The US-based company Utz Brands recently sold two brands and a pair of factories to Our Home, the company behind Popchips snacks, as part of their strategic restructuring plan. Our Home will pay Utz $182.5m for the Good Health and RW Garcia brands, plus factories in North Carolina and Pennsylvania. Additionally, Our Home will take on the lease for a manufacturing facility in Las Vegas.
The sale is a part of an overall plan to overhaul its manufacturing network that Utz Brands announced in September. After closing their deal, there will be a co-manufacturing agreement between Utz and Our Home to produce certain products for each other.
The Zapp’s owner said the proceeds from the sale will be used to “reduce long-term debt.” Utz Brands has set a target of approximately three times net leverage by the end of fiscal 2025 and expects to make $45m in savings from its supply chain overhaul in the coming years. The CEO of Utz, Howard Friedman, expressed confidence that these transactions will fast-track their deleveraging timeline, accelerate their brand portfolio strategy, and provide immediate benefits to their free cash flow.
On the other hand, Aaron Greenwald, the founder and CEO of Our Home, commented on the acquisition, highlighting the significance of the deal in scaling Our Home’s snacking platform and manufacturing footprint across the United States. As a result, Our Home will have five manufacturing facilities in the US.
Meanwhile, Utz Brands estimates its net sales to grow by 2-2.2% in 2023 and is narrowing its adjusted EBITDA forecast. They also expect the deal with Our Home to “accelerate” their supply chain optimization process, with immediate benefits to their free cash flow from lower interest expense.
Overall, these transactions are expected to deliver on Utz Brands’ supply chain transformation and value creation initiatives, fast-track their deleveraging timeline, and accelerate their brand portfolio strategy to optimize for growth, positioning them to execute their expansion plans across the US and deliver on their margin target.
