In a bid to reduce debt and cut expenses, Hanover-based Utz Brands is unloading some of its snack brands and plants, including a facility in the Lititz area.
- In a deal valued at $182.5 million, the snack maker is selling plants in Manheim Township and Littletown, N.C. as well as the lease for a plant in Las Vegas, Nevada, according to a press release.
- Utz also is selling its Good Health and R.W. Garcia snack brands, which together accounted for about $65 million in sales last year.
- Good Health makes healthy snacks like veggie chips and veggie sticks. R.W. Garcia makes organic tortilla chips, crackers and corn chips.
- The buyer is Our Home, a food company based in Boonton, New Jersey, active in the so-called “better for you” snacking category.
- Its existing brands include Food Should Taste Good and Popchips.
- The deal is expected to close Feb. 5.
Why is this happening: Utz is hoping to pay off debt more quickly and streamline its supply chain.
- The company paid interest of $15.5 million for the 13 weeks ending Oct. 1, up from $11.6 million for the year-ago quarter.
- After applying the anticipated sale proceeds of $150 million to its debt, Utz expects to shave $15 million a year in interest costs.
- The company also hopes to trim $45 million in supply chain costs this year.
- “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,” Utz CEO Howard Friedman said in a statement.
- The latest moves come about four months after the snack maker announced plans to close a factory in its hometown, build a new warehouse there and sell three other plants.
What’s next: Our Home is expected to continue operating the plants it is buying from Utz and hire the employees working there.
- “In addition, Our Home is keeping pay rates and PTO allotments the same, honoring job tenure, and offering similar benefits,” said Utz spokesperson Kevin Brick.
- The two companies also plan to continue manufacturing certain of each other’s products under reciprocal co-manufacturing agreements.
The numbers: Utz has seen sales growth slow over the past year.
- The company has not reported final results for 2023 but expects sales to grow between 2% and 2.2% for the year, down from 19.3% in 2022.
- Sales may actually shrink by 0.2% to 1.3% for the fourth quarter of 2023, the company estimates.
- Last December, the company unveiled a three-year plan to increase sales, boost profits and shrink debt.
The background: Founded in 1921, Utz was a family-owned business until September 2020, when it became a publicly traded company.
- The company has grown through organic sales but also through a series of acquisitions, some of which were fueled by debt.
- Utz purchased R.W. Garcia in November 2021 for $56 million.
- Utz acquired the Manheim Township plant when it bought the former Keystone Pretzel Bakery in 2015.
- Utz bought Good Health in 2014.
