Strengthens Balance Sheet Through Inventory
Reduction and $12.5 Million Debt Paydown
Expands Princess Polly Wholesale Partnership
with PacSun
a.k.a. Brands Holding Corp. (NYSE: AKA), a brand
accelerator of next generation fashion brands, today announced
financial results for the second quarter ended June 30, 2023.
Results for the Second Quarter
- Net sales decreased 14.2% to $136.0 million, compared to
$158.5 million in the second quarter of 2022; down 11% in Constant
Currency1.
- In the U.S., net sales decreased 2.8% compared to the
second quarter of 2022 and grew 12.3% on a two-year stack.
- Net loss was $(5.0) million or $(0.04) per share, and
(3.7%) of net sales in the second quarter of 2023, compared to net
loss of $(4.2) million or $(0.03) per share, and (2.7%) of net
sales in the second quarter of 2022.
- Adjusted EBITDA2 was $5.6 million, or 4.1% of net sales,
compared to $5.9 million, or 3.7% of net sales in the second
quarter of 2022.
“We continue to execute against our strategic initiatives and
have made significant improvements in our operating efficiencies,
which enabled us to deliver on our adjusted EBITDA and cash flow
expectations for the second quarter,” said Ciaran Long, Interim
Chief Executive Officer and Chief Financial Officer. “I’m also
pleased that we continued to strengthen our balance sheet by way of
strategically reducing inventories, which were down 16% since the
end of fiscal 2022, and we paid down $12.5 million of debt in the
quarter. “The U.S. performance was in line with our expectations,
registering $80 million of net sales in the second quarter and
delivering 12% growth on a two-year basis. Despite the inline
performance in the U.S., our overall net sales were dampened by
continued macro pressures and consumer challenges in
Australia.”
“Importantly, we are increasing our total addressable market,
particularly in the U.S., by introducing our brands to new
customers through direct to consumer and omnichannel initiatives.
We’re excited to announce that Princess Polly is expanding its
partnership with PacSun to 100 stores and will open its first store
next month. Looking ahead, we remain laser focused on chasing
consumer demand, driving greater operational efficiencies and
strengthening the balance sheet by paying down additional debt
through the remainder of the year. We remain confident in the
future of our brands and our business model and are committed to
driving shareholder value,” concluded Long.
Recent Business
Highlights
- Princess Polly is expanding its wholesale relationship with
PacSun to 100 stores and remains on-track to open its first store
in Los Angeles next month.
- Culture Kings continues to disrupt the U.S. streetwear industry
with the flagship store in Las Vegas outperforming expectations and
recent partnerships with Rolling Loud and the UFC.
- Petal & Pup continues to exceed expectations on Target
marketplace and is exploring additional omnichannel tests.
- mnml remains a top 10 brand at Culture Kings and continues to
leverage Culture Kings for new customer acquisition and marketing
activations.
Second Quarter Financial
Details
- Net sales decreased 14.2% to $136.0 million, compared to
$158.5 million in the second quarter of 2022. The decrease was
driven by a decline in the number of orders and average order value
during the quarter, primarily driven by adverse macroeconomic
conditions in Australia. On a Constant Currency1 basis, net sales
decreased 11%.
- Gross margin was 56.9%, compared to 55.2% in the second
quarter of 2022. The improvement was primarily driven by improved
full price sell-through, particularly in the U.S., and lower
freight expenses.
- Selling expenses were $35.9 million, compared to $45.3
million in the second quarter of 2022. Selling expenses were 26.4%
of net sales compared to 28.6% of net sales in the second quarter
of 2022. The decrease was primarily due to operational efficiencies
in distribution, fulfillment and outbound shipping.
- Marketing expenses were $18.4 million, compared to $19.1
million in the second quarter of 2022. Marketing expenses were
13.5% of net sales compared to 12.0% of net sales in the second
quarter of 2022. The increase was primarily driven by lower sales
volume compared to the prior year.
- General and administrative (“G&A”) expenses were
$24.2 million, compared to $25.7 million in the second quarter of
2022. G&A expenses were 17.8% of net sales compared to 16.2% of
net sales in the second quarter of 2022. The increase in G&A as
a percent of net sales during the quarter was primarily due lower
sales volume compared to the prior year.
- Adjusted EBITDA2 was $5.6 million, or 4.1% of net sales,
compared to $5.9 million, or 3.7% of net sales in the second
quarter of 2022.
Balance Sheet and Cash
Flow
- Cash and cash equivalents at the end of the second
quarter totaled $25.9 million, compared to $46.3 million at the end
of fiscal year 2022.
- Inventory at the end of the second quarter totaled
$106.7 million, compared to $126.5 million at the end of fiscal
year 2022, or compared to $143.9 million at the end of the second
quarter of 2022.
- Debt at the end of the second quarter totaled $120.0
million, compared to $143.6 million at the end of fiscal year
2022.
- Cash flow provided by operations for the six months
ended June 30, 2023 was $7.3 million, compared to cash flow used in
operations of $23.6 million for the six months ended June 30,
2022.
Outlook
For the third quarter of 2023, the Company expects:
- Net sales between $138 million and $143 million
- Adjusted EBITDA3 between $6 million and $8 million
- Weighted average diluted share count of 130 million
For the full year 2023, the Company is adjusting its outlook
and now expects:
- Net sales between $555 million and $565 million
- Adjusted EBITDA3 between $21 million and $25 million
- Weighted average diluted share count of 130 million
The above outlook is based on several assumptions, including but
not limited to, foreign exchange rates remaining at the current
levels and continued macroeconomic pressures, specifically in the
Australia Region. See “Forward-Looking Statements” for additional
information.
Conference Call
A conference call to discuss the Company’s second quarter
results is scheduled for August 9, 2023, at 4:30 p.m. ET. Those who
wish to participate in the call may do so by dialing (877) 858-5495
or (201) 689-8853 for international callers. The conference call
will also be webcast live at https://ir.aka-brands.com in the
Events and Presentations section. A recording will be available
shortly after the conclusion of the call. To access the replay,
please dial (877) 660-6853 or (201) 612-7415 for international
callers, conference ID 13739113. An archive of the webcast will be
available on a.k.a. Brands’ investor relations website.
Use of Non-GAAP Financial Measures and Other Operating
Metrics
In addition to results determined in accordance with accounting
principles generally accepted in the United States of America
(GAAP), management utilizes certain non-GAAP financial measures
such as Adjusted EBITDA, Adjusted EBITDA margin, net income (loss),
as adjusted, net income (loss) per share, as adjusted and pro forma
net sales for purposes of evaluating ongoing operations and for
internal planning and forecasting purposes. We believe that these
non-GAAP financial measures, when reviewed collectively with our
GAAP financial information, provide useful supplemental information
to investors in assessing our operating performance. The non-GAAP
financial measures should not be considered in isolation or as a
substitute for the GAAP financial measures. The non-GAAP financial
measures used by the Company may be different from similarly-titled
non-GAAP financial measures used by other companies. See additional
information at the end of this release regarding non-GAAP financial
measures.
About a.k.a. Brands
a.k.a. Brands is a brand accelerator of next generation fashion
brands. Each brand in the a.k.a. portfolio targets a distinct Gen Z
and millennial audience, creates authentic and inspiring social
content and offers quality exclusive merchandise. a.k.a. Brands
leverages its next-generation retail platform to help each brand
accelerate its growth, scale in new markets and enhance its
profitability. Current brands in the a.k.a. Brands portfolio
include Princess Polly, Culture Kings, mnml and Petal &
Pup.
Forward-Looking Statements
Certain statements made in this release are “forward-looking
statements” within the meaning of the “safe harbor” provisions of
the United States Private Securities Litigation Reform Act of 1995.
When used in this press release, the words “estimates,”
“projected,” “expects,” “anticipates,” “forecasts,” “plans,”
“intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,”
“propose” and variations of these words or similar expressions (or
the negative versions of such words or expressions) are intended to
identify forward-looking statements. These forward-looking
statements include statements related to our financial and
operational results for the second quarter and long-term
expectations, as well as our brands’ omnichannel expansion
initiatives.
These forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside the Company’s control, that
could cause actual results or outcomes to differ materially from
those discussed in the forward-looking statements.
Important factors, among others, that may affect actual results
or outcomes include the effects of economic downturns and unstable
market conditions; our ability to regain compliance with the NYSE
minimum share price requirement within the applicable cure period;
our ability in the future to comply with the NYSE listing standards
and maintain the listing of our common stock on the NYSE; risks
related to doing business in China; our ability to anticipate
rapidly-changing consumer preferences in the apparel, footwear and
accessories industries; our ability to acquire new customers,
retain existing customers or maintain average order value levels;
the effectiveness of our marketing and our level of customer
traffic; merchandise return rates; our ability to manage our
inventory effectively; our success in identifying brands to
acquire, integrate and manage on our platform; our ability to
expand into new markets; the global nature of our business;
interruptions in or increased costs of shipping and distribution,
which could affect our ability to deliver our products to the
market; our use of social media platforms and influencer
sponsorship initiatives, which could adversely affect our
reputation or subject us to fines or other penalties; fluctuating
operating results; the inherent challenges in measuring certain of
our key operating metrics, and the risk that real or perceived
inaccuracies in such metrics may harm our reputation and negatively
affect our business; the potential for tax liabilities that may
increase the costs to our consumers; our ability to attract and
retain highly qualified personnel, including key members of our
leadership team; fluctuations in wage rates and the price,
availability and quality of raw materials and finished goods, which
could increase costs; foreign currency fluctuations; and other
risks and uncertainties set forth in the sections entitled “Risk
Factors,” “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Forward-Looking
Statements” in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2022, quarterly reports on Form 10-Q and
any other periodic reports that the Company may file with the
Securities and Exchange Commission (the “SEC”). a.k.a. Brands does
not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
a.k.a. BRANDS HOLDING
CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(in thousands, except share
and per share data)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net sales
$
136,028
$
158,471
$
256,513
$
306,790
Cost of sales
58,672
71,024
110,657
135,147
Gross profit
77,356
87,447
145,856
171,643
Operating expenses:
Selling
35,932
45,254
70,338
85,618
Marketing
18,354
19,064
33,131
34,769
General and administrative
24,191
25,703
50,059
50,481
Total operating expenses
78,477
90,021
153,528
170,868
Income (loss) from operations
(1,121
)
(2,574
)
(7,672
)
775
Other expense, net:
Interest expense
(2,841
)
(1,393
)
(5,692
)
(2,652
)
Other expense
(750
)
(1,200
)
(1,784
)
(1,112
)
Total other expense, net
(3,591
)
(2,593
)
(7,476
)
(3,764
)
Loss before income taxes
(4,712
)
(5,167
)
(15,148
)
(2,989
)
Benefit from (provision for) income
tax
(328
)
955
555
302
Net loss
$
(5,040
)
$
(4,212
)
$
(14,593
)
$
(2,687
)
Net loss per share:
Basic and diluted
$
(0.04
)
$
(0.03
)
$
(0.11
)
$
(0.02
)
Weighted average shares outstanding:
Basic and diluted
129,138,138
128,657,271
129,089,647
128,652,580
a.k.a. BRANDS HOLDING
CORP.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
(unaudited)
June 30, 2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
25,876
$
46,319
Restricted cash
2,001
2,054
Accounts receivable
2,604
3,231
Inventory, net
106,695
126,533
Prepaid income taxes
7,097
6,089
Prepaid expenses and other current
assets
16,748
13,378
Total current assets
161,021
197,604
Property and equipment, net
27,862
28,958
Operating lease right-of-use assets
39,785
37,317
Intangible assets, net
69,641
76,105
Goodwill
164,140
167,731
Deferred tax assets
1,042
1,070
Other assets
705
853
Total assets
$
464,196
$
509,638
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
20,718
$
20,903
Accrued liabilities
29,715
39,806
Sales returns reserve
6,107
3,968
Deferred revenue
11,208
11,421
Operating lease liabilities, current
6,926
6,643
Current portion of long-term debt
7,000
5,600
Total current liabilities
81,674
88,341
Long-term debt
112,974
138,049
Operating lease liabilities
37,624
34,404
Other long-term liabilities
1,570
1,483
Deferred income taxes
241
284
Total liabilities
234,083
262,561
Stockholders’ equity:
Preferred stock
—
—
Common stock
129
129
Additional paid-in capital
464,144
460,660
Accumulated other comprehensive loss
(51,040
)
(45,185
)
Accumulated deficit
(183,120
)
(168,527
)
Total stockholders’ equity
230,113
247,077
Total liabilities and stockholders’
equity
$
464,196
$
509,638
a.k.a. BRANDS HOLDING
CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended June
30,
2023
2022
Cash flows from operating
activities:
Net loss
$
(14,593
)
$
(2,687
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation expense
4,230
2,728
Amortization expense
5,931
8,079
Amortization of inventory fair value
adjustment
—
707
Amortization of debt issuance costs
315
326
Lease incentives
1,186
—
Loss on disposal of businesses
1,533
—
Non-cash operating lease expense
3,760
3,109
Equity-based compensation
3,760
2,862
Deferred income taxes, net
3
(1,078
)
Changes in operating assets and
liabilities, net of effects of acquisitions:
Accounts receivable
896
(424
)
Inventory
15,511
(33,183
)
Prepaid expenses and other current
assets
(3,793
)
(67
)
Accounts payable
350
5,304
Income taxes payable
(1,179
)
(7,213
)
Accrued liabilities
(9,117
)
4,896
Returns reserve
2,214
(1,569
)
Deferred revenue
98
(3,434
)
Lease liabilities
(3,815
)
(1,943
)
Net cash provided by (used in) operating
activities
7,290
(23,587
)
Cash flows from investing
activities:
Acquisition of businesses, net of cash
acquired
—
(2,095
)
Purchase of intangible assets
(62
)
(64
)
Purchases of property and equipment
(3,618
)
(5,803
)
Net cash used in investing activities
(3,680
)
(7,962
)
Cash flows from financing
activities:
Payments of costs related to initial
public offering
—
(1,142
)
Proceeds from line of credit, net of
issuance costs
—
25,000
Repayment of line of credit
(21,100
)
—
Proceeds from issuance of debt, net of
issuance costs
—
(121
)
Repayment of debt
(2,800
)
(2,800
)
Taxes paid related to net share settlement
of equity awards
(66
)
(32
)
Proceeds from issuances under equity-based
compensation plans
90
—
Repurchase of shares
(299
)
—
Net cash provided by (used in) financing
activities
(24,175
)
20,905
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
69
401
Net decrease in cash, cash equivalents and
restricted cash
(20,496
)
(10,243
)
Cash, cash equivalents and restricted cash
at beginning of period
48,373
41,018
Cash, cash equivalents and restricted cash
at end of period
$
27,877
$
30,775
Reconciliation of cash, cash
equivalents and restricted cash:
Cash and cash equivalents
$
25,876
$
29,109
Restricted cash
2,001
1,666
Total cash, cash equivalents and
restricted cash
$
27,877
$
30,775
a.k.a. BRANDS HOLDING
CORP.
KEY FINANCIAL AND OPERATING
METRICS AND NON-GAAP MEASURES
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
(dollars in thousands)
2023
2022
2023
2022
Gross margin
57
%
55
%
57
%
56
%
Net loss
$
(5,040
)
$
(4,212
)
$
(14,593
)
$
(2,687
)
Net loss margin
(4
)%
(3
)%
(6
)%
(1
)%
Adjusted EBITDA2
$
5,568
$
5,891
$
7,754
$
16,543
Adjusted EBITDA margin2
4
%
4
%
3
%
5
%
Key Operational Metrics and Regional
Sales
Three Months Ended June
30,
Six Months Ended June
30,
(metrics in millions, except AOV; sales
in thousands)
2023
2022
% Change
2023
2022
% Change
Key Operational
Metrics
Active customers4
3.6
3.9
(7.7)%
3.6
3.9
(7.7)%
Average order value
$
82
$
85
(3.5)%
$
81
$
84
(3.6)%
Number of orders
1.7
1.9
(10.5)%
3.1
3.7
(16.2)%
Sales by
Region
U.S.
$
79,967
$
82,277
(2.8)%
$
152,593
$
159,945
(4.6)%
Australia/New Zealand
48,037
67,076
(28.4)%
89,483
129,600
(31.0)%
Rest of world
8,024
9,118
(12.0)%
14,437
17,245
(16.3)%
Total
$
136,028
$
158,471
(14.2)%
$
256,513
$
306,790
(16.4)%
Year-over-year growth
(14.2
)%
(16.4
)%
Year-over-year growth on a constant
currency basis1
(11.3
)%
(13.6
)%
Sales by Region -
Two-Year Stack
Three Months Ended June
30,
Six Months Ended June
30,
2023
2021
% Change
2023
2021
% Change
U.S.
$
79,967
$
71,205
12.3%
$
152,593
$
114,035
33.8%
Australia/New Zealand
48,037
69,736
(31.1)%
89,483
90,738
(1.4)%
Rest of world
8,024
8,286
(3.2)%
14,437
13,233
9.1%
Total
$
136,028
$
149,227
(8.8)%
$
256,513
$
218,006
17.7%
Active Customers
We view the number of active customers as a key indicator of our
growth, the value proposition and consumer awareness of our brand,
and their desire to purchase our products. In any particular
period, we determine our number of active customers by counting the
total number of unique customer accounts who have made at least one
purchase in the preceding 12-month period, measured from the last
date of such period.
Average Order Value
We define average order value (“AOV”) as net sales in a given
period divided by the total orders placed in that period. AOV may
fluctuate as we expand into new categories or geographies or as our
assortment changes.
a.k.a. BRANDS HOLDING CORP.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (in
thousands, except per share data) (unaudited)
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP
financial measures that management uses to assess our operating
performance. Because Adjusted EBITDA and Adjusted EBITDA margin
facilitate internal comparisons of our historical operating
performance on a more consistent basis, we use these measures for
business planning purposes.
We also believe this information will be useful for investors to
facilitate comparisons of our operating performance and better
identify trends in our business. We expect Adjusted EBITDA margin
to increase over the long-term as we continue to scale our business
and achieve greater leverage in our operating expenses.
We calculate Adjusted EBITDA as net income (loss) adjusted to
exclude: interest and other expense; provision for income taxes;
depreciation and amortization expense; equity-based compensation
expense; costs to establish or relocate distribution centers;
transaction costs; costs related to severance from headcount
reductions; goodwill and intangible asset impairment; sales tax
penalties; insured losses, net of any recoveries; and one-time or
non-recurring items, and Adjusted EBITDA margin as Adjusted EBITDA
as a percentage of net sales. Adjusted EBITDA and Adjusted EBITDA
margin are considered non-GAAP financial measures under the SEC’s
rules because they exclude certain amounts included in net income
(loss) and net income (loss) margin, the most directly comparable
financial measures calculated in accordance with GAAP.
A reconciliation of non-GAAP Adjusted EBITDA to net income
(loss) for the three and six months ended June 30, 2023 and 2022 is
as follows:
Three Months Ended June
30,
Six Months Ended June
30,
(dollars in thousands)
2023
2022
2023
2022
Net loss
$
(5,040
)
$
(4,212
)
$
(14,593
)
$
(2,687
)
Add (deduct):
Total other expense, net
3,591
2,593
7,476
3,764
Provision for (benefit from) income
tax
328
(955
)
(555
)
(302
)
Depreciation and amortization expense
4,720
5,590
10,161
10,807
Equity-based compensation expense
1,824
1,494
3,760
2,862
Inventory step-up amortization expense
—
—
—
707
Distribution center relocation costs
—
1,291
—
1,291
Transaction costs
—
90
—
101
Severance
417
—
682
—
Sales tax penalties
49
—
532
—
Insured (gains) losses
(321
)
—
291
—
Adjusted EBITDA
$
5,568
$
5,891
$
7,754
$
16,543
Net loss margin
(4
)%
(3
)%
(6
)%
(1
)%
Adjusted EBITDA margin
4
%
4
%
3
%
5
%
Net Income (Loss), As Adjusted and Net Income (Loss) Per
Share, As Adjusted
Net income (loss), as adjusted and net income (loss) per share,
as adjusted are considered non-GAAP financial measures under the
SEC’s rules because they exclude certain amounts included in net
income (loss) and net income (loss) per share calculated in
accordance with GAAP, the most directly comparable financial
measures calculated in accordance with GAAP. Management believes
that net income (loss), as adjusted and net income (loss) per
share, as adjusted are meaningful measures to share with investors
because they better enable comparison of the performance with that
of the comparable period. In addition, net income (loss), as
adjusted and net income (loss) per share, as adjusted afford
investors a view of what management considers a.k.a.’s core
earnings performance and the ability to make a more informed
assessment of such core earnings performance with that of the prior
year.
We have calculated net loss, as adjusted and net loss per share,
as adjusted for the six months ended June 30, 2023 by adjusting net
loss and net loss per share for the loss on disposal of the
Rebdolls reporting unit.
A reconciliation of non-GAAP net loss, as adjusted to net loss,
as well as the resulting calculation of net loss per share, as
adjusted for the six months ended June 30, 2023 are as follows:
Six Months Ended June 30,
2023
Net loss
$
(14,593
)
Adjustments:
Loss on disposal of the Rebdolls reporting
unit
951
Tax effects of adjustments
—
Net loss, as adjusted
$
(13,642
)
Net loss per share, as adjusted
$
(0.11
)
Weighted-average shares, diluted
129,089,647
We have calculated net loss, as adjusted and net loss per share,
as adjusted for the six months ended June 30, 2022 by adjusting net
loss and net loss per share for the inventory step-up amortization
expense resulting from the acquisition of mnml.
A reconciliation of non-GAAP net loss, as adjusted to net loss,
as well as the resulting calculation of net loss per share, as
adjusted for the six months ended June 30, 2022 are as follows:
Six Months Ended June 30,
2022
Net loss
$
(2,687
)
Adjustments:
Inventory step-up amortization expense
707
Tax effects of adjustments
(212
)
Net loss, as adjusted
$
(2,192
)
Net loss per share, as adjusted
$
(0.02
)
Weighted-average shares, diluted
128,652,580
Pro Forma Net Sales
Pro forma net sales is considered a non-GAAP financial measure
under the SEC’s rules calculated in accordance with Article 11 of
Regulation S-X. We believe that pro forma net sales is useful
information for investors as it provides a better understanding of
sales performance, and relative changes therein, on a comparable
basis. We calculate pro forma net sales as net sales including the
historical net sales relating to the pre-acquisition periods of
Culture Kings, assuming that the Company acquired Culture Kings at
the beginning of the period presented. Pro forma net sales is not
necessarily indicative of what the actual results would have been
if the acquisition had in fact occurred on the date or for the
periods indicated nor does it purport to project net sales for any
future periods or as of any date. A reconciliation of non-GAAP pro
forma net sales to net sales, disaggregated by geography, which is
the most directly comparable financial measure calculated in
accordance with GAAP, for the six months ended June 30, 2023 and
2021, is as follows:
Six Months Ended June
30, 2023
Six Months Ended June 30,
2021
Two-year Growth Rate
Actual
Actual
Culture Kings
Pro Forma
Actual
Pro Forma
U.S.
$
152,593
$
114,035
$
7,669
$
121,704
33.8
%
25.4
%
Australia/New Zealand
89,483
90,738
43,314
134,052
(1.4
)%
(33.2
)%
Rest of world
14,437
13,233
280
13,513
9.1
%
6.8
%
Total
$
256,513
$
218,006
$
51,263
$
269,269
17.7
%
(4.7
)%
____________________________ 1 In order to provide a framework
for assessing the performance of our underlying business, excluding
the effects of foreign currency rate fluctuations, we compare the
percent change in the results from one period to another period
using a constant currency methodology wherein current and
comparative prior period results for our operations reporting in
currencies other than U.S. dollars are converted into U.S. dollars
at constant exchange rates (i.e., the rates in effect on December
31, 2022, which was the last day of our prior fiscal year) rather
than the actual exchange rates in effect during the respective
periods. 2 See additional information at the end of this release
regarding non-GAAP financial measures. 3 The Company has not
provided a quantitative reconciliation of its Adjusted EBITDA
outlook to a GAAP net income outlook because it is unable, without
making unreasonable efforts, to project certain reconciling items.
These items include, but are not limited to, future equity-based
compensation expense, income taxes, interest expense and
transaction costs. These items are inherently variable and
uncertain and depend on various factors, some of which are outside
of the Company’s control or ability to predict. See additional
information at the end of this release regarding non-GAAP financial
measures. 4 Trailing twelve months.
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