Utz Brands, Inc. (UTZ)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following management's discussion and analysis of financial condition and results of operations ("MD&A") should be read in conjunction with our unaudited interim consolidated financial statements as of and for the thirteen and twenty-six weeks ended June 28, 2026, together with our audited consolidated financial statements for our most recently completed fiscal year set forth under Item 8 of our Annual Report on Form 10-K for the year ended December 28, 2025. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified above and those discussed in Item 1A "Risk Factors" of our Annual Report on Form 10-K for the year ended December 28, 2025 and other filings under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

Our fiscal year end is the Sunday closest to December 31. Our fiscal year 2025 ended December 28, 2025 and was a fifty-two-week fiscal year. Our fiscal year 2026 will end on January 3, 2027 and will be a fifty-three-week fiscal year. Our fiscal quarters are comprised of thirteen weeks each, except for fifty-three-week fiscal years for which the fourth quarter is comprised of fourteen weeks, and end on the thirteenth Sunday of each quarter (or the fourteenth Sunday of the fourth quarter in fifty-three-week fiscal years).

Overview

We were founded in 1921 in Hanover, Pennsylvania and benefit from over 100 years of brand awareness and heritage in the salty snack industry. We are a leading United States manufacturer of branded salty snacks, producing a broad offering of salty snacks, including potato chips, tortilla chips, pretzels, cheese snacks, pork skins, pub/party mixes and other snacks. Our iconic portfolio of authentic, craft and “better-for-you” ("BFY") brands includes Utz®, On The Border®, Zapp’s®, Boulder Canyon®, Golden Flake®, Hawaiian® Brand and Miguelitos®, among others, and enjoys strong household penetration in the United States, where our products can be found in approximately 50% of U.S. households as of June 28, 2026. As of June 28, 2026, we operate eight primary manufacturing facilities across the United States with a broad range of capabilities. As part of Utz's ongoing supply chain transformation, the Company made the strategic decision to consolidate its manufacturing footprint from eight primary manufacturing facilities to seven, with the planned closure of its Grand Rapids, Michigan manufacturing facility. Our products are distributed nationally to grocery, mass merchant, club, convenience, drug and other retailers through direct shipments, distributors and approximately 2,500 direct-store delivery ("DSD") routes. We have historically expanded our geographic reach and product portfolio organically and through acquisitions. Based on 2025 retail sales, we are the second-largest producer of branded salty snacks in our collective core geographies of Alabama, Connecticut, Delaware, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Virginia, Vermont, West Virginia, and Washington (the “Core Geographies”), where we have acquired strong regional brands and distribution capabilities in recent years.

Key Developments and Trends

Our management team monitors a number of developments and trends that could impact our revenue and profitability objectives.

Growth Strategy - We have a long-term growth strategy focusing on various initiatives and have experienced share gains in our geographies in the United States other than our Core Geographies (the "Expansion Geographies"). Our portfolio strategy is focused on accelerating investments in marketing and innovation to drive top-line growth and achieve share gains in the attractive salty snack category. We plan to further penetrate the Expansion Geographies and untapped channels and customers by further expanding our Branded Salty Snacks, comprised of our Power Four Brands, consisting of our flagship Utz® brand, On the Border®, Zapp's®, and Boulder Canyon®, along with our other brands including Golden Flake®, TORTIYAHS®, Miguelitos®, Hawaiian®, Bachman®, Tim's Cascade®, Dirty Potato Chips®, TGI Fridays®, and Vitner's®, in Expansion Geographies, as well as maintaining our share in our Core Geographies. Our Core Geographies retail volumes and retail sales were down 6.5% and down 2.2%, respectively, for the thirteen weeks ended June 28, 2026 versus the comparable prior year period.

Long-Term Demographics, Consumer Trends, and Demand – We participate in the $42 billion U.S. salty snack category, within the broader approximately $154 billion market for U.S. snack foods as of June 28, 2026, based on Circana data. In the last few years snacking occasions have held relatively stable as consumers continue to seek out convenient, delicious snacks for both on-the-go and at-home lifestyles. A 2026 study from Circana cites that 55% of consumers snack three or more times a day, up 9 points versus 2021. While the category has seen volatility from the impact of pricing actions implemented throughout the industry, we believe the salty snacks category will continue to benefit over the long term from favorable dynamics including low private label penetration as well as category leaders competing primarily in marketing and innovation. We expect these consumer trends to continue to drive consistent retail sales for salty snacks in the long term.

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For the thirteen weeks ended June 28, 2026, U.S. retail sales for salty snacks based on Circana data increased by 0.8% versus the comparable prior year period while Utz's retail sales increased 0.3%.

Competition – The salty snack industry is highly competitive and includes many diverse participants. Our products primarily compete with other salty snacks but also compete more broadly for certain eating occasions with other snack foods. We believe that the principal competitive factors in the salty snack industry include taste, convenience, product variety, product quality, price, nutrition, consumer brand awareness, media and promotional activities, in-store merchandising execution, customer service, cost-efficient distribution and access to retailer shelf space. We believe we compete effectively with respect to each of these factors. We also source nearly all of our inputs domestically within the United States, and therefore, we may be less impacted by international pricing volatility and tariffs (or associated refund initiatives) as compared to other multi-national salty snack food companies. Additionally, since 2024, certain competitors have implemented more aggressive promotional strategies from time to time, which has caused us to respond with our own promotional changes. We expect the pricing and promotional environment to remain dynamic in the near-term. Such promotions have impacted our sales and, in response, we have increased our promotional activities. We expect these pricing and promotional activity dynamics to continue in the near-term.

Operating Costs – Our operating costs include raw materials, labor, manufacturing overhead and selling, general, and administrative expenses. We manage these expenses through annual cost saving and productivity initiatives, sourcing and hedging programs, pricing actions, refinancing and tax optimization. Additionally, we maintain ongoing efforts to expand our profitability, including implementing significant reductions to our operating cost structure in both supply chain and overhead costs.

Financing Costs and Exposure to Interest Rate Changes – As of June 28, 2026, we had $685.1 million in variable rate indebtedness, down from $687.5 million as of December 28, 2025. As of June 28, 2026, our variable rate indebtedness was benchmarked to the Term SOFR Screen Rate (“SOFR”). In June 2026, the Company terminated its previously existing swap agreement associated with the Term Loan B and received cash proceeds of $8.4 million. The proceeds were recorded in other comprehensive income (loss) and will be amortized into earnings over the remaining term of the swap. In addition, on the same date, the Company entered into a new interest rate swap agreement with a notional amount of $425.0 million. The agreement is scheduled to mature on December 31, 2029. During the thirteen weeks ended June 28, 2026, in connection with the paydown of the Real Estate Term Loan related to the sale of a property discussed in Note 4. Property, Plant and Equipment, Net, and the estimated future paydowns anticipated upon the sale of assets held for sale, the Company determined that the forecasted interest payments associated with $8.7 million of the notional amount of its Real Estate Term Loan interest rate swap were no longer probable of occurring. Accordingly, effective June 15, 2026, the Company de-designated that $8.7 million portion of the hedging relationship while continuing to apply cash flow hedge accounting to the remaining $34.0 million notional amount, which remains designated as a cash flow hedge. The de-designated $8.7 million notional amount is carried at fair value, with subsequent mark-to-market adjustments recognized immediately in earnings.

As of June 28, 2026, we have existing interest rate swaps totaling $500.8 million of debt. Our interest rate hedge strategy has limited some of our exposure to changes in interest rates. We regularly evaluate our variable and fixed-rate debt. As of June 28, 2026, our interest rate swaps were carried as a net liability on our balance sheet totaling $2.1 million. We continue to use low-cost, short- and long-term debt to finance our ongoing working capital, capital expenditures and other investments and dividends. Our weighted average interest rate for the twenty-six weeks ended June 28, 2026 was 6.4%, up from 4.8% during the twenty-six weeks ended June 29, 2025. We have used interest rate swaps to help manage some of our exposure to interest rate changes, which can drive cash flow variability related to our debt. Refer to Note 9. Term Debt, Revolving Credit Facility, and Other Notes Payable and Note 10. Derivative Financial Instruments, Purchase Commitments and Fair Value to our Unaudited Consolidated Financial Statements for additional information on debt and derivative activity. The Company has experienced the effect of increased interest rates on the portion of its debt that is not hedged and a further increase in interest rates could negatively impact our net income.

Other Business Trends – The ongoing conflict in Iran and geopolitical tensions in the region could lead to significant disruption of global energy supplies and increases in global energy prices, adversely affect global supply chains, heighten inflationary pressures on our input costs and supply chain, and adversely affect consumer spending patterns. Although we have no operations in the Middle East and nearly all our input costs are sourced domestically, we are continuing to evaluate the evolving macroeconomic environment. However, at this time, we do not expect these factors to result in a material negative effect on our business, financial condition and results of operations in 2026.

Product Recall – In May 2026, the Company issued a voluntary recall in the United States of certain limited varieties of Zapp’s® and Dirty® potato chips. This voluntary recall follows notification that a seasoning containing dry milk powder, sourced from California Dairies, Inc. and supplied by a third-party supplier, may contain the presence of Salmonella. The affected seasoning batches tested negative for Salmonella prior to use; however, out of an abundance of caution, the Company recalled limited varieties of Zapp’s® and Dirty® b

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Audited Financial Statements and related notes included in Item 8 of this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in Item 1A “Risk Factors” of this Annual Report on Form 10-K.

Our fiscal year end is the Sunday closest to December 31. Our fiscal year 2023 ended December 31, 2023 and was a fifty-two-week fiscal year, our fiscal year 2024 ended December 29, 2024 and was a fifty-two-week fiscal year and our fiscal year 2025 ended December 28, 2025 and was a fifty-two-week fiscal year. Our fiscal quarters are comprised of thirteen weeks each, except for fifty-three-week fiscal periods for which the fourth quarter is comprised of fourteen weeks, and end on the thirteenth Sunday of each quarter (fourteenth Sunday of the fourth quarter, when applicable).

Overview

We were founded in 1921 in Hanover, Pennsylvania and benefit from over 100 years of brand awareness and heritage in the salty snack industry. We are a leading United States manufacturer of branded salty snacks, producing a broad offering of salty snacks, including potato chips, tortilla chips, pretzels, cheese snacks, pork skins, pub/party mixes and other snacks. Our iconic portfolio of authentic, craft and “better-for-you” ("BFY") brands includes Utz®, On The Border®, Zapp’s®, Boulder Canyon®, Golden Flake®, Hawaiian® Brand and Miguelito's!®, among others, and enjoys strong household penetration in the United States, where our products can be found in approximately 50% of U.S. households as of December 28, 2025. As of December 28, 2025, we operate eight primary manufacturing facilities across the United States with a broad range of capabilities. As part of Utz's ongoing supply chain transformation, the Company made the strategic decision to consolidate its manufacturing footprint from eight primary manufacturing facilities to seven, with the planned closure of its Grand Rapids, Michigan manufacturing facility. Our products are distributed nationally to grocery, mass merchant, club, convenience, drug and other retailers through direct shipments, distributors and approximately 2,500 direct-store delivery ("DSD") routes. We have historically expanded our geographic reach and product portfolio organically and through acquisitions. Based on 2025 retail sales, we are the second-largest producer of branded salty snacks in our collective core geographies of Alabama, Connecticut, Delaware, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, Washington, and West Virginia (our “Core Geographies”), where we have acquired strong regional brands and distribution capabilities in recent years.

Key Developments and Trends

Our management team monitors a number of developments and trends that could impact our revenue and profitability objectives.

Growth Strategy - We have a long-term growth strategy focusing on various initiatives and have experienced share gains in our geographies in the United States other than our Core Geographies (the "Expansion Geographies") over the past ten consecutive quarters with retail volumes and retail sales being up by 6.7% and 7.8%, respectively, for the fiscal year ended December 28, 2025 versus the comparable prior year period. Our portfolio strategy is focused on accelerating investments in marketing and innovation to drive top-line growth and achieve share gains in the attractive salty snack category. We plan to further penetrate the Expansion Geographies and untapped channels and customers by further expanding our Branded Salty Snacks, comprised of our Power Four Brands, consisting of our flagship Utz® brand, On the Border®, Zapp's®, and Boulder Canyon®, along with our other brands including Golden Flake®, Miguelito's!®, Hawaiian®, Bachman®, Tim's Cascade®, Dirty Potato Chips®, TGI Fridays®, and Vitner's®, in Expansion Geographies, as well as maintaining our share in our Core Geographies. Our Core Geographies retail volumes and retail sales were up 0.6% and down 0.7%, respectively, for the fiscal year ended December 28, 2025 versus the comparable prior year period.

Long-Term Demographics, Consumer Trends, and Demand – We participate in the $42 billion U.S. salty snack category, within the broader approximately $148 billion market for U.S. snack foods as of December 28, 2025, based on Circana data. In the last few years snacking occasions have held relatively stable as consumers continue to seek out convenient, delicious snacks for both on-the-go and at-home lifestyles. A 2025 study from Circana cites that 48.8% of consumers snack three or more times a day, up 2.7 points versus 2024. While the category has seen recent softness due to the impact of pricing made throughout the industry, we believe the salty snacks category will continue to benefit from favorable dynamics including low private label penetration as well as category leaders competing primarily in marketing and innovation. We expect these consumer trends to continue to drive consistent retail sales for salty snacks in the long term.

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For the fiscal year ended December 28, 2025 , U.S. retail sales for salty snacks based on Circana data decreased by 0.5% versus the comparable prior year period while Utz's retail sales increased 2.9%.

Competition – The salty snack industry is highly competitive and includes many diverse participants. Our products primarily compete with other salty snacks but also compete more broadly for certain eating occasions with other snack foods. We believe that the principal competitive factors in the salty snack industry include taste, convenience, product variety, product quality, price, nutrition, consumer brand awareness, media and promotional activities, in-store merchandising execution, customer service, cost-efficient distribution and access to retailer shelf space. We believe we compete effectively with respect to each of these factors. We also source nearly all of our inputs domestically within the United States, and therefore, we may be less impacted by international pricing volatility and tariffs as compared to other multi-national salty snack food companies. Additionally, beginning in 2024, certain competitors began to take certain discrete pricing actions in specific channels, resulting in an environment that has become far more promotional. Such promotions have impacted our sales and, in response, we have increased our promotional activities. We expect these pricing and promotional activity dynamics to continue in the near-term.

Operating Costs – Our operating costs include raw materials, labor, manufacturing overhead and selling, general and administrative expenses. We manage these expenses through annual cost saving and productivity initiatives, sourcing and hedging programs, pricing actions, refinancing and tax optimization. Additionally, we maintain ongoing efforts led to expand our profitability, including implementing significant reductions to our operating cost structure in both supply chain and overhead costs.

Financing Costs and Exposure to Interest Rate Changes – As of December 28, 2025, we had $687.5 million in variable rate indebtedness, down from $690.1 million as of December 29, 2024. As of December 29, 2024, our variable rate indebtedness was benchmarked to the Term SOFR Screen Rate (“SOFR”). As of December 28, 2025, we have existing interest rate swaps totaling $577.6 million of debt. Our interest rate hedge strategy has limited some of our exposure to changes in interest rates. We regularly evaluate our variable and fixed-rate debt. In September 2025, the Company terminated the previously existing swap agreement associated with the Term Loan B (as defined below), resulting in the receipt of cash proceeds totaling $12.1 million. In addition, on the same date, the Company entered into a new interest rate swap agreement with a notional amount of $500.0 million. This agreement is scheduled to mature on December 31, 2028. Under the terms of this agreement, the Company is obligated to make periodic payments at the fixed interest rate of 3.23%, while receiving periodic payments based on the one-month SOFR from the counterparty. As of December 28, 2025, our interest rate swaps were carried as a net liability on our balance sheet totaling $0.5 million. We continue to use low-cost, short- and long-term debt to finance our ongoing working capital, capital expenditures and other investments and dividends. Our weighted average interest rate for the fiscal year ended December 28, 2025 was 5.6%, down from 5.9% during the fiscal year ended December 29, 2024. On January 29, 2025, the Company amended its Term Loan B to refinance in full all of the $630.3 million outstanding term loans thereunder, reduce the interest rate from SOFR plus the applicable rate of 2.75% to SOFR plus the applicable rate of 2.50% and extend the maturity date from January 20, 2028 to January 29, 2032, as well as to make certain other changes. We have used interest rate swaps to help manage some of our exposure to interest rate changes, which can drive cash flow variability related to our debt. Refer to Note 10. Long-Term Debt and Note 11. Derivative Financial Instruments and Purchase Commitments to our Audited Financial Statements for additional information on debt and derivative activity. The Company has experienced the effect of increased interest rates on the portion of its debt that is not hedged and a further increase in interest rates could negatively impact our net income.

One Big Beautiful Bill Act - On July 4, 2025, the President of the United States signed into law budget reconciliation bill H.R. 1, referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA, among other regulatory updates, contains numerous federal tax provisions including modifications to the capitalization of research and development expenses, limitations on deductions for interest expense, and accelerated fixed asset depreciation. The Company considered the effects of the OBBBA on its consolidated financial statements, which resulted in a charge to deferred taxes and an increase to the valuation allowance. A reduction to the TRA liability and a corresponding benefit was recorded due to favorable provisions of OBBBA on the taxable results of the Company and anticipated timing of future utilization of TRA eligible attributes.

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Recent Developments and Significant Items Affecting Comparability

Acquisitions and Dispositions

On February 5, 2024, the Company sold certain assets and brands to affiliates of Our Home™, an operating company of Better-for-You brands (“Our Home”). Under the agreement, affiliates of Our Home purchased the Good Health and R.W. Garcia brands, and the Lincolnton, NC and Lititz, PA manufacturing facilities and certain related assets, and assumed the Company’s Las Vegas, NV facility lease and manufacturing operations (the "Good Health and R.W. Garcia Sale"), for $167.5 million, subject to customary adjustments. See Note 2. Divestitures to our Audited Consolidated Financial Statements. On April 22, 2024, the Company also sold to Our Home its Berlin, PA and Fitchburg, MA manufacturing facilities and certain related assets, including certain inventory (the “Manufacturing Facilities Sale”).

The Company and Our Home were operating under transition services agreements related to each of the Good Health and R.W. Garcia Sale and the Manufacturing Facilities Sale, which expired during the first

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