Company: UTZ
Filing Date: 2025-07-31
Form Type: 10-Q
Source: 0001739566-25-000153
Chunk: 25

Company: Utz Brands, Inc.
Filing Date: 2025-07-31
Form: 10-Q
Item: Part I, Item 1
Chunk 25
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3.8 million for the thirteen and twenty-six weeks ended June 29, 2025, respectively. Comparably, the Company recorded income tax benefit of $1.3 million and expense of $25.2 million for the thirteen and twenty-six weeks ended June 30, 2024, respectively. The effective tax rates for the thirteen and twenty-six weeks ended June 29, 2025 were (46.4)% and (31.7)%, respectively. Comparably, the effective tax rates for the thirteen and twenty-six weeks ended June 30, 2024 were (5.4)% and 47.5%, respectively. The Company’s effective tax rates differ from the federal statutory rate of 21% primarily because UBH, which is a partnership, is not taxed at the entity level, and is required to allocate some of its taxable results to the holders of noncontrolling interests ("Noncontrolling Interest Holders"), as well as state taxes and the fair value impact of warrant liabilities. The Company’s effective tax rates for the thirteen and twenty-six weeks ended June 29, 2025 are 62.2% and 43.8%, respectively before consideration of any discrete items. During the thirteen and twenty-six weeks ended June 29, 2025, the effective tax rate was impacted by statutory state tax rate changes, which resulted in a discrete tax benefit of $0.3 million and expense of $0.8 million, respectively.

13

The Company regularly evaluates valuation allowances established for deferred tax assets (“DTAs”) for which future realization is uncertain. The Company assessed the available positive and negative evidence to estimate whether future taxable income would be generated to permit the use of existing DTAs. As of June 29, 2025, a significant piece of objective negative evidence evaluated was the twelve-quarter cumulative loss before taxes. Such objective evidence limits the ability to consider other subjective evidence, such as projections for future growth. The Company determined that there is uncertainty regarding the utilization of certain DTAs such as the investment in UBH, federal operating losses subject to annual limitations due to “change in ownership” provisions, and state net operating losses where the Company does not expect to continue to have nexus. Therefore, a valuation allowance has been recorded against the DTAs for which it is more likely than not they will not be realized. The Company has DTAs related to its investment in UBH that are expected to be realized in the ordinary course of operations or generate future net