Utz Brands, Inc. announced that certain of its subsidiaries including Utz Quality Foods, LLC have entered into a definitive agreement for the sale of certain assets and brands to Our Home, an operating company of Better-for-You brands that includes Real Food From the Ground Up, Popchips and Food Should Taste Good. Under the agreement, affiliates of Our Home have agreed to purchase the Good Health and R.W. Garcia brands, the Lincolnton, N.C., and Lititz, Penn., manufacturing facilities and certain related assets, and assume the Company’s Las Vegas facility’s lease and manufacturing operations.

Following the close of the transactions, Utz and Our Home will operate under a transition services agreement for 12 months. The total consideration for the transactions is $182.5 million, subject to customary adjustments, and the transactions are expected to close on Feb. 5. In addition, post-closing, the parties will operate under reciprocal co-manufacturing agreements under which Our Home will co-manufacture certain Utz products and Utz will co-manufacture certain Good Health products. Certain Good Health products will continue to be distributed and sold on the Utz DSD network for Our Home. Our Home plans to continue to operate and grow the brands and manufacturing facilities under its platform while offering employment to Utz associates working in those facilities as part of the transition.

Howard Friedman, chief executive officer of Utz, said, “We expect these transactions to deliver on our supply chain transformation and value creation initiatives, to fast-track our deleveraging timeline by a full year, and to accelerate our brand portfolio strategy to better optimize for growth. With this important step in the optimization of our supply chain and brand portfolio, together with immediate benefits to free cash flow from lower interest expense, we are well-positioned to execute against our expansion plans across the U.S. and deliver on our margin target.

“Our Home’s portfolio of Better-for-You brands is well aligned with Good Health and R.W. Garcia’s missions of bringing healthy, innovative snacks to consumers. On behalf of everyone at Utz, I would like to thank our associates within the Good Health and R.W. Garcia businesses for their many contributions. They have a great place within Our Home, and I am confident they will have exciting opportunities ahead.”

Aaron Greenwald, founder and CEO of Our Home, said, “We are thrilled to announce this acquisition from Utz as it significantly scales Our Home’s snacking platform and manufacturing footprint across the United States. These transactions support our vision to deliver snacks that satisfy while creating a sense of connection and comfort at tremendous value. Through our owned-production facilities led by our invaluable team members, along with a carefully curated brand portfolio, we aim to be the preferred choice for those seeking high-quality, Better-for-You snacks.”

The transactions are expected to provide approximately $150 million in after-tax net proceeds, which Utz will use to pay down its long-term debt. The debt reduction is expected to lower interest expense by approximately $12 million in fiscal 2024 based on the Company’s current outlook for interest rates, and to accelerate the Company’s plan for achieving its target of approximately 3.0x Net Leverage by a full year from the end of fiscal 2026 to the end of fiscal 2025.

The company expects the impact of the transactions to be accretive to its Adjusted Earnings per Share on a full-year basis in 2024, reflecting the foregone profit related to the Good Health and R.W. Garcia brands, and after factoring in the benefit of cost savings and the use of net proceeds from the sale to paydown long-term debt and reduce interest expense. Utz estimates that Good Health and R.W. Garcia-related products contributed approximately $65 million in net sales for the fiscal-year ended Dec. 31.

In addition, at the company’s recent 2023 Investor Day, Utz provided fiscal 2026 financial targets that included targeted Supply Chain Network Optimization cost savings of approximately $45 million to be achieved from 2024 through 2026. The Company expects that the completion of these transactions will accelerate the timing of cost savings. Management will further discuss this impact, in addition to its fiscal year 2024 outlook, on its fiscal-year 2023 earnings conference call on Feb. 29.

In the fourth quarter of fiscal 2023, the Company’s Circana total retail sales increased 4.1% and Power Brands increased 5.3 percent, both ahead of Salty Snack Category growth of 2.8 percent. The company’s total retail sales growth was led by volume growth of 4.3 percent compared to the Salty Snack Category volume decline of (1.9 percent). Additionally, based on preliminary financial information, the company estimates fourth quarter total net sales declined between (1.3 percent) to (0.2 percent) to between $350 million and $354 million. The Company anticipates that its net sales growth in the first quarter of fiscal 2024 to be more consistent with retail sales growth.

For the fiscal-year 2023, based on preliminary financial information, the Company estimates 2023 total net sales growth in a range of 2 to 2.2 percent, and is narrowing its fiscal-year 2023 Adjusted EBITDA outlook range to growth of 9.5 to 10 percent versus the prior expectation of growth of 8 to 11 percent.

These preliminary results are based on the company’s current estimate of its results for the fiscal year ended Dec. 31, 2023 and remain subject to normal year-end accounting procedures and are subject to change. Under the federal securities laws, the Company is not permitted to release non-GAAP results until it is able to disclose the most directly comparable GAAP measure. Due to the company’s year-end closing process, such GAAP figures are not available in advance of the release of such information on Feb. 29, when Utz plans to release its fiscal-year 2023 financial results. At that time, the company will host a conference call and webcast with members of the executive management team to discuss these results at 8:30 a.m. Eastern Time.

Visit the “Events & Presentations” section of Utz’s Investor Relations website at https://investors.utzsnacks.com to access the live webcast and presentation. The webcast will be available in listen-only mode, and the replay will be archived on the “Events & Presentations” section of Utz’s Investor Relations website.

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