Item 2.05. Costs Associated with Exit or Disposal Activities.
On April 24, 2023 Utz Brands, Inc. (the “Company”) made the decision to permanently cease operations at the Company’s manufacturing facility located in Birmingham, Alabama (the “Facility”) effective on or around July 3, 2023 (the “Manufacturing Closure”). This decision reflects the Company’s dedication to network optimization and cost containment. The Company communicated this decision to affected employees on April 26, 2023. Golden Flake® and other products currently being produced at the Facility will continue to be produced at other Utz manufacturing facilities following the ceasing of manufacturing operations at the Facility and the Company expects no distribution or availability issues due to the Manufacturing Closure.
The Facility employs approximately 275 individuals. While manufacturing at the Facility is being permanently ceased, approximately 100 employees will continue to be employed by the Company and continue working in Birmingham in the Company’s distribution center.
The Company currently expects to incur pre-tax cash charges of approximately $3.0 million to $5.0 million in connection with the Manufacturing Closure in fiscal year 2023, which is expected to include $1.5 million in severance costs and $1.5 million to $3.5 million in closing and transfer of production costs. The Company also expects to incur non-cash charges of approximately $8.5 million to $11.0 million in asset impairments. The estimates of the charges and expenditures that the Company expects to incur in connection, and the timing thereof, are subject to a number of assumptions, including local law requirements, and actual amounts may differ materially from estimates. In addition, the Company may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with this decision to permanently cease manufacturing at the Facility.
Certain matters discussed in this Form 8-K are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including the expected timing of the Manufacturing Closure and the amount and timing of the expected charges associated with the Manufacturing Closure, including any non-cash impairment charges associated with the Manufacturing Closure. These forward-looking statements are sometimes identified from the use of forward-looking words such as “believe,” “should,” “could,” “potential,” “continue,” “expect,” “project,” “estimate,” “predict,” “anticipate,” “aim,” “intend,” “plan,” “forecast,” “target,” “is likely,” “will,” “can,” “may” or “would” or the negative of these terms or similar expressions elsewhere in this Form 8-K. All forward-looking statements are subject to a number of important factors, risks, uncertainties and assumptions that could cause actual results to differ materially from those described in any forward-looking statements. These factors and risks include, but are not limited to, unanticipated developments that impact the expected timing and costs of the Manufacturing Closure and other financial, operational and legal risks and uncertainties detailed from time to time in the Company’s cautionary statements contained in its filings with the Securities and Exchange Commission (the “SEC”). These forward-looking statements represent the Company’s judgment as of the date of this Form 8-K. For additional information on these and other factors that could cause the Company’s actual results to materially differ from those set forth herein, please see the Company’s filings with the SEC, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update any forward looking statement, whether as a result of new information, future events or otherwise, except as required by law.