Utz Brands, Inc. — Form 8-K Summary
Reporting date: May 4, 2021. The filing concerns accounting for warrants and the expected restatement of previously issued financial statements, rather than new operating results.
Business Context and Reporting Period
- Utz Brands is the successor entity following the August 28, 2020 business combination involving Collier Creek Holdings and Utz Brands Holdings, LLC.
- The affected filings include the fiscal year ended January 3, 2021 and the interim period ended September 27, 2020.
- The Audit Committee concluded that these previously issued financial statements and related financial communications should no longer be relied upon.
Financial Metrics and Accounting Impact
- The Company expects to recognize incremental fiscal 2020 non-operating expense of approximately $90 million to $100 million from revising the accounting for warrants.
- The filing states that historically reported cash and cash equivalents and cash flows from operating, investing, and financing activities are not expected to be affected.
- No updated revenue, profit, margin, debt, liquidity, or operating cash flow figures are provided in this filing.
- The affected warrants will be presented as liabilities and measured at fair value each reporting period rather than classified within equity.
Material Changes Versus Prior Reporting
- The Public Warrants, Forward Purchase Warrants, and private placement warrants were previously recorded within equity or opening equity following the business combination.
- Following the SEC’s April 12, 2021 statement on warrant accounting, the Company concluded that the warrants do not qualify for equity classification.
- The Company intends to amend its fiscal 2020 Form 10-K and restate the relevant September 27, 2020 interim financial information in a Form 10-K/A.
- The Public Warrants and Forward Purchase Warrants were announced for redemption on December 14, 2020, and remaining instruments were redeemed on January 14, 2021; the filing does not quantify the resulting fair-value adjustments by instrument.
Outlook, Risks, and Unusual Items
- Management is evaluating the impact of the restatement on internal control over financial reporting.
- Further details and remediation plans are expected in the Form 10-K/A.
- The $90 million to $100 million expense range is preliminary and subject to change. Grant Thornton LLP had not audited or reviewed the estimate or range as of the filing date.
- The completed audit or interim review could result in material changes to the estimates.
- The filing incorporates a May 4, 2021 press release under Regulation FD, but the provided text does not include additional operating guidance or forecasts.
Facts Investors Should Verify
- Confirm the final warrant liability classification and fair values in the Form 10-K/A.
- Compare the final restated fiscal 2020 net income, earnings per share, equity, and non-operating expense with the preliminary $90 million to $100 million estimate.
- Review any disclosed material weaknesses, control deficiencies, and remediation plans.
- Verify that reported cash balances and operating, investing, and financing cash flows remain unchanged after the restatement.
- Review the independent auditor’s conclusions and any subsequent amendments or related filings.