Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Audited Financial Statements and related notes included in Item 8 of this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in Item 1A “Risk Factors” of this Annual Report on Form 10-K.
Our fiscal year end is the Sunday closest to December 31. Our fiscal year 2023 ended December 31, 2023 and was a fifty-two-week fiscal year, our fiscal year 2024 ended December 29, 2024 and was a fifty-two-week fiscal year and our fiscal year 2025 ended December 28, 2025 and was a fifty-two-week fiscal year. Our fiscal quarters are comprised of thirteen weeks each, except for fifty-three-week fiscal periods for which the fourth quarter is comprised of fourteen weeks, and end on the thirteenth Sunday of each quarter (fourteenth Sunday of the fourth quarter, when applicable).
Overview
We were founded in 1921 in Hanover, Pennsylvania and benefit from over 100 years of brand awareness and heritage in the salty snack industry. We are a leading United States manufacturer of branded salty snacks, producing a broad offering of salty snacks, including potato chips, tortilla chips, pretzels, cheese snacks, pork skins, pub/party mixes and other snacks. Our iconic portfolio of authentic, craft and “better-for-you” ("BFY") brands includes Utz®, On The Border®, Zapp’s®, Boulder Canyon®, Golden Flake®, Hawaiian® Brand and Miguelito's!®, among others, and enjoys strong household penetration in the United States, where our products can be found in approximately 50% of U.S. households as of December 28, 2025. As of December 28, 2025, we operate eight primary manufacturing facilities across the United States with a broad range of capabilities. As part of Utz's ongoing supply chain transformation, the Company made the strategic decision to consolidate its manufacturing footprint from eight primary manufacturing facilities to seven, with the planned closure of its Grand Rapids, Michigan manufacturing facility. Our products are distributed nationally to grocery, mass merchant, club, convenience, drug and other retailers through direct shipments, distributors and approximately 2,500 direct-store delivery ("DSD") routes. We have historically expanded our geographic reach and product portfolio organically and through acquisitions. Based on 2025 retail sales, we are the second-largest producer of branded salty snacks in our collective core geographies of Alabama, Connecticut, Delaware, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, Washington, and West Virginia (our “Core Geographies”), where we have acquired strong regional brands and distribution capabilities in recent years.
Key Developments and Trends
Our management team monitors a number of developments and trends that could impact our revenue and profitability objectives.
Growth Strategy - We have a long-term growth strategy focusing on various initiatives and have experienced share gains in our geographies in the United States other than our Core Geographies (the "Expansion Geographies") over the past ten consecutive quarters with retail volumes and retail sales being up by 6.7% and 7.8%, respectively, for the fiscal year ended December 28, 2025 versus the comparable prior year period. Our portfolio strategy is focused on accelerating investments in marketing and innovation to drive top-line growth and achieve share gains in the attractive salty snack category. We plan to further penetrate the Expansion Geographies and untapped channels and customers by further expanding our Branded Salty Snacks, comprised of our Power Four Brands, consisting of our flagship Utz® brand, On the Border®, Zapp's®, and Boulder Canyon®, along with our other brands including Golden Flake®, Miguelito's!®, Hawaiian®, Bachman®, Tim's Cascade®, Dirty Potato Chips®, TGI Fridays®, and Vitner's®, in Expansion Geographies, as well as maintaining our share in our Core Geographies. Our Core Geographies retail volumes and retail sales were up 0.6% and down 0.7%, respectively, for the fiscal year ended December 28, 2025 versus the comparable prior year period.
Long-Term Demographics, Consumer Trends, and Demand – We participate in the $42 billion U.S. salty snack category, within the broader approximately $148 billion market for U.S. snack foods as of December 28, 2025, based on Circana data. In the last few years snacking occasions have held relatively stable as consumers continue to seek out convenient, delicious snacks for both on-the-go and at-home lifestyles. A 2025 study from Circana cites that 48.8% of consumers snack three or more times a day, up 2.7 points versus 2024. While the category has seen recent softness due to the impact of pricing made throughout the industry, we believe the salty snacks category will continue to benefit from favorable dynamics including low private label penetration as well as category leaders competing primarily in marketing and innovation. We expect these consumer trends to continue to drive consistent retail sales for salty snacks in the long term.
For the fiscal year ended December 28, 2025 , U.S. retail sales for salty snacks based on Circana data decreased by 0.5% versus the comparable prior year period while Utz's retail sales increased 2.9%.
Competition – The salty snack industry is highly competitive and includes many diverse participants. Our products primarily compete with other salty snacks but also compete more broadly for certain eating occasions with other snack foods. We believe that the principal competitive factors in the salty snack industry include taste, convenience, product variety, product quality, price, nutrition, consumer brand awareness, media and promotional activities, in-store merchandising execution, customer service, cost-efficient distribution and access to retailer shelf space. We believe we compete effectively with respect to each of these factors. We also source nearly all of our inputs domestically within the United States, and therefore, we may be less impacted by international pricing volatility and tariffs as compared to other multi-national salty snack food companies. Additionally, beginning in 2024, certain competitors began to take certain discrete pricing actions in specific channels, resulting in an environment that has become far more promotional. Such promotions have impacted our sales and, in response, we have increased our promotional activities. We expect these pricing and promotional activity dynamics to continue in the near-term.
Operating Costs – Our operating costs include raw materials, labor, manufacturing overhead and selling, general and administrative expenses. We manage these expenses through annual cost saving and productivity initiatives, sourcing and hedging programs, pricing actions, refinancing and tax optimization. Additionally, we maintain ongoing efforts led to expand our profitability, including implementing significant reductions to our operating cost structure in both supply chain and overhead costs.
Financing Costs and Exposure to Interest Rate Changes – As of December 28, 2025, we had $687.5 million in variable rate indebtedness, down from $690.1 million as of December 29, 2024. As of December 29, 2024, our variable rate indebtedness was benchmarked to the Term SOFR Screen Rate (“SOFR”). As of December 28, 2025, we have existing interest rate swaps totaling $577.6 million of debt. Our interest rate hedge strategy has limited some of our exposure to changes in interest rates. We regularly evaluate our variable and fixed-rate debt. In September 2025, the Company terminated the previously existing swap agreement associated with the Term Loan B (as defined below), resulting in the receipt of cash proceeds totaling $12.1 million. In addition, on the same date, the Company entered into a new interest rate swap agreement with a notional amount of $500.0 million. This agreement is scheduled to mature on December 31, 2028. Under the terms of this agreement, the Company is obligated to make periodic payments at the fixed interest rate of 3.23%, while receiving periodic payments based on the one-month SOFR from the counterparty. As of December 28, 2025, our interest rate swaps were carried as a net liability on our balance sheet totaling $0.5 million. We continue to use low-cost, short- and long-term debt to finance our ongoing working capital, capital expenditures and other investments and dividends. Our weighted average interest rate for the fiscal year ended December 28, 2025 was 5.6%, down from 5.9% during the fiscal year ended December 29, 2024. On January 29, 2025, the Company amended its Term Loan B to refinance in full all of the $630.3 million outstanding term loans thereunder, reduce the interest rate from SOFR plus the applicable rate of 2.75% to SOFR plus the applicable rate of 2.50% and extend the maturity date from January 20, 2028 to January 29, 2032, as well as to make certain other changes. We have used interest rate swaps to help manage some of our exposure to interest rate changes, which can drive cash flow variability related to our debt. Refer to Note 10. Long-Term Debt and Note 11. Derivative Financial Instruments and Purchase Commitments to our Audited Financial Statements for additional information on debt and derivative activity. The Company has experienced the effect of increased interest rates on the portion of its debt that is not hedged and a further increase in interest rates could impact our net income.
One Big Beautiful Bill Act - On July 4, 2025, the President of the United States signed into law budget reconciliation bill H.R. 1, referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA, among other regulatory updates, contains numerous federal tax provisions including modifications to the capitalization of research and development expenses, limitations on deductions for interest expense, and accelerated fixed asset depreciation. The Company considered the effects of the OBBBA on its consolidated financial statements, which resulted in a charge to deferred taxes and an increase to the valuation allowance. A reduction to the TRA liability and a corresponding benefit was recorded due to favorable provisions of OBBBA on the taxable results of the Company and anticipated timing of future utilization of TRA eligible attributes.
Recent Developments and Significant Items Affecting Comparability
Acquisitions and Dispositions
On February 5, 2024, the Company sold certain assets and brands to affiliates of Our Home™, an operating company of Better-for-You brands (“Our Home”). Under the agreement, affiliates of Our Home purchased the Good Health and R.W. Garcia brands, and the Lincolnton, NC and Lititz, PA manufacturing facilities and certain related assets, and assumed the Company’s Las Vegas, NV facility lease and manufacturing operations (the "Good Health and R.W. Garcia Sale"), for $167.5 million, subject to customary adjustments. See Note 2. Divestitures to our Audited Consolidated Financial Statements. On April 22, 2024, the Company also sold to Our Home its Berlin, PA and Fitchburg, MA manufacturing facilities and certain related assets, including certain inventory (the “Manufacturing Facilities Sale”).
The Company and Our Home were operating under transition services agreements related to each of the Good Health and R.W. Garcia Sale and the Manufacturing Facilities Sale, which expired during the first half of 2025. For the greater part of fiscal year 2025, the parties operated under reciprocal co-manufacturing agreements. Although Our Home remains involved in the manufacturing of certain products of the Company, the Company no longer manufactures products for Good Health. Certain Good Health products continue to be distributed and sold on the Company's DSD network for Our Home, pursuant to a distribution agreement. The Company received approximately $18.7 million in advance from Our Home for certain services under these agreements, which the Company recognized through income from operations over the terms of the transition services and co-manufacturing agreements.
As part of its ongoing supply chain transformation, the Company announced in July 2025 the strategic decision to consolidate its manufacturing footprint with the closure of its Grand Rapids, Michigan manufacturing facility. This decision is a key component of the Company’s long-term strategic roadmap, is expected to generate cost savings and should enable the Company to allocate more volume to its larger, more efficient facilities, while driving fixed cost leverage and enhanced automation capabilities across its remaining network. In addition to the expected cost savings, the Company expects the optimized footprint will support its ongoing geographic expansion. In December 2025, the Company sold its Grand Rapids, MI manufacturing facility; however the Company has subsequently executed a lease agreement with the acquirer and presently maintains ongoing operations at the facility. See Note 5. Property, Plant and Equipment, Net .
In September 2025, the Company announced a multi-phase project aimed at upgrading facilities across its Hanover, PA campus. The project includes upgrading the Company's headquarters and transforming it into a modern employee hub as well as other upgrades. As part of this project, the Company intends to sell three buildings located in Hanover, PA. See Note 5. Property, Plant and Equipment, Net .
As part of the California expansion strategy, in October 2025, the Company acquired Insignia International’s DSD distribution assets. The transaction includes DSD routes across California and the Midwest, along with select related assets. This acquisition accelerates Utz’s expansion in California, a key growth geography that represents the largest U.S. market for salty snacks with $4.2 billion in retail sales based on Circana data.
During the fiscal year ended December 29, 2024, the Company bought out and terminated the contracts of multiple third-party distributors who had previously been providing services to the Company. These transactions, which were accounted for as contract terminations and asset purchases, resulted in expense of $2.1 million for the fiscal year ended December 29, 2024 and are included within selling on the Consolidated Statements of Operations and Comprehensive Income (Loss) for such periods.
Product Innovation
Investments in new product innovation support three focus areas that are rooted in the consumer and tied to our portfolio and brand strategy: Expanding Positive Choices, Delivering Craveable Flavor, and Capturing Occasions. Within Expanding Positive Choices, recent focus has been on Boulder Canyon, a brand offering solutions for consumers seeking great tasting BFY snacks via BFY oils such as avocado oil and olive oil. Innovation contributed to Boulder Canyon® increases with the launching of new flavors that capitalized on the hot & spicy trend and by entrance into the cheese snack subcategory. Boulder Canyon® gained share for the fiscal year ended December 28, 2025 versus the comparable prior year period with growth of 180.5% per Circana. In the natural channel, Boulder Canyon growth was 36.9% for the fiscal year ended December 28, 2025, per Spins. Within Delivering Craveable Flavor, we recently addressed consumer desire for flavor exploration with innovation across brands and snacking subcategories via our seasoned pretzels and new potato chip flavor offerings in both our Utz and Zapp’s brands. Within Capturing Occasions, we recently introduced a portfolio of variety/multipacks across our Power Four Brands, consisting of our flagship Utz® brand, On The Border®, Zapp’s®, and Boulder Canyon®, and our Targeted Brands, consisting of Golden Flake®, Miguelito's®, Hawaiian®, Bachman®, Tim's Cascade®, Dirty Potato Chips®, and TGI Fridays®. During the third quarter of 2025, we announced our commitment to remove Food, Drug & Cosmetic colors from our portfolio of products before the end of 2027. While we do not currently anticipate a significant impact to our input costs in our efforts to meet this commitment, our net sales, market share, or results of operations could be affected if we are in our efforts to continue to consumer preferences.
Supply and Commodity Trends
We regularly monitor worldwide supply and commodity costs so that we can cost-effectively secure ingredients, packaging and fuel required for production. A number of external factors such as weather, which may be impacted in unanticipated ways due to climate change, commodity market conditions, inflationary conditions and the effects of governmental, agricultural or other programs, including tariffs or other trade policies, may affect the cost and availability of raw materials and agricultural materials used in our products. Given that nearly all our input costs are sourced domestically and our manufacturing facilities are all in the United States, we continue to expect that recent tariff volatility will have a modest and manageable impact on our business in 2026. We address commodity costs primarily through the use of buying-forward, which locks in pricing for key materials between three and 18 months in advance. Other methods include hedging, net pricing adjustments to cover longer term cost inflation, and manufacturing and overhead cost control. Our hedging techniques, such as forward contracts, limit the impact of fluctuations in the cost of our principal raw materials; however, we may not be able to fully hedge against commodity cost changes, where there is a limited ability to hedge, and our hedging strategies may not protect us from increases in specific raw material costs. Commodity cost increases may impact our net income. Although we have experienced some ingredient cost deflation, we continue to experience rising costs related to fuel and freight rates as well as rising labor costs both of which have impacted . Transportation costs have been on the rise and may continue to rise and impact net income. The Company looks to offset rising costs through increasing manufacturing and distribution as well as through price increases to our customers, although it is unclear whether historic customer sales levels will be maintained at these higher prices (See "Key Developments and Trends - Long-Term Demographics, Consumer Trends, and Demand" and "Key Developments and Trends - Competition"). Due to competitive market conditions, planned trade or promotional incentives, or other factors, our pricing actions may also supply and commodity cost changes.
While the costs of our principal raw materials fluctuate, we believe there will continue to be an adequate supply of the raw materials we use and that they will generally remain available from numerous sources. Market factors, including supply and demand may result in higher costs of sourcing those materials.
Results of Operations
Overview
The following tables present selected financial data for the fiscal year ended December 28, 2025, fiscal year ended December 29, 2024, and fiscal year ended December 31, 2023.
We have prepared our discussion of the results of operations by comparing the results for the fiscal year ended December 28, 2025 to the results of operations for the fiscal year ended December 29, 2024 and by comparing the results for fiscal year ended December 29, 2024 to the results of operations for the fiscal year ended December 31, 2023.
(in millions)
For the Fiscal Year Ended December 28, 2025
For the Fiscal Year Ended December 29, 2024
For the Fiscal Year Ended December 31, 2023
Net sales
Cost of goods sold
Gross profit
Selling general and administrative expenses
Selling
General and Administrative
Total selling, general and administrative expenses
Gain (loss) on sale of assets, net
Income from operations
Other (expense) income
Gain on sale of business
Interest expense
Loss on debt extinguishment
Other income
Gain on remeasurement of warrant liability
Other (expense) income, net
(Loss) income before income taxes
Income tax expense
Net (loss) income
Net loss (income) attributable to noncontrolling interest
Net income (loss) attributable to controlling interest
Fiscal Year Ended December 28, 2025 versus Fiscal Year Ended December 29, 2024
Net sales
Net sales were $1,438.8 million for the fiscal year ended December 28, 2025 and $1,409.2 million for the fiscal year ended December 29, 2024. Net sales for the fiscal year ended December 28, 2025 increased $29.6 million or 2.1% from fiscal year 2024. The 2.1% increase in net sales was primarily driven by a 3.7% benefit from favorable volume/mix, which was offset by a 1.3% reduction from lower net price realization and a reduction of 0.3% attributable to the Good Health and R.W. Garcia Sale. IO discounts decreased from $183.6 million for the fiscal year ended December 29, 2024 to $179.4 million for the fiscal year ended December 28, 2025.
For the fiscal year ended December 28, 2025, Branded Salty Snacks and Non-Branded & Non-Salty Snacks totaled 88% and 12% of our net sales, respectively. For the fiscal year ended December 28, 2025 versus the comparable prior year period, Branded Salty Snacks net sales increased by 4.7% led by the Company's Power Four Brands consisting of Utz® brand, On The Border®, Zapp’s ®, and Boulder Canyon®, and Non-Branded & Non-Salty Snacks net sales decreased by 14.0% primarily due to a decline in partner brands and dips and salsas.
Cost of goods sold and Gross profit
Gross profit was $358.3 million for the fiscal year ended December 28, 2025 and $369.1 million for the fiscal year ended December 29, 2024. Our gross profit margin was 24.9% for the fiscal year ended December 28, 2025 versus 26.2% for the fiscal year ended December 29, 2024. The decrease in gross profit was primarily due to increased investments to support capacity expansion and supply chain chain cost inflation; partially offset by productivity savings. Additionally, IO discounts decreased to $179.4 million for the fiscal year ended December 28, 2025, from $183.6 million for the fiscal year ended December 29, 2024.
Selling, general and administrative expenses
Selling, general and administrative expenses were $348.0 million for the fiscal year ended December 28, 2025 and $310.1 million for the fiscal year ended December 29, 2024, an increase of $37.9 million or 12.2%. The increase in selling, general and administrative expense is primarily due to adding capabilities and selling costs to support the Company’s geographic expansion and growth initiatives.
Gain (Loss) on sale of assets
Gain on sale of assets was $9.2 million for the fiscal year ended December 28, 2025 and a loss of $0.1 million for the fiscal year ended December 29, 2024. The gain recognized for the fiscal year ended December 28, 2025, related to land sold in Goodyear, AZ and the sale of the Grand Rapids, MI manufacturing facility. See note Note 5. Property, Plant and Equipment, Net.
Other (expense) income, net
Other (expense) income, net was $(20.1) million for the fiscal year ended December 28, 2025 and $10.5 million for the fiscal year ended December 29, 2024. The increase in other expense of $30.6 million for the fiscal year ended December 28, 2025 compared to the fiscal year ended December 29, 2024 was primarily due to the gain on sale of business of $44.0 million relating to the Good Health and R.W. Garcia Sale which occurred on February 5, 2024. See Note 2. Divestitures , for further discussion. This was partially offset by an increase in the gain on the remeasurement of the warrant liability of $12.6 million for the fiscal year ended December 28, 2025. See Note 10. Long-Term Debt , for further discussion.
Income taxes
Income taxes expense was $7.1 million for the fiscal year ended December 28, 2025 and $38.7 million for the fiscal year ended December 29, 2024. The income tax expense recognized for the fiscal year ended December 28, 2025 was primarily driven by an increased valuation allowance recorded against certain deferred tax assets ("DTAs") for which it is more likely than not they will not be realized, and the income tax expense recognized for the the fiscal year ended December 29, 2024 was primarily driven by the Good Health and R.W. Garcia Sale, which took place on February 5, 2024. See Note 16. Income Taxes and Note 2. Divestitures .
Fiscal Year Ended December 29, 2024 versus Fiscal Year Ended December 31, 2023
During the fourth quarter of 2025, the Company changed its presentation related to costs associated with operating its inter-location logistics, DSD distribution centers and outbound shipping and handling activities from Selling to Cost of goods sold within the Consolidated Statements of Operations and Comprehensive Income (Loss). Additionally, the Company has revised the Selling and distribution caption to Selling within the Consolidated Statements of Operations and Comprehensive Income (Loss). See Change in Accounting Policy within Note 1. Operations and Summary of Significant Accounting Policies within our consolidate financial statements for further information.
Net sales
Net sales were $1,409.2 million for the fiscal year ended December 29, 2024 and $1,438.2 million for the fiscal year ended December 31, 2023. Net sales for the fiscal year ended December 29, 2024 decreased $29.0 million or 2.0% from fiscal year 2023. The Good Health and R.W. Garcia Sale contributed 3.3% to the year-over-year decrease. The remaining change, totaling a 1.3% increase in net sales, was related to favorable volume/mix of 1.5% as further discussed below, offset by 0.2% attributable to lower net price realization as a result of the promotional environment and a decrease of 0.1% related to IO conversions. IO discounts increased from $179.3 million for the fiscal year ended December 31, 2023 to $183.6 million for the fiscal year ended December 29, 2024.
Sales are evaluated based on classification as Branded Salty Snacks or Non-Branded & Non-Salty Snacks. For the fiscal year ended December 29, 2024, excluding prior year sales related to the Good Health and R.W. Garcia Sale and certain IO conversions, Branded Salty Snacks and Non-Branded & Non-Salty Snacks totaled 87% and 13% of our net sales, respectively. For the fiscal year ended December 29, 2024, excluding prior year sales related to the Good Health and R.W. Garcia Sale and certain IO conversions, Branded Salty Snacks and Non-Branded & Non-Salty Snacks net sales increased by 3.7% and decreased by 12.3%, respectively.
Cost of goods sold and Gross profit
Gross profit was $369.1 million for the fiscal year ended December 29, 2024 and $350.8 million for the fiscal year ended December 31, 2023. Our gross profit margin was 26.2% for the fiscal year ended December 29, 2024 versus 24.4% for the fiscal year ended December 31, 2023. The increase in gross profit and gross profit margin was primarily driven by benefits from increased productivity including plant network optimization activities, favorable sales volume/mix and ingredient cost deflation which more than offset supply chain cost inflation, investments to support the Company’s productivity initiatives and slightly lower pricing. Additionally, IO discounts increased to $183.6 million for the fiscal year ended December 29, 2024, from $179.3 million for the fiscal year ended December 31, 2023.
Selling, general and administrative expenses
Selling, general and administrative expenses were $310.1 million for the fiscal year ended December 29, 2024 and $327.4 million for the fiscal year ended December 31, 2023, a decrease of $17.3 million or 5.3%. The decrease in selling, general and administrative expense was primarily attributable to $12.6 million related to the impairment of fixed assets, primarily related to the closure of the manufacturing operation at the Birmingham, Alabama facility during the fiscal year ended December 31, 2023 as discussed in Note 4. Property, Plant and Equipment, Net to our Audited Financial Statements. The Company also recognized a liability and related expense of $4.7 million related to a contract termination with a co-manufacturer, which is recorded in the general and administrative line in the Consolidated Statements of Operations and Comprehensive Income (Loss) during the fiscal year ended December 31, 2023. This agreement was a continuation of the Company's response to shifting production from a manufacturing facility that was damaged by a natural disaster in 2021. This decrease was partially offset by an increased marketing spend, higher distribution costs, and investments in selling capabilities to support distribution growth in Expansion geographies.
(Loss) Gain on sale of assets
Loss on sale of assets was $0.1 million for the fiscal year ended December 29, 2024 and $7.4 million for the fiscal year ended December 31, 2023. The loss during the fiscal year ended December 31, 2023 was primarily related to the sale of the Company's manufacturing facility in Bluffton, Indiana which generated a loss of $13.4 million, partially offset by gain on sale of land for $4.0 million and the sale of IO routes and other fixed assets.
Other income (expense), net
Other income (expense), net was $10.5 million for the fiscal year ended December 29, 2024 and $(55.2) million for the fiscal year ended December 31, 2023. The increase in other income of $65.7 million for the fiscal year ended December 29, 2024 compared to the fiscal year ended December 31, 2023 was primarily due to the gain on sale of business of $44.0 million relating to the Good Health and R.W. Garcia Sale which occurred on February 5, 2024. See Note 2. Divestitures to our Audited Financial Statements, for further discussion. Interest expense also decreased by $15.7 million, primarily related to the $141.0 million payment on our Term Loan B and the $17.7 million payment on our loan agreement (the "Real Estate Term Loan") with City National Bank, which was secured by a majority of the Company's real estate assets, during the fiscal year ended December 29, 2024. There was also an increase in the gain on the remeasurement of the warrant liability of $8.0 million and a loss on debt extinguishment of $1.3 million recognized during the fiscal year ended December 29, 2024. See Note 10. Long-Term Debt to our Audited Financial Statements, for further discussion.
Income taxes
Income taxes expense was $38.7 million for the fiscal year ended December 29, 2024 and $0.8 million for the fiscal year ended December 31, 2023. The increase in income tax expense for the fiscal year ended December 29, 2024 compared to the fiscal year ended December 31, 2023 is primarily attributable to the Good Health and R.W. Garcia Sale, which occurred on February 5, 2024. See Note 2. Divestitures to our Audited Financial Statements, for further discussion. The income tax expense increase is also driven by the increase in valuation allowance, which partially offsets a deferred tax asset, which resulted in a $7.6 million income tax expense. See Note 16. Income Taxes , for further discussion.
Non-GAAP Financial Measures
We use non-GAAP financial information and believe it is useful to investors as it provides additional information to facilitate comparisons of historical operating results and identify trends in our underlying operating results, and it also provides additional insight and transparency on how we evaluate the business. We use non-GAAP financial measures to budget, make operating and strategic decisions, and evaluate our performance. We have detailed the non-GAAP adjustments that we make in our non-GAAP definitions below. The adjustments generally fall within the categories of non-cash items, acquisition, divestiture and integration costs and gains, business transformation initiatives, and financing-related costs. We believe the non-GAAP financial measures should always be considered along with the most directly comparable U.S. generally accepted accounting principles ("U.S. GAAP") financial measures. We have provided the reconciliations between the U.S. GAAP and non-GAAP financial measures below, and we also discuss our underlying U.S. GAAP results throughout this discussion and analysis of our financial condition and results of operations.
Our primary non-GAAP financial measures are listed below and reflect how we evaluate our current and prior-year operating results. As new events or circumstances arise, these definitions could change. When the definitions change, we will provide the updated definitions and present the related non-GAAP historical results on a comparable basis.
EBITDA and Adjusted EBITDA
We define EBITDA as net income before interest, income taxes, and depreciation and amortization.
We define Adjusted EBITDA as EBITDA further adjusted to exclude certain non-cash items, such as accruals for long-term incentive programs and asset impairments and hedging and purchase commitments adjustments; remeasurement of warrant liabilities; acquisition, divestiture and integration costs and gains; business transformation initiatives; and financing-related costs.
Adjusted EBITDA is one of the key performance indicators we use in evaluating our operating performance and in making financial, operating, and planning decisions. We believe EBITDA and Adjusted EBITDA are useful to investors in the evaluation of Utz’s operating performance compared to other companies in the salty snack industry, as similar measures are commonly used by companies in this industry; however, we caution that other companies may use different definitions from us and such figures may not be directly comparable to our figures. We also report Adjusted EBITDA as a percentage of net sales as an additional measure for investors to evaluate our Adjusted EBITDA margins on net sales.
The following table provides a reconciliation from Net (Loss) Income to EBITDA and Adjusted EBITDA for the fiscal year ended December 28, 2025 and the fiscal year ended December 29, 2024:
(dollars in millions)
For the Fiscal Year Ended December 28, 2025
For the Fiscal Year Ended December 29, 2024
Net (loss) income
Net (Loss) Income as a % of Net Sales
Plus non-GAAP adjustments:
Income Tax Expense
Depreciation and Amortization
Interest Expense, Net
Interest Income (IO loans) (1)
EBITDA
Certain Non-Cash Adjustments (2)
Acquisition, Divestitures and Investments (3)
Business Transformation Initiatives (4)
Financing-Related Costs (5)
Gain on remeasurement of warrant liability (6)
Adjusted EBITDA
Adjusted EBITDA as a % of Net Sales
(1) Interest Income (IO Loans) refers to interest income that we earn from IO notes receivable that has resulted from our initiatives to transition from RSP distribution to IO distribution. (“Business Transformation Initiatives”) . There is a note payable recorded that mirrors most IO notes receivable, and the interest expense associated with the notes payable is part of the Interest Expense, Net adjustment.
(2) Certain Non-Cash Adjustments are comprised primarily of the following:
Incentive programs – The Company incurred $15.6 million and $17.6 million of share-based compensation expense for awards to employees and directors associated with the 2020 Omnibus Equity Incentive Plan (the “OEIP”) for the fiscal year ended December 28, 2025 and the fiscal year ended December 29, 2024, respectively.
Loss on impairment — The Company recorded an impairment charge of $0.6 million during the fiscal year ended December 28, 2025.
Purchase commitments and other adjustments – We have purchase commitments for specific quantities at fixed prices for certain of our products’ key ingredients. To facilitate comparisons of our underlying operating results, this adjustment was made to remove the volatility of purchase commitment related unrealized gains and losses. The adjustment related to purchase commitment and other adjustments, including cloud computing, were $10.6 million and $4.3 million for the fiscal year ended December 28, 2025 and the fiscal year ended December 29, 2024, respectively.
(3) Acquisitions, Divestitures and Investments – This is comprised of start-up costs, consulting, transaction services, and legal fees incurred for acquisitions and certain potential acquisitions, in addition to expenses associated with integrating recent acquisitions and costs related to divestitures. These acquisitions and divestitures include assets related to our supply chain consolidation and transformation. Such expenses were $22.8 million for fiscal year ended December 28, 2025. Such expenses were $20.9 million for the fiscal year ended December 29, 2024, as well as a gain of $44.0 million related to the Good Health and R.W. Garcia Sale.
(4) Business Transformation Initiatives – This adjustment is related to start-up costs, consulting, professional, and legal fees incurred for specific initiatives and structural changes to the business that do not reflect the cost of normal business operations. The adjustment also includes initiatives and structural changes related to our supply chain transformation. In addition, gains and losses realized from the sale of distribution rights to IOs and the subsequent disposal of trucks, severance costs associated with the elimination of RSP positions, and enterprise planning system transition costs, fall into this category. The Company incurred such costs of $65.4 million for the fiscal year ended December 28, 2025 and $28.1 million for the fiscal year ended December 29, 2024.
(5) Financing-Related Costs – These costs include adjustments for various items related to raising debt and equity capital or debt extinguishment costs.
(6) Gains on Remeasurement of Warrant liability – In August 2025, the Warrants were fully exercised in a cashless exchange resulting in the issuance of 1,307,873 shares of the Company's Class A Common Stock. At the time of exercise the corresponding liability was extinguished, and the fair value of Warrants was recorded as an increase to equity.
Liquidity and Capital Resources
Sources and Uses of Cash
We believe that the cash provided by our operating activities, revolving credit facility, term loans, and derivative financial instruments will continue to provide sufficient liquidity for our working capital needs, planned capital expenditures and future payments of our contractual, and tax obligations both in the short term and long term. We regularly evaluate our financing strategy to meet our short- and longer-term capital needs. From time-to-time, we may dispose of assets or enter into other cash generating transactions, such as through a sale-leaseback, when we deem beneficial. To date, we have been successful in generating cash and raising financing as needed. However, if a serious economic or credit market crisis ensues or another adverse development arises, it could have a material adverse effect on our liquidity, results of operations and financial condition.
Financing Arrangements
The primary objective of our financing strategy is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives. We use short-term debt as management determines is reasonable, principally to finance ongoing operations, including our seasonal requirements for working capital (generally accounts receivable, inventory, and prepaid expenses and other current assets, less accounts payable, accrued payroll, and other accrued liabilities), and a combination of equity and long-term debt to finance both our base working capital needs and our non-current assets.
Term Debt and Revolving Credit Facility
Term Debt
On January 29, 2025, the Company amended its Term Loan B to refinance in full all of the $630.3 million outstanding term loans thereunder, reduce the interest rate from SOFR plus the applicable rate of 2.75% to SOFR plus the applicable rate of 2.50% and extend the maturity date from January 20, 2028 to January 29, 2032, as well as to make certain other changes. Other material terms of the Term Loan B remain unchanged. The Company recorded a loss on debt extinguishment of $0.5 million related to the refinancing of its Term Loan B in its Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 28, 2025.
On September 11, 2025, the Company terminated the previously existing swap agreement associated with the Term Loan B, resulting in the receipt of cash proceeds totaling $12.1 million. In addition, on the same date, the Company entered into a new interest rate swap agreement with a notional amount of $500.0 million. This agreement is scheduled to mature on December 31, 2028. Under the terms of this agreement, the Company is obligated to make periodic payments at the fixed interest rate of 3.23%, while receiving periodic payments based on the one-month SOFR from the counterparty.
Revolving Credit Facility
As of both December 28, 2025 and December 29, 2024, $0.2 million was outstanding under the ABL facility. 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 and amounts borrowed. As of December 28, 2025 and December 29, 2024, $119.7 million and $158.7 million, respectively, was available for borrowing, net of letters of credit. Standby letters of credit in the amount of $10.3 million were issued as of both December 28, 2025 and December 29, 2024. The standby letters of credit are primarily issued for insurance purposes. Refer to Note 10. Long-Term Debt to our Audited Financial Statements for more information.
Cash Requirements
Our expected future payments at December 28, 2025 primarily consist of:
• Short-term cash requirements related primarily to funding operations (including expenditures for raw materials, labor, manufacturing and distribution, trade and promotions, advertising and marketing, benefit plan obligations and lease expenses) as well as periodic expenditures for acquisitions, shareholder returns (such as dividend payments), property, plant and equipment and any significant non-operating items.
• Cash requirements related to Other Notes Payable and Capital Leases (Refer to Note 10. Long-Term Debt to our Audited Financial Statements).
• Long-term cash requirements primarily related to funding long-term debt repayments and related interest payment on long-term debt (Refer to Note 10. Long-Term Debt to our Audited Financial Statements).
• Long-term cash requirements related to our deferred taxes and TRA (Refer to Note 16. Income Taxes to our Audited Financial Statements).
• Operating lease liabilities (Refer to Note 17. Leases to our Audited Financial Statements).
Off-Balance Sheet Arrangements
Purchase Commitments
The Company has outstanding purchase commitments for specific quantities at fixed prices for certain key ingredients to economically hedge commodity input prices. Refer to Note 11. Derivative Financial Instruments and Purchase Commitments to our Audited Financial Statements.
IO Guarantees Off Balance Sheet
The Company partially guarantees loans made to IOs by Bank of America and two other banks for the purchase of routes, all of which was recorded by the Company as off-balance sheet arrangements. 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. Refer to Note 14. Contingencies to our Audited Financial Statements.
Cash Flow
The following table presents net cash provided by operating activities, investing activities, and financing activities for the fiscal year ended December 28, 2025, and fiscal year ended December 29, 2024:
(in millions)
For the Fiscal Year Ended December 28, 2025
For the Fiscal Year Ended December 29, 2024
Net cash provided by operating activities
Net cash (used in) provided by investing activities
Net cash provided by (used in) financing activities
At December 28, 2025, our consolidated cash balance, including cash equivalents, was $120.4 million or $64.3 million higher than at December 29, 2024. Net cash provided by operating activities for the fiscal year ended December 28, 2025 was $112.2 million an increase of $6.0 million from the fiscal year ended December 29, 2024. The increase is largely driven by a decrease in our cash conversion cycle by improving processes and payment terms with customers and suppliers, sale of certain trade accounts receivables to a third party, and termination of an interest rate swap, partially offset by increased costs to support capacity expansion, adding capabilities and selling costs to support the Company’s geographic expansion and growth initiatives, and increases in inventory.
Cash used in investing activities for the fiscal year ended December 28, 2025 was $86.9 million, representing an increase of $161.9 million from the fiscal year ended December 29, 2024. The increase in cash used in investing activities is primarily driven by proceeds from the sale of a business for $167.5 million related to the Good Health and R.W. Garcia Sale, partially offset by purchase of intangibles related to an indefinite life intangible right for the use of a third-party brand name both of which occurred during the fiscal year ended December 29, 2024.
Net cash provided by financing activities was $39.0 million for fiscal year ended December 28, 2025, an increase of $216.1 million from the fiscal year ended December 29, 2024 primarily driven by the pay down of debt utilizing the proceeds from the Good Health and R.W. Garcia Sale as well as proceeds from the Manufacturing Facilities Sale which occurred during the fiscal year ended December 29, 2024 and increases in proceeds from our equipment loans.
Debt Covenants
The Company has a credit agreement with a syndicate of banks, led by Bank of America, N.A. ("Term Loan B"). The Term Loan B and the ABL facility are collateralized by substantially all of the assets and liabilities of UBH and its subsidiaries excluding the real estate assets secured by the Real Estate Term Loan, including equity interests in certain of UBH’s subsidiaries. The credit agreements contain certain affirmative and negative covenants as to operations and the financial condition of UBH and its subsidiaries. UBH and its subsidiaries were in compliance with their financial covenants as of December 28, 2025. Refer to Note 10. Long-Term Debt to our Audited Financial Statements for more information.
New Accounting Pronouncements
See Note 1. Operations and Summary of Significant Accounting Policies to our Audited Financial Statements.
Application of Critical Accounting Policies and Estimates
General
Our consolidated financial statements have been prepared in accordance with U.S GAAP. While the majority of our revenue, expenses, assets and liabilities are not based on estimates, there are certain accounting principles that require management to make estimates regarding matters that are uncertain and susceptible to change. Critical accounting policies are defined as those policies that are reflective of significant judgments, estimates and uncertainties, which could potentially result in materially different results under different assumptions and conditions. Management regularly reviews the estimates and assumptions used in the preparation of our financial statements for reasonableness and adequacy. Our significant accounting policies are discussed in Note 1. Operations and Summary of Significant Accounting Policies , of our Audited Financial Statements; however, the following discussion pertains to accounting policies we believe are most critical to the portrayal of our financial condition and results of operations and that require significant, difficult, subjective or complex judgments. Other companies in similar businesses may use different estimation policies and methodologies, which may affect the comparability of our financial condition, results of operations and cash flows to those of other companies.
Revenue Recognition
Our revenues primarily consist of the sale of salty snack items that are sold through DSD and direct-to-warehouse distribution methods, either directly to retailers or via distributors. We sell to supermarkets, mass merchandisers, club warehouses, convenience stores and other large-scale retailers, merchants, distributors, brokers, wholesalers, and IOs (which are third party businesses). 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 receivables and require payment on a short-term basis and, therefore, we do not have any significant financing components.
We recognize 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 products’ control is transferred to customers. We assess the goods promised in customers’ purchase orders and identify a performance obligation for each promise to transfer a good that is distinct.
We offer 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. Our 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 customer or consumer. These estimates are made using various techniques including historical data on performance of similar promotional programs. Differences between estimated expense and actual redemptions are recognized as a change in management estimate as the actual redemption is incurred.
Distribution Route Purchase and Sale Transactions
We purchase and sell distribution routes as a part of our maintenance of our DSD network. As new IOs are identified, we either sell our existing routes to the IOs or sell routes that were previously purchased by us to the IOs. Gain/loss from the sale of a distribution route is recorded upon the completion of the sale transaction and signing of the relevant documents 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. We record the distribution routes that we purchase based on the payment that we make to acquire the route as intangible assets and record the purchased distribution routes as indefinite-lived intangible assets under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other. The indefinite lived intangible assets are subject to annual impairment testing.
Goodwill and Indefinite-Lived Intangibles
We allocate 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 our 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, trademarks, trade names and non-compete agreements. 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 trade names, trademarks, master distribution rights and Company owned routes) are not amortized but are tested for impairment at least annually and whenever events or circumstances change that indicate impairment may have occurred. We test goodwill for impairment at the reporting unit level.
As we have adopted Accounting Standards Update 2017-04, simplifying the Test for Goodwill Impairment, we will record an impairment charge based on the excess of a reporting unit’s carrying amount over our fair value.
ASC 350, Goodwill and Other Intangible Assets 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.
For the qualitative impairment analysis performed, which took place on the first day of the fourth quarter, we have taken into consideration all the events and circumstances listed in FASB ASC 350, Intangibles—Goodwill and Other and concluded that Goodwill and our intangible assets were not impaired.
Income Taxes
We account for income taxes pursuant to the asset and liability method of ASC 740, Income Taxes, which require us to recognize current tax liabilities or receivables for the amount of taxes we estimate 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.
Under the terms of the TRA, the Company generally will be required to pay to Noncontrolling Interest Holders 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 which occurred in 2020 with Collier Creek Holdings. This is accounted for in conjunction with the methods used to record income tax described above.
We follow 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 our 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. Our policy is to classify assessments, if any, for tax related interest as interest expense and penalties as selling, general and administrative expenses. As of each of December 28, 2025, and December 29, 2024, no liability for unrecognized tax benefits was required to be reported. We do not expect any significant changes in our unrecognized tax benefits in the next year.
Business Combinations
We evaluate 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 we have 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.
We use the acquisition method in accounting for acquired businesses. Under the acquisition method, our 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.
