships 2,109 Total assets acquired: 6,066 Liabilities assumed: Accounts payable 173 Accrued expenses 2 Deferred tax liability 1,005 Total liabilities assumed: 1,180 Net identifiable assets acquired 4,886 Goodwill $ 4,060 |
Pro Forma Information | The following unaudited pro forma financial information presents the results of operations as if the Business Combination had occurred on January 1, 2019. These unaudited pro forma results may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations. The unaudited pro forma information reflects the step-up depreciation and amortization adjustments for the fair value of the assets acquired, the adjustment in interest expense due to the reduction in long term debt as a result of the Business Combination, and the related adjustment to the income tax provision. In addition, the pro forma net income is not adjusted to exclude transaction expenses and other non-recurring costs. For the 13 weeks ended September 27, 2020 For the 13 weeks ended September 29, 2019 For the 39 weeks ended September 27, 2020 For the 39 weeks ended September 29, 2019 (in thousands) (unaudited) (unaudited) (unaudited) (unaudited) Pro forma net sales $ 248,028 $ 231,341 $ 718,034 $ 653,311 Pro forma net (loss) income (9,382) 5,993 (5,880) (62) Pro forma net (loss) income attributable to controlling interest (3,481) 2,536 (1,210) 43 Pro forma net (loss) income attributable to noncontrolling interest (5,901) 3,457 (4,670) (105) 13 weeks ended 39 weeks ended September 29, 2019 September 29, 2019 (in thousands) (unaudited) Pro forma net sales $ 2,224 $ 6,314 Pro forma net income (loss) 22 (25) |
Provisional Fair Values Allocated to Identifiable Intangible Assets | The provisional fair values allocated to identifiable intangible assets and their estimated useful lives are as follows: Fair Value Useful Life (In Thousands) (In Years) Indefinite lived trade names $ 355,500 Indefinite Finite lived trade names 56,000 15 Customer relationships 426,500 25 Technology 43 5 Master distribution rights 4,677 Indefinite Company owned routes 13,886 Indefinite Total $ 856,606 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following: Successor Predecessor (in thousands) As of September 27, 2020 As of December 29, 2019 Finished goods $ 28,081 $ 24,447 Raw materials 23,817 22,122 Maintenance parts 5,266 4,575 57,164 51,144 Less: inventory reserve — (250) Total inventories $ 57,164 $ 50,894 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, Net | Property, plant and equipment, net, consisted of the following: Successor Predecessor (in thousands) As of September 27, 2020 As of December 29, 2019 Land $ 22,840 $ 14,970 Buildings 77,633 104,736 Machinery and equipment 164,460 297,666 Land improvements 8,280 1,174 Building improvements 1,104 3,561 Construction-in-progress 14,940 7,341 289,257 429,448 Less: accumulated depreciation (3,776) (257,731) Property, plant and equipment, net $ 285,481 $ 171,717 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | A rollforward of goodwill is as follows: Predecessor (in thousands) Balance as of December 29, 2019 $ 202,407 Acquisition of Kitchen Cooked 4,060 Kennedy acquisition adjustment 989 June 28, 2020 207,456 August 28, 2020 $ 207,456 Successor (in thousands) Balance as of August 29, 2020 $ 664,335 September 27, 2020 $ 664,335 |
Schedule of Estimated Future Amortization Expense | Intangible assets, net, consisted of the following: Successor Predecessor (in thousands) As of September 27, 2020 As of December 29, 2019 Subject to amortization: Distributor/customer relationships $ 426,500 $ 107,100 Technology 43 1,250 Trade names 56,000 22,610 Unfavorable lease — (85) Amortizable assets, gross 482,543 130,875 Accumulated amortization (1,768) (20,425) Amortizable assets, net 480,775 110,450 Not subject to amortization: Trade names 355,500 66,580 Master distribution rights 4,677 4,677 Company owned routes 13,957 2,307 Intangible assets, net $ 854,909 $ 184,014 Successor (in thousands) As of September 27, 2020 2020 (Q4) $ 5,311 2021 20,793 2022 20,793 2023 20,793 2024 20,793 2025 20,793 Thereafter 371,499 Total $ 480,775 |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets, net, consisted of the following: Successor Predecessor (in thousands) As of September 27, 2020 As of December 29, 2019 Subject to amortization: Distributor/customer relationships $ 426,500 $ 107,100 Technology 43 1,250 Trade names 56,000 22,610 Unfavorable lease — (85) Amortizable assets, gross 482,543 130,875 Accumulated amortization (1,768) (20,425) Amortizable assets, net 480,775 110,450 Not subject to amortization: Trade names 355,500 66,580 Master distribution rights 4,677 4,677 Company owned routes 13,957 2,307 Intangible assets, net $ 854,909 $ 184,014 |
ACCRUED EXPENSES AND OTHER (Tab
ACCRUED EXPENSES AND OTHER (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other | Accrued expenses and other consisted of the following: Successor Predecessor (in thousands) As of September 27, 2020 As of December 29, 2019 Accrued compensation and benefits $ 24,499 $ 14,198 Insurance liabilities 7,541 7,880 Accrued distributions 6,031 — Accrued freight and manufacturing related costs 3,437 4,930 Short term interest rate hedge liability 2,797 — Accrued interest 1,826 4,184 Accrued business combination transaction fees 1,683 — Accrued sales tax 1,300 1,300 Other accrued expenses 12,675 11,714 Total accrued expenses and other $ 61,789 $ 44,206 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Debt Disclosure [Abstract] | |
Amounts Outstanding Under Notes Payable | Amounts outstanding under notes payable consisted of the following: Successor Predecessor (in thousands) As of September 27, 2020 As of December 29, 2019 Note payable – IO notes $ 25,565 $ 33,700 Capital lease 6,051 6,055 Other 2,479 29 Total notes payable 34,095 39,784 Less: current portion (7,909) (7,984) Long term portion of notes payable $ 26,186 $ 31,800 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of September 27, 2020: (in thousands) Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 32,024 $ — $ — $ 32,024 Total assets $ 32,024 $ — $ — $ 32,024 Liabilities: Commodity contracts $ — $ 1,016 $ — $ 1,016 Interest rate swaps — 5,802 — 5,802 Debt — 411,451 — 411,451 Total liabilities $ — $ 418,269 $ — $ 418,269 The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis based upon the level within the fair value hierarchy in which the fair value measurements fall, as of December 29, 2019: (in thousands) Level 1 Level 2 Level 3 Total Assets: Cash and cash equivalents $ 15,053 $ — $ — $ 15,053 Interest rate swaps — 1,486 — 1,486 Total assets $ 15,053 $ 1,486 $ — $ 16,539 Liabilities: Commodity contracts $ — $ 494 $ — $ 494 Debt — 640,125 — 640,125 Total liabilities $ — $ 640,619 $ — $ 640,619 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Equity [Abstract] | |
Schedule of Changes to the Balance in Accumulated Other Comprehensive (Loss) | During the period ended September 27, 2020, changes to the balance in accumulated other comprehensive (loss) income were as follows: Predecessor (in thousands) Gains/(Losses) on Balance as of December 29, 2019 $ 1,408 Unrealized gain (loss) on cash flow hedges (7,917) Balance as of June 28, 2020 (6,509) Unrealized gain (loss) on cash flow hedges 454 Balance as of August 28, 2020 $ (6,055) Successor (in thousands) Gain on Balance as of August 29, 2020 $ — Unrealized gain on cash flow hedges 252 Balance as of September 27, 2020 $ 252 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Tax Assets and Liabilities | The financial statements reflect a net deferred tax liability (“DTL”) of $23.0 million, the detail of which is outlined in the following table. Deferred Tax (in thousands) Asset or (Liability) UBI Investment in UBH partnership $ 52,538 Valuation Allowance - non-reversing temporary differences (52,538) Subtotal - UBI — Heron and Subsidiaries Fixed assets (10,915) Intangible assets (26,069) Federal and state net operating losses 14,029 Other temporary differences 1,551 Subtotal (21,404) Valuation allowance - state net operating losses (1,554) Subtotal - Heron and Subsidiaries (22,958) Total $ (22,958) |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table reconciles the numerators and denominators used in the computations of both basic and diluted earnings per share: Successor (in thousands, except share data) From August 29, 2020 through September 27, 2020 Basic earnings per share: Numerator: Net loss attributable to controlling interest $ (111) Denominator: Weighted average Class A Common Stock shares, basic 59,369,050 Basic earnings per share $ — Diluted earnings per share: Numerator: Net loss attributable to controlling interest $ (111) Denominator: Weighted average Class A Common Stock shares, basic 59,369,050 Effect of dilutive securities: Warrants 7,928,050 2020 LTIP RSUs 815,224 PSUs 140,076 Stock options 19,530 Weighted average Class A Common Stock shares, diluted 68,271,930 Diluted earnings per share $ — Class V Common Stock not subject to earnings per share calculation 61,249,000 Net loss attributable to noncontrolling interest $ 2,320 |
OPERATIONS AND SUMMARY OF SIG_3
OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions | Sep. 27, 2020 | Dec. 29, 2019 |
Accounting Policies [Abstract] | ||
Promotional program reserve | $ 18 | $ 16.4 |
ACQUISITIONS - Fair Value of As
ACQUISITIONS - Fair Value of Assets and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jun. 05, 2020 | Dec. 30, 2019 | Sep. 27, 2020 | Sep. 27, 2020 | Aug. 29, 2020 | Aug. 28, 2020 | Jun. 28, 2020 | Dec. 29, 2019 |
Business Acquisition [Line Items] | ||||||||
Tax Receivable Agreement obligations to the Continuing Members | $ 51,400 | |||||||
Identifiable Intangible assets | $ 856,606 | $ 856,606 | ||||||
Goodwill | $ 4,100 | 664,335 | 664,335 | $ 664,335 | $ 207,456 | $ 207,456 | $ 202,407 | |
Customer relationships | ||||||||
Business Acquisition [Line Items] | ||||||||
Identifiable Intangible assets | 426,500 | 426,500 | ||||||
Trade names | ||||||||
Business Acquisition [Line Items] | ||||||||
Identifiable Intangible assets | 56,000 | 56,000 | ||||||
Technology | ||||||||
Business Acquisition [Line Items] | ||||||||
Identifiable Intangible assets | 43 | $ 43 | ||||||
Trademarks | ||||||||
Business Acquisition [Line Items] | ||||||||
Acquired customer relationships and trademarks, amortization period | 15 years | |||||||
Master distribution rights | ||||||||
Business Acquisition [Line Items] | ||||||||
Identifiable Intangible assets | 4,677 | $ 4,677 | ||||||
Trade names | ||||||||
Business Acquisition [Line Items] | ||||||||
Identifiable Intangible assets | 355,500 | 355,500 | ||||||
Company owned routes | ||||||||
Business Acquisition [Line Items] | ||||||||
Identifiable Intangible assets | $ 13,886 | $ 13,886 | ||||||
Customer relationships | ||||||||
Business Acquisition [Line Items] | ||||||||
Acquired customer relationships and trademarks, amortization period | 25 years | |||||||
Common Class V | ||||||||
Business Acquisition [Line Items] | ||||||||
Conversion of Continuing Members' Retained Restricted Units (in shares) | 3,483,022 | |||||||
Utz Brands, Inc. | ||||||||
Business Acquisition [Line Items] | ||||||||
Total cash consideration | 199,161 | |||||||
Tax Receivable Agreement obligations to the Continuing Members | 51,393 | |||||||
Total cash consideration | 315,796 | |||||||
Noncontrolling interest | 896,701 | |||||||
Net debt assumed | 648,150 | |||||||
Total business enterprise value | 1,860,647 | |||||||
Utz Brands, Inc. | Phantom Units | ||||||||
Business Acquisition [Line Items] | ||||||||
Equity consideration | 11,175 | |||||||
Utz Brands, Inc. | Common Class A | ||||||||
Business Acquisition [Line Items] | ||||||||
Equity consideration | $ 54,067 | |||||||
Utz Brands Holdings, Inc. | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash and cash equivalents | $ 13,713 | $ 13,713 | ||||||
Accounts receivable | 119,339 | 119,339 | ||||||
Inventory, net | 63,862 | 63,862 | ||||||
Prepaid expenses and other assets | 6,116 | 6,116 | ||||||
Notes receivable | 29,453 | 29,453 | ||||||
Property, plant and equipment | 286,038 | 286,038 | ||||||
Identifiable Intangible assets | 856,606 | 856,606 | ||||||
Other assets | 7,055 | 7,055 | ||||||
Total assets acquired: | 1,382,182 | 1,382,182 | ||||||
Accounts payable | 49,531 | 49,531 | ||||||
Accrued expenses | 78,082 | 78,082 | ||||||
Notes payable | 34,547 | 34,547 | ||||||
Deferred tax liability | 23,710 | 23,710 | ||||||
Total liabilities assumed: | 185,870 | 185,870 | ||||||
Net identifiable assets acquired | 1,196,312 | 1,196,312 | ||||||
Goodwill | 664,335 | 664,335 | ||||||
Kitchen Cooked | ||||||||
Business Acquisition [Line Items] | ||||||||
Total cash consideration | $ 6,900 | |||||||
Total cash consideration | 8,946 | |||||||
Cash and cash equivalents | 130 | 130 | ||||||
Accounts receivable | 737 | 737 | ||||||
Inventory, net | 291 | 291 | ||||||
Prepaid expenses and other assets | 37 | 37 | ||||||
Income tax prepayments | 212 | 212 | ||||||
Property, plant and equipment | 672 | 672 | ||||||
Other assets | 255 | 255 | ||||||
Total assets acquired: | 6,066 | 6,066 | ||||||
Accounts payable | 173 | 173 | ||||||
Accrued expenses | 2 | 2 | ||||||
Deferred tax liability | 1,005 | 1,005 | ||||||
Total liabilities assumed: | 1,180 | 1,180 | ||||||
Net identifiable assets acquired | 4,886 | 4,886 | ||||||
Goodwill | 4,060 | 4,060 | ||||||
Kitchen Cooked | Customer relationships | ||||||||
Business Acquisition [Line Items] | ||||||||
Customer relationships | 2,109 | $ 2,109 | ||||||
Acquired customer relationships and trademarks, amortization period | 15 years | |||||||
Kitchen Cooked | Trademarks | ||||||||
Business Acquisition [Line Items] | ||||||||
Trademarks | $ 1,623 | $ 1,623 |
ACQUISITIONS - Additional Infor
ACQUISITIONS - Additional Information (Details) - USD ($) | Dec. 30, 2019 | Aug. 28, 2020 | Aug. 28, 2020 | Sep. 27, 2020 | Dec. 26, 2021 | Jan. 03, 2021 | Aug. 29, 2020 | Jun. 28, 2020 | Mar. 29, 2020 | Dec. 29, 2019 |
Business Acquisition [Line Items] | ||||||||||
Transaction costs | $ 18,000,000 | $ 25,000,000 | $ 13,400,000 | |||||||
Goodwill | $ 4,100,000 | $ 207,456,000 | $ 207,456,000 | 664,335,000 | $ 664,335,000 | $ 207,456,000 | $ 202,407,000 | |||
Goodwill, amount deductible for income tax purposes | 0 | |||||||||
Kitchen Cooked | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Purchase consideration | 6,900,000 | |||||||||
Total cash consideration | 8,946,000 | |||||||||
Deferred payment obligations | 2,000,000 | $ 500,000 | ||||||||
Deferred payment obligations payable | $ 1,000,000 | |||||||||
Goodwill | $ 4,060,000 | |||||||||
Kitchen Cooked | Trademarks | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Acquired customer relationships and trademarks, amortization period | 15 years | |||||||||
Kitchen Cooked | Customer relationships | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Acquired customer relationships and trademarks, amortization period | 15 years | |||||||||
Kitchen Cooked | Forecast | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Deferred payment obligations payable | $ 1,000,000 | $ 1,000,000 |
ACQUISITIONS - Pro Forma Inform
ACQUISITIONS - Pro Forma Information (Details) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Aug. 28, 2020 | Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Business Combinations [Abstract] | ||||||
Pro forma net sales | $ 2,224,000 | $ 6,314,000 | $ 248,028,000 | $ 231,341 | $ 718,034,000 | $ 653,311 |
Pro forma net (loss) income | (9,382,000) | 5,993 | (5,880,000) | (62) | ||
Pro forma net income (loss) | $ 22,000 | $ (25,000) | (3,481,000) | 2,536 | (1,210,000) | 43 |
Pro forma net (loss) income attributable to noncontrolling interest | $ (5,901,000) | $ 3,457 | $ (4,670,000) | $ (105) |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 28,081 | $ 24,447 |
Raw materials | 23,817 | 22,122 |
Maintenance parts | 5,266 | 4,575 |
Inventory, gross | 57,164 | 51,144 |
Less: inventory reserve | 0 | (250) |
Total inventories | $ 57,164 | $ 50,894 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | $ 289,257 | $ 429,448 |
Less: accumulated depreciation | (3,776) | (257,731) |
Property, plant and equipment, net | 285,481 | 171,717 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 22,840 | 14,970 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 77,633 | 104,736 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 164,460 | 297,666 |
Land improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 8,280 | 1,174 |
Building improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | 1,104 | 3,561 |
Construction-in-progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment | $ 14,940 | $ 7,341 |
PROPERTY, PLANT AND EQUIPMENT_4
PROPERTY, PLANT AND EQUIPMENT, NET - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | 6 Months Ended | 8 Months Ended | 9 Months Ended |
Sep. 27, 2020 | Aug. 28, 2020 | Sep. 29, 2019 | Jun. 28, 2020 | Aug. 28, 2020 | Sep. 29, 2019 | |
Property, Plant and Equipment [Line Items] | ||||||
Depreciation expense | $ 3,800 | $ 4,800 | $ 5,500 | $ 19,000 | $ 16,500 | |
Kennedy | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Acquisition adjustments | $ 989 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS, NET - Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | ||||
Jun. 28, 2020 | Sep. 27, 2020 | Aug. 29, 2020 | Aug. 28, 2020 | Dec. 30, 2019 | |
Goodwill [Roll Forward] | |||||
Beginning balance | $ 202,407 | ||||
Goodwill | 207,456 | $ 664,335 | $ 664,335 | $ 207,456 | $ 4,100 |
Ending balance | 207,456 | ||||
Kitchen Cooked | |||||
Goodwill [Roll Forward] | |||||
Goodwill | $ 4,060 | ||||
Acquisition of Kitchen Cooked | 4,060 | ||||
Kennedy | |||||
Goodwill [Roll Forward] | |||||
Acquisition adjustments | $ 989 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS, NET - Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets | $ 482,543 | $ 130,875 |
Unfavorable lease | 0 | (85) |
Accumulated amortization | (1,768) | (20,425) |
Amortizable assets, net | 480,775 | 110,450 |
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, net | 854,909 | 184,014 |
Trade names | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 355,500 | 66,580 |
Master distribution rights | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 4,677 | 4,677 |
Company owned routes | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 13,957 | 2,307 |
Distributor/customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets | 426,500 | 107,100 |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets | 43 | 1,250 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets | $ 56,000 | $ 22,610 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS, NET - Additional Information (Details) - USD ($) $ in Millions | 1 Months Ended | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | |
Sep. 27, 2020 | Aug. 28, 2020 | Sep. 27, 2020 | Sep. 29, 2019 | Aug. 28, 2020 | Sep. 29, 2019 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Amortization of intangible assets | $ 1.8 | $ 1.3 | $ 1.4 | $ 5.1 | $ 4.1 | |
Kitchen Cooked | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Amortization of intangible assets | $ 1.1 | |||||
Kitchen Cooked | Trade names | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Amortization of intangible assets | $ 0.7 | |||||
Trademarks | Kitchen Cooked | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Amortization of intangible assets | 1.6 | |||||
Customer relationships | Kitchen Cooked | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Amortization of intangible assets | $ 2.1 |
GOODWILL AND INTANGIBLE ASSET_6
GOODWILL AND INTANGIBLE ASSETS, NET - Future Amortization Expense (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 (Q4) | $ 5,311 | |
2021 | 20,793 | |
2022 | 20,793 | |
2023 | 20,793 | |
2024 | 20,793 | |
2025 | 20,793 | |
Thereafter | 371,499 | |
Amortizable assets, net | $ 480,775 | $ 110,450 |
NOTES RECEIVABLE (Details)
NOTES RECEIVABLE (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 27, 2020 | Dec. 29, 2019 | Sep. 29, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Other notes receivable | $ 5,856 | $ 6,754 | |
Notes Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Other notes receivable | 33,700 | $ 25,600 | |
Notes Receivable | IO Notes Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Other notes receivable | 28,200 | 34,000 | |
Other Notes Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Other notes receivable | $ 800 | $ 1,400 | |
Minimum | IO Notes Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Interest rate | 0.00% | ||
Term of agreement | 1 year | ||
Maximum | IO Notes Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Interest rate | 8.55% | ||
Term of agreement | 10 years |
ACCRUED EXPENSES AND OTHER (Det
ACCRUED EXPENSES AND OTHER (Details) - USD ($) $ in Thousands | Jun. 05, 2020 | Sep. 27, 2020 | Dec. 29, 2019 |
Payables and Accruals [Abstract] | |||
Accrued compensation and benefits | $ 24,499 | $ 14,198 | |
Insurance liabilities | 7,541 | 7,880 | |
Accrued distributions | 6,031 | 0 | |
Accrued freight and manufacturing related costs | 3,437 | 4,930 | |
Short term interest rate hedge liability | 2,797 | 0 | |
Accrued interest | 1,826 | 4,184 | |
Accrued business combination transaction fees | 1,683 | 0 | |
Accrued sales tax | 1,300 | 1,300 | |
Other accrued expenses | 12,675 | 11,714 | |
Accrued expenses and other | 61,789 | 44,206 | |
Tax Receivable Agreement obligations to the Continuing Members | $ 51,400 | ||
Long-term accrued expenses and other, retirement and salary continuation plan | 6,400 | 5,200 | |
Hedging liabilities, current | 2,800 | ||
Long-term accrued expenses and other, other | $ 100 | ||
Long-term LTIP liability | $ 14,400 |
LONG-TERM DEBT - Additional Inf
LONG-TERM DEBT - Additional Information (Details) - USD ($) | Oct. 21, 2019 | Oct. 01, 2019 | Nov. 21, 2017 | Sep. 27, 2020 | Mar. 30, 2018 | Aug. 28, 2020 | Sep. 29, 2019 | Aug. 28, 2020 | Sep. 27, 2020 | Sep. 29, 2019 | Dec. 29, 2019 | Apr. 01, 2020 | Mar. 29, 2020 | Dec. 30, 2019 |
Debt Instrument [Line Items] | ||||||||||||||
Deferred financing costs | $ 0 | $ 1,742,000 | $ 1,557,000 | |||||||||||
Repayment of debt | 239,370,000 | 6,686,000 | 5,218,000 | |||||||||||
Loss on debt extinguishment | 2,500,000 | |||||||||||||
Proceeds on the sale of IO notes | 31,916,000 | |||||||||||||
Interest expense | $ 1,818,000 | $ 7,029,000 | $ 12,617,000 | 26,659,000 | 38,012,000 | |||||||||
Kitchen Cooked | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Deferred payment obligations | $ 500,000 | $ 2,000,000 | ||||||||||||
Line of Credit | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest expense | $ 900,000 | |||||||||||||
First Lien Term Loan | Secured Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 2.50% | |||||||||||||
Interest rate | 3.70% | 5.60% | 3.70% | 5.60% | ||||||||||
Principal amount | $ 535,000,000 | |||||||||||||
Quarterly principal payments | $ 1,300,000 | |||||||||||||
Advance payment of principal | $ 111,600,000 | |||||||||||||
Finance fees | $ 10,700,000 | |||||||||||||
First Lien Term Loan | Secured Debt | LIBOR | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 3.50% | |||||||||||||
Second Lien Term Loan | Secured Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Principal amount | $ 125,000,000 | |||||||||||||
Finance fees | 4,100,000 | |||||||||||||
Repayment of debt | $ 126,300,000 | |||||||||||||
Loss on debt extinguishment | 4,300,000 | |||||||||||||
Senior Secured First Lien Floating Rate Note | Secured Debt | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 6.70% | |||||||||||||
Interest expense | 1,300,000 | |||||||||||||
Principal amount | $ 125,000,000 | |||||||||||||
Repayment of debt | 128,800,000 | |||||||||||||
Loss on debt extinguishment | $ 2,500,000 | |||||||||||||
Senior Secured First Lien Floating Rate Note | Secured Debt | LIBOR | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 5.25% | |||||||||||||
IO Notes Payable | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Deferred financing costs | 400,000 | $ 500,000 | 1,700,000 | $ 1,500,000 | ||||||||||
Interest expense | $ 1,800,000 | 26,700,000 | ||||||||||||
Notes receivable sold | $ 33,200,000 | |||||||||||||
Proceeds on the sale of IO notes | 34,100,000 | |||||||||||||
Interest expense | 7,000,000 | 12,600,000 | 38,000,000 | |||||||||||
Revolving Credit Facility | Line of Credit | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest expense | 1,700,000 | |||||||||||||
Interest expense | 6,200,000 | 11,400,000 | 23,300,000 | $ 34,900,000 | ||||||||||
Revolving Credit Facility | ABL Facility | Line of Credit | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Principal amount | $ 100,000,000 | $ 116,000,000 | ||||||||||||
Long-term Line of Credit | 0 | $ 0 | 0 | |||||||||||
Available for borrowing, net of letters of credit | 101,800,000 | $ 101,800,000 | 83,000,000 | |||||||||||
Unused line fees | 0.50% | |||||||||||||
Interest expense | $ 100,000 | 100,000 | $ 400,000 | 500,000 | ||||||||||
Revolving Credit Facility | ABL Facility | Line of Credit | Minimum | LIBOR | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 1.50% | |||||||||||||
Interest rate | 1.68% | 1.68% | ||||||||||||
Revolving Credit Facility | ABL Facility | Line of Credit | Minimum | Prime Rate | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 0.50% | |||||||||||||
Interest rate | 3.75% | 3.75% | ||||||||||||
Revolving Credit Facility | ABL Facility | Line of Credit | Maximum | LIBOR | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 2.00% | |||||||||||||
Interest rate | 3.48% | 3.48% | ||||||||||||
Revolving Credit Facility | ABL Facility | Line of Credit | Maximum | Prime Rate | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Basis spread on variable rate | 1.00% | |||||||||||||
Interest rate | 5.50% | 5.50% | ||||||||||||
Revolving Credit Facility | IO Notes Payable | Total notes payable | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Interest expense | $ 100,000 | $ 400,000 | $ 700,000 | $ 1,700,000 | $ 1,600,000 | |||||||||
Standby Letters of Credit | ABL Facility | Line of Credit | ||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||
Principal amount | $ 14,100,000 | $ 14,100,000 | $ 14,100,000 |
LONG-TERM DEBT - Amounts Outsta
LONG-TERM DEBT - Amounts Outstanding Under Notes Payable (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Debt Instrument [Line Items] | ||
Capital lease | $ 6,051 | $ 6,055 |
Notes Payable to Banks | ||
Debt Instrument [Line Items] | ||
Non-current portion of term debt | 25,565 | 33,700 |
Other notes payable | ||
Debt Instrument [Line Items] | ||
Non-current portion of term debt | 2,479 | 29 |
Total notes payable | ||
Debt Instrument [Line Items] | ||
Total notes payable | 34,095 | 39,784 |
Less: current portion | (7,909) | (7,984) |
Long term portion of notes payable | $ 26,186 | $ 31,800 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS AND PURCHASE COMMITMENTS (Details) - USD ($) $ in Millions | 1 Months Ended | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | |
Sep. 27, 2020 | Aug. 28, 2020 | Sep. 29, 2019 | Aug. 28, 2020 | Sep. 29, 2019 | Sep. 06, 2019 | |
Derivative [Line Items] | ||||||
Purchase commitments | $ 53 | |||||
Purchase Commitment Losses | $ 0.2 | $ 0.3 | $ (0.5) | $ (0.7) | $ (0.8) | |
Interest rate swaps | Cash Flow Hedging | Designated as Hedging Instrument | ||||||
Derivative [Line Items] | ||||||
Fixed interest rate | 4.20% | 1.339% | ||||
Derivative, Variable Interest Rate | 0.00% | |||||
Notional amount | $ 250 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Assets | ||
Cash and cash equivalents | $ 32,024 | $ 15,053 |
Total assets | 32,024 | 16,539 |
Liabilities | ||
Debt | 411,451 | 640,125 |
Total liabilities | 418,269 | 640,619 |
Commodity contracts | ||
Liabilities | ||
Derivative liabilities | 1,016 | 494 |
Interest rate swaps | ||
Assets | ||
Interest rate swaps | 1,486 | |
Liabilities | ||
Derivative liabilities | 5,802 | |
Level 1 | ||
Assets | ||
Cash and cash equivalents | 32,024 | 15,053 |
Total assets | 32,024 | 15,053 |
Liabilities | ||
Debt | 0 | 0 |
Total liabilities | 0 | 0 |
Level 1 | Commodity contracts | ||
Liabilities | ||
Derivative liabilities | 0 | 0 |
Level 1 | Interest rate swaps | ||
Assets | ||
Interest rate swaps | 0 | |
Liabilities | ||
Derivative liabilities | 0 | |
Level 2 | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
Total assets | 0 | 1,486 |
Liabilities | ||
Debt | 411,451 | 640,125 |
Total liabilities | 418,269 | 640,619 |
Level 2 | Commodity contracts | ||
Liabilities | ||
Derivative liabilities | 1,016 | 494 |
Level 2 | Interest rate swaps | ||
Assets | ||
Interest rate swaps | 1,486 | |
Liabilities | ||
Derivative liabilities | 5,802 | |
Level 3 | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
Total assets | 0 | 0 |
Liabilities | ||
Debt | 0 | 0 |
Total liabilities | 0 | 0 |
Level 3 | Commodity contracts | ||
Liabilities | ||
Derivative liabilities | 0 | 0 |
Level 3 | Interest rate swaps | ||
Assets | ||
Interest rate swaps | $ 0 | |
Liabilities | ||
Derivative liabilities | $ 0 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - USD ($) | Aug. 28, 2020 | Dec. 29, 2019 | Sep. 27, 2020 | Sep. 27, 2020 | Aug. 31, 2020 |
Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares that will be vested as a percentage of the initial grant | 0.00% | ||||
Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares that will be vested as a percentage of the initial grant | 200.00% | ||||
Award On December 31 2022 | Share-based Payment Arrangement, Tranche One | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share vesting percentage | 50.00% | ||||
Award On December 21 2023 | Share-based Payment Arrangement, Tranche Two | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share vesting percentage | 50.00% | ||||
2020 Plan | 2020 LTIP Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Conversion of Continuing Members' Retained Restricted Units (in shares) | 1,479,445 | ||||
Fair value per unit (in dollars per share) | $ 16.34 | $ 16.34 | |||
Fair value of replaced Phantom Units | $ 13,900,000 | $ 11,200,000 | |||
Unrecognized compensation expense | 13,000,000 | $ 13,000,000 | |||
Post-combination service period | 1 year 3 months 18 days | ||||
Share-based compensation expense | 900,000 | ||||
2020 Plan | Initial Grant Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation expense | $ 2,300,000 | $ 2,300,000 | |||
Post-combination service period | 2 years 3 months 18 days | ||||
Share-based compensation expense | $ 100,000 | ||||
Initial grant RSUs (in shares) | 128,935 | ||||
Grant date fair value (in dollars per share) | $ 18.40 | ||||
2020 Plan | Common Class A | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common stock reserved for future issuance (in shares) | 9,500,000 | ||||
2020 Plan | Executive Leadership Team | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock options granted (in shares) | 286,268 | ||||
Closing share price (in dollars per share) | $ 16.34 | ||||
PSUs | 2020 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation expense | $ 3,200,000 | $ 3,200,000 | |||
Post-combination service period | 2 years 9 months 18 days | ||||
Share-based compensation expense | $ 100,000 | ||||
Initial grant RSUs (in shares) | 140,076 | ||||
Grant date fair value (in dollars per share) | $ 23.67 | ||||
Expected option term | 2 years 9 months 18 days | ||||
Expected volatility | 53.60% | ||||
Risk-free interest rate | 0.20% | ||||
PSUs | 2020 Plan | Award On December 31 2022 | Share-based Payment Arrangement, Tranche One | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share vesting percentage | 50.00% | ||||
PSUs | 2020 Plan | Award On December 21 2023 | Share-based Payment Arrangement, Tranche Two | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share vesting percentage | 50.00% | ||||
Stock Options | 2020 Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation expense | $ 1,700,000 | $ 1,700,000 | |||
Post-combination service period | 2 years 9 months 18 days | ||||
Share-based compensation expense | $ 0 | ||||
Grant date fair value (in dollars per share) | $ 7.38 | ||||
Expected option term | 6 years 4 months 24 days | ||||
Expected volatility | 46.80% | ||||
Risk-free interest rate | 0.40% | ||||
Stock Options | 2020 Plan | Award On December 31 2022 | Share-based Payment Arrangement, Tranche One | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share vesting percentage | 50.00% | ||||
Stock Options | 2020 Plan | Award On December 21 2023 | Share-based Payment Arrangement, Tranche Two | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share vesting percentage | 50.00% | ||||
Stock Options | 2020 Plan | Executive Leadership Team | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Maximum contractual life | 10 years | ||||
Phantom Units | 2018 LTIP | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Reserve for the estimated fair value | $ 11,200,000 | $ 14,400,000 |
CONTINGENCIES (Details)
CONTINGENCIES (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 27, 2020USD ($)state | Dec. 29, 2019USD ($) | |
Other Commitments [Line Items] | ||
Number of states | state | 22 | |
Accounts payable and payroll components | $ 200 | $ 200 |
Commonwealth Of Pennsylvania Tax Assessment | ||
Other Commitments [Line Items] | ||
Reserve for tax assessment | $ 1,300 | 1,300 |
Cadence Bank | ||
Other Commitments [Line Items] | ||
Maximum future payment of guaranteed loans | 25.00% | |
Maximum future payment amount | $ 2,000 | |
Cadence Bank | Payment Guarantee | ||
Other Commitments [Line Items] | ||
Outstanding balance of guaranteed loans | $ 4,200 | 5,100 |
Bank Of America | ||
Other Commitments [Line Items] | ||
Maximum future payment of guaranteed loans | 25.00% | |
Bank Of America | Payment Guarantee | ||
Other Commitments [Line Items] | ||
Outstanding balance of guaranteed loans | $ 4,300 | 700 |
Notes purchased | 18,300 | 25,100 |
M&T Bank | Payment Guarantee | ||
Other Commitments [Line Items] | ||
Outstanding balance of guaranteed loans | $ 7,200 | $ 8,600 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | 6 Months Ended | |
Sep. 27, 2020 | Aug. 28, 2020 | Sep. 29, 2019 | Jun. 28, 2020 | Dec. 29, 2019 | |
Equity [Abstract] | |||||
Accumulated other comprehensive income | $ 252 | $ 1,408 | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Unrealized gain on cash flow hedges | 252 | $ 454 | $ 912 | $ (7,917) | |
Ending Balance | 469,120 | ||||
Gains/(Losses) on Cash Flow Hedges | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Beginning Balance | 0 | (6,509) | 1,408 | ||
Unrealized gain on cash flow hedges | 252 | 454 | (7,917) | ||
Ending Balance | $ 252 | $ (6,055) | $ (6,509) |
SUPPLEMENTARY CASH FLOW INFOR_2
SUPPLEMENTARY CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | 1 Months Ended | 8 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Aug. 28, 2020 | Aug. 28, 2020 | Sep. 27, 2020 | Sep. 29, 2019 | |
Supplemental Cash Flow Elements [Abstract] | |||||
Refunds related to income related taxes | $ 0 | $ 200 | $ 100 | ||
Payments made for income-related taxes | 300 | $ 500 | 1,800 | ||
Class of Stock [Line Items] | |||||
Cash paid for interest | 1,600 | 28,800 | 40,200 | ||
Refunds related to income related taxes | 0 | $ 200 | 100 | ||
Payments made for income-related taxes | $ 300 | $ 500 | $ 1,800 | ||
2020 LTIP RSUs | |||||
Class of Stock [Line Items] | |||||
Noncash considerations | $ 11,200 | ||||
Restricted units | |||||
Class of Stock [Line Items] | |||||
Noncash considerations | 54,100 | ||||
TRA Units | |||||
Class of Stock [Line Items] | |||||
Noncash considerations | $ 51,400 |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) | Jun. 05, 2020 | Sep. 27, 2020 | Aug. 28, 2020 | Sep. 29, 2019 | Aug. 28, 2020 | Sep. 29, 2019 | Dec. 29, 2019 |
Income Tax Disclosure [Abstract] | |||||||
Effective income tax rate | 54.30% | (38.60%) | 9.00% | 53.70% | 20.80% | ||
Deferred tax asset | $ 52,500,000 | ||||||
Unrecognized tax benefits | $ 0 | ||||||
Tax Receivable Agreement obligations to the Continuing Members | $ 51,400,000 |
INCOME TAXES - Components of Ne
INCOME TAXES - Components of Net Deferred Tax Asset and Liabilities (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 29, 2019 |
Income Tax Examination [Line Items] | ||
Total | $ (22,958) | $ (19,123) |
Heron | ||
Income Tax Examination [Line Items] | ||
Valuation Allowance - non-reversing temporary differences | (1,554) | |
Fixed assets | (10,915) | |
Intangible assets | (26,069) | |
Federal and state net operating losses | 14,029 | |
Other temporary differences | 1,551 | |
Subtotal | (21,404) | |
Total | (22,958) | |
Utz Brands, Inc. | ||
Income Tax Examination [Line Items] | ||
Investment in UBH partnership | 52,538 | |
Valuation Allowance - non-reversing temporary differences | (52,538) | |
Subtotal - UBI | $ 0 |
VARIABLE INTEREST ENTITIES (Det
VARIABLE INTEREST ENTITIES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 29, 2019 | Sep. 29, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | ||
Lease expense/income | $ 1.1 | $ 3.3 |
EQUITY (Details)
EQUITY (Details) | 9 Months Ended |
Sep. 27, 2020USD ($)$ / sharesshares | |
Warrants | |
Class of Stock [Line Items] | |
New issues during period (in shares) | 15,833,332 |
Forward Purchase Warrant | |
Class of Stock [Line Items] | |
New issues during period (in shares) | 1,166,666 |
Private Placement Warrants | |
Class of Stock [Line Items] | |
New issues during period (in shares) | 7,200,000 |
Warrants outstanding (in shares) | $ | $ 7,200,000 |
Public Warrants | |
Class of Stock [Line Items] | |
Warrants outstanding (in shares) | $ | $ 15,833,332 |
Forward Purchase Shares And Warrants | |
Class of Stock [Line Items] | |
New issues during period (in shares) | 3,500,000 |
Common Class A | |
Class of Stock [Line Items] | |
Common stock authorized (in shares) | 1,000,000,000 |
Common stock issued (in shares) | 59,369,050 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Common stock outstanding (in shares) | 59,369,050 |
Common Class A | Forward Purchase Shares And Warrants | |
Class of Stock [Line Items] | |
New issues during period (in shares) | 1,166,666 |
Stock price (in dollars per share) | $ / shares | $ 11.50 |
Aggregate proceeds from issuance of common stock | $ | $ 35,000,000 |
Forward Purchase Class A | |
Class of Stock [Line Items] | |
Shares converted (in shares) | 3,500,000 |
Common Class B | |
Class of Stock [Line Items] | |
Shares converted (in shares) | 2,000,000 |
Common Class V | |
Class of Stock [Line Items] | |
Common stock authorized (in shares) | 61,249,000 |
Common stock issued (in shares) | 61,249,000 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 |
Common stock outstanding (in shares) | 61,249,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended |
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 29, 2019 | |
Numerator | |||
Net loss attributable to controlling interest | $ (111) | ||
Denominator | |||
Weighted average common shares, basic (in shares) | 59,369,050 | ||
Basic earnings per share (in dollars per share) | $ 0 | ||
Numerator | |||
Net loss attributable to controlling interest | $ (111) | ||
Effect of dilutive securities | |||
Warrants (in shares) | 7,928,050 | ||
Weighted average common shares, diluted (in shares) | 68,271,930 | ||
Diluted (in dollars per share) | $ 0 | ||
Net loss (income) attributable to noncontrolling interest | $ (2,320) | $ 723 | $ 1,420 |
Common Class V | |||
Numerator | |||
Net loss attributable to controlling interest | $ 2,320 | ||
Effect of dilutive securities | |||
Common stock issued (in shares) | 61,249,000 | ||
Net loss (income) attributable to noncontrolling interest | $ 2,300 | ||
2020 LTIP RSUs | |||
Effect of dilutive securities | |||
Dilutive securities (in shares) | 815,224 | ||
PSUs | |||
Effect of dilutive securities | |||
Dilutive securities (in shares) | 140,076 | ||
Stock options | |||
Effect of dilutive securities | |||
Dilutive securities (in shares) | 19,530 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ in Millions | Nov. 02, 2020USD ($) |
Subsequent Event | Conagra Brands, Inc. | Utz Quality Foods LLC | |
Subsequent Event [Line Items] | |
Payment to acquire assets | $ 10 |