Company: UTZ
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0001739566-25-000111
Chunk: 88

Company: Utz Brands, Inc.
Filing Date: 2025-05-01
Form: 10-Q
Item: Part I, Item 2
Chunk 88
---
 factors including supply and demand may result in higher costs of sourcing those materials.

Independent Operator Conversions

Our DSD distribution is executed via Company-owned routes operated by route sales professionals (“RSP”), and third-party routes managed by IOs. We have used the IO and RSP models for more than a decade. In fiscal year 2017, we embarked on a multi-year strategy to convert all company-owned RSP routes to the IO model. The conversion process involves selling distribution rights to a defined route to an IO. As we convert routes, there is a decrease in the selling, distribution and administrative costs that we previously incurred on RSPs and a corresponding increase in discounts paid to IOs to cover their costs to distribute our product. The net impact is a reduction in selling expenses and a decrease in net sales and gross profit. Conversions also impact our Consolidated Balance Sheets, resulting in cash proceeds to us as a result of selling the route to an IO, or by creating notes receivable related to the sale of the routes. While we expect to have a small number of routes under the ownership of the Company as we acquire and re-sell routes as part of our normal operations, as of March 30, 2025, substantially all of our DSD routes are managed by IOs.

19

Results of Operations

Overview

The following tables present selected unaudited financial data for the thirteen weeks ended March 30, 2025 and March 31, 2024.

(in thousands)Thirteen weeks ended March 30, 2025Thirteen weeks ended March 31, 2024Net sales$352,084 $346,523 Cost of goods sold233,854 226,950 Gross profit118,230 119,573 Selling, distribution, and administrative expensesSelling and distribution77,265 73,666 Administrative35,949 35,782 Total selling, distribution, and administrative expenses113,214 109,448 Gain (loss) on sale of assets, net660 (470)Income from operations5,676 9,655 Other (expense) incomeGain on sale of business— 44,015 Interest expense(11,470)(13,831)Loss on debt extinguishment(531)— Other income362 910 Gain (loss) on remeasurement of warrant liability 11,016 (11,808)Other (expense) income, net(623)19,286 Income