Utz Brands (UTZ) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We operate in the highly competitive and increasingly consolidated snack food industry. If we are unable to compete effectively, it may reduce our ability to sell our products to our customers or consumers
2. 02Our reliance on key customers and consolidation within the retail industry, in tandem with a rise in hard discounters, may limit our ability to obtain favorable contractual terms and protections with customers and maintain our profitability
3. 03Demand for our products may be adversely affected by changes in consumer preferences and tastes or if we are unable to innovate or market our products effectively, which could reduce our revenues
4. 04Consumers’ loyalty to our brands may change due to factors beyond our control, which could have a material adverse effect on our business and operating results
5. 05Our reputation or brand image might be impacted as a result of issues or concerns relating to the quality and safety of our products, ingredients or packaging, processing techniques, which in turn could negatively impact our operating results
6. 06If our products become adulterated or are mislabeled, we might need to recall those items, and we may experience product liability claims and related losses, as well as damage to our reputation
7. 07Changes in retail distribution arrangements can result in the loss of retail shelf space and disrupt sales of food products, causing our sales to fall
8. 08Our DTW delivery network system relies on a significant number of brokers, wholesalers and logistics companies. Such reliance could affect our ability to effectively and profitably distribute and market products, maintain existing markets and expand business into other geographic markets
9. 09Our DSD network system and regional third-party distributor network relies on a significant number of IOs and third-party distributors, and such reliance could affect our ability to effectively and profitably distribute and market products, maintain existing markets and expand business into other geographic markets
10. 10The evolution of e-commerce retailers and sales channels may adversely affect our business, financial condition or results of operations
11. 11Disruption to our manufacturing operations, supply chain or distribution channels could impair our ability to produce or deliver finished products and negatively impact our operating results
12. 12Our results of operations and profitability may continue to be adversely affected by inflation, including from rising labor costs and we may not be able to effectively offset such inflation and volatility
13. 13Our business, financial condition or results of operations may be adversely affected by shortages of raw materials, energy, water and other supplies
14. 14Potential liabilities and costs from litigation, claims, legal or regulatory proceedings, inquiries or investigations can have an adverse impact on our business, financial condition or results of operations
15. 15We may be unable to successfully identify and execute acquisitions or dispositions or to successfully integrate acquisitions or carve out dispositions
16. 16The geographic concentration of our markets may adversely impact us if we are unable to effectively diversify the markets in which we participate
17. 17We may not be able to attract and retain the highly skilled people we need to support our business
18. 18Impairment in the carrying value of goodwill or other intangible assets could have an adverse impact on our financial results
19. 19Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products and brands. However, if consumers do not identify with our trademarks or other intellectual property rights, our brand may be significantly and adversely impaired
20. 20Disruptions, failures or security breaches of our information technology infrastructure could have a negative impact on our operations and subject us to significant losses
21. 21Climate change or legal, regulatory or market measures to address climate change may negatively affect our business and operations or damage our reputation
22. 22Liabilities, claims or new laws or regulations with respect to environmental matters could have a significant negative impact on our business
23. 23We are subject to increasing focus on ESG issues, including those related to climate change, and any perceived failure by us to meet ESG initiatives may negatively impact our business
24. 24Our debt instruments contain covenants that impose restrictions on our operations that may adversely affect our ability to operate our business if we fail to meet those covenants or otherwise suffer a default thereunder
25. 25Changes in interest rates may adversely affect our earnings and/or cash flows
26. 26Disruptions in the worldwide financial markets may materially and adversely affect our ability to obtain new credit
27. 27The imposition or proposed imposition of new or increased income or product taxes can adversely affect our business, financial condition or results of operations
28. 28Pandemics, epidemics or other disease outbreaks may change or disrupt consumption patterns, supply chains, and production processes, which could materially affect our operations and results of operations
29. 29We are subject to risks from changes to the trade policies and tariff and import/export regulations by the U.S. and/or other foreign governments

Risks Related to the Ownership of our Securities

1. 30Resales of shares of our Class A Common Stock could cause the market price of our Class A Common Stock to drop significantly, even if our business is doing well
2. 31We are a holding company and our only material asset is our interest in UBH, and we are accordingly dependent upon distributions made by our subsidiaries to pay taxes, make payments under the TRA and pay dividends
3. 32In certain cases, payments under the TRA may exceed the actual tax benefits we realize or be accelerated
4. 33Delaware law, the Certificate of Incorporation, Bylaws, and certain other agreements contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
5. 34These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Company Board or management
6. 35Certain of our significant stockholders and Utz Brands Holdings members whose interests may differ from those of our other stockholders have the ability to significantly influence our business and management
7. 36Our private placement warrants may have an adverse effect on the market price of our Class A Common Stock, and the valuation of our private placement warrants could increase the volatility in our net income (loss) in our consolidated statements of earnings (loss)