[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents a.k.a. Brands Holding Corp.'s unaudited condensed consolidated financial statements as of September 30, 2022, including balance sheets, income statements, and cash flows, with detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased slightly to $670.3 million as of September 30, 2022, primarily due to reduced goodwill, while total liabilities increased to $270.6 million due to higher long-term debt Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $31,114 | $38,832 | | Inventory, net | $136,931 | $115,783 | | Goodwill | $326,855 | $363,305 | | **Total Assets** | **$670,258** | **$687,846** | | **Liabilities & Equity** | | | | Total current liabilities | $108,814 | $108,015 | | Long-term debt | $124,334 | $103,182 | | **Total Liabilities** | **$270,559** | **$236,820** | | **Total Stockholders' Equity** | **$399,699** | **$451,026** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q3 2022 net sales decreased 3.7% to $155.8 million, while gross profit remained stable and net loss significantly improved to $0.1 million from $10.1 million in Q3 2021 Q3 2022 vs Q3 2021 Income Statement (in thousands) | Metric | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Net sales | $155,822 | $161,762 | | Gross profit | $86,857 | $86,110 | | Income from operations | $2,742 | $1,165 | | Net loss | $(114) | $(10,093) | | Diluted net loss per share | $0.00 | $(0.11) | Nine Months Ended Sep 30, 2022 vs 2021 Income Statement (in thousands) | Metric | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | | Net sales | $462,612 | $379,768 | | Gross profit | $258,500 | $208,132 | | Income from operations | $3,517 | $11,128 | | Net loss | $(2,801) | $(6,114) | | Diluted net loss per share | $(0.02) | $(0.07) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was $11.4 million for the nine months ended September 30, 2022, a shift from cash provided in the prior year, primarily due to increased inventory Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(11,417) | $20,631 | | Net cash used in investing activities | $(16,205) | $(251,802) | | Net cash provided by financing activities | $19,453 | $261,528 | | **Net (decrease) increase in cash** | **$(7,958)** | **$29,527** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover the company's IPO, acquisitions, revenue disaggregation by geography, debt facilities, lease obligations, and equity-based compensation plans - The company completed its **IPO in September 2021**, issuing **10 million shares** for net proceeds of **$95.7 million**[29](index=29&type=chunk) Net Sales by Geography (Nine Months Ended Sep 30, in thousands) | Region | 2022 | 2021 | | :--- | :--- | :--- | | U.S. | $242,117 | $190,470 | | Australia | $166,377 | $142,163 | | Rest of world | $54,118 | $47,135 | | **Total** | **$462,612** | **$379,768** | - The company acquired a **55% stake in Culture Kings** in March 2021 for **$369.8 million**, including **$264.5 million in goodwill**, acquiring the remaining interest concurrently with the IPO[45](index=45&type=chunk)[46](index=46&type=chunk) - In October 2021, the company acquired **mnml for $46.1 million**, including **$30.0 million in goodwill**[52](index=52&type=chunk)[54](index=54&type=chunk) - As of September 30, 2022, total debt was **$129.9 million**, comprising a **$106.6 million term loan** and **$25.0 million** on its revolving credit facility[74](index=74&type=chunk)[161](index=161&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, noting a 4% Q3 2022 net sales decrease due to lower average order value, while nine-month net sales grew 22%, covering key metrics, non-GAAP measures, macroeconomic pressures, and liquidity [Key Operating and Financial Metrics](index=32&type=section&id=Key%20Operating%20and%20Financial%20Metrics) Active customers grew to 3.8 million, but Average Order Value decreased to $85, and Adjusted EBITDA margin compressed significantly to 6% in Q3 2022 due to macroeconomic pressures Key Operating Metrics | Metric (in millions, except AOV) | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Active customers | 3.8 | 3.1 | | Average order value | $85 | $89 | | Number of orders | 1.8 | 1.8 | Key Financial Metrics (Non-GAAP) | Metric (in thousands) | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Adjusted EBITDA | $9,236 | $18,547 | | Adjusted EBITDA margin | 6% | 11% | [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Q3 2022 net sales decreased 4% to $155.8 million due to lower AOV, while gross margin improved to 56%; nine-month net sales increased 22% to $462.6 million, driven by higher orders from acquisitions - Q3 2022 net sales decreased by **$5.9 million (4%)** year-over-year, primarily due to a **4% decrease in average order value**; on a constant currency basis, net sales would have been flat[139](index=139&type=chunk) - Q3 2022 gross margin increased to **56% from 53%**, primarily due to the absence of a **$6.0 million inventory step-up charge** from the Culture Kings acquisition in the prior year[140](index=140&type=chunk)[141](index=141&type=chunk) - For the nine months ended September 30, 2022, net sales grew by **$82.8 million (22%)** year-over-year, driven by a **25% increase in orders**, largely due to the acquisitions of Culture Kings and mnml[149](index=149&type=chunk) - Marketing expenses for the nine-month period increased **40%** year-over-year, outpacing sales growth, due to reduced marketing channel effectiveness and mnml's higher advertising spend rate[154](index=154&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2022, the company had **$31.1 million in cash**, with liquidity primarily from operations and a senior secured credit facility, deemed sufficient for the next 12 months, despite **$11.4 million** net cash used in operations due to inventory build-up - Principal sources of liquidity as of September 30, 2022, were **$31.1 million in cash and cash equivalents**, a revolving line of credit, and a term loan[160](index=160&type=chunk) - The company's senior secured credit facility includes a **$100.0 million term loan** and a **$50.0 million revolving line of credit**, with **$106.6 million** outstanding on the term loan and **$25.0 million** on the revolver as of September 30, 2022[161](index=161&type=chunk) - Net cash used in operating activities for the nine months ended September 30, 2022, was **$11.4 million**, a shift from **$20.6 million provided** in the prior year, primarily due to an inventory build-up for Culture Kings' U.S. expansion[165](index=165&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate and foreign currency fluctuations, with a 100 basis point interest rate change impacting annual interest expense by $1.3 million, and a 10% Australian dollar change affecting accumulated other comprehensive loss by $43.4 million - A hypothetical **100 basis point** change in interest rates would impact annual interest expense by approximately **$1.3 million** based on September 30, 2022, debt levels[171](index=171&type=chunk) - The company is exposed to foreign currency risk from Australian operations; a hypothetical **10% change in the Australian dollar** could lead to a **$43.4 million fluctuation** in the currency translation adjustment[172](index=172&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of September 30, 2022, due to material weaknesses in internal control design, documentation, and segregation of duties, with remediation efforts ongoing - Management concluded that the company's disclosure controls and procedures were **not effective** as of September 30, 2022[174](index=174&type=chunk) - Ineffectiveness stems from two material weaknesses: insufficient design and documentation of internal controls, and lack of appropriate segregation of duties in manual and IT processes[175](index=175&type=chunk) - Remediation efforts are underway, including hiring experienced personnel and a third-party consulting firm, but material weaknesses are **not yet remediated**[176](index=176&type=chunk)[177](index=177&type=chunk) [PART II - OTHER INFORMATION](index=44&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to ordinary course legal proceedings, not expecting a material adverse impact on its financial position or results of operations - Ongoing legal proceedings are **not expected to have a material adverse impact** on the company's financial position, results of operations, or cash flows[181](index=181&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K are reported - The company reports **no material changes** to the risk factors disclosed in its 2021 Form 10-K[182](index=182&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the quarterly report, including CEO and CFO certifications and Inline XBRL documents - The report includes required exhibits such as **CEO and CFO certifications** under Sarbanes-Oxley Sections 302 and 906, and XBRL data files[185](index=185&type=chunk)

Financial Data and Key Metrics Changes - In Q2 2022, global net sales grew by 6%, or 11% in constant currency, following a 76% pro forma growth last year [6][23] - Net sales for the quarter reached $158 million, up from $149 million in the previous year [23] - Adjusted EBITDA was $6 million, down from $19 million in the prior year, with an adjusted EBITDA margin of 3.7% compared to 13% in the previous year [28][30] - The net loss for the quarter was $4.2 million, or $0.03 per share, compared to a net income of $2.4 million, or $0.03 per share, in the prior year [28] Business Line Data and Key Metrics Changes - Princess Polly, the largest brand, saw significant growth, contributing to U.S. sales which increased by 16% [25][30] - Petal and Pup continued to be the fastest-growing brand, leveraging strategies from Princess Polly [15] - Culture Kings experienced strong growth in-store, benefiting from a return to in-person events [17][19] Market Data and Key Metrics Changes - U.S. sales increased to $82 million, while Australia saw a decrease of 5% to $57 million, although it was up 3% in constant currency [25] - The rest of the world reported net sales of $19.7 million, a 5% increase from the previous year [25] Company Strategy and Development Direction - The company is focused on driving profitable growth and protecting margins through disciplined inventory management and marketing efficiency [7][22] - A unique operating model allows the company to manage growth and profit during volatile times, leveraging data-driven merchandising and a multi-brand platform [8][9] - The company plans to open a flagship Culture Kings store in Las Vegas, aiming to replicate its success in Australia and New Zealand [18][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic challenges impacting consumer behavior and sales, but expressed confidence in long-term growth potential [22][30] - The company is adjusting its marketing strategies to focus on higher ROI channels and is optimistic about the upcoming back-to-college season [39][53] - Despite current headwinds, management remains confident in the differentiated brands and the business model's ability to support long-term growth [22][30] Other Important Information - Active customers grew by 34% to 3.9 million globally, indicating strong demand for the company's brands [8][23] - The company is taking measures to right-size inventory, including order cancellations and reallocations [29] Q&A Session Summary Question: Inventory quality and timing for alignment with sales growth - Management feels confident about inventory quality, with expectations to align inventory growth with sales growth by fall [35] Question: Adjustments to the operating model to prevent future issues - Management noted macro impacts as a significant factor and highlighted the ability to reallocate orders based on real-time sales data [37][38] Question: Currency headwinds and M&A expectations - No M&A contributions are expected in guidance, with a 6% FX impact modeled for the back half of the year [42] Question: Consumer strength and weakness by income region - Lower-income customers at Rebdolls were more impacted, while stores performed well as consumers returned to in-person shopping [46] Question: Gross margin guidance rationale - Management expects to be less promotional in the back half, which should help stabilize gross margins [49] Question: Nature of promotions and digital marketing efficiency - Promotions will be more targeted, and the marketing landscape remains dynamic, with a focus on high-return channels [51][53] Question: Operational metrics expectations for active customers and AOV - Active customer growth is expected to continue, with AOV decline moderating in the back half of the year [63] Question: Thoughts on acquisitions and national expansion - Current focus is on scaling existing brands, with M&A discussions ongoing but not prioritized in the short term [78]

a.k.a. Brands Holding Corp. (NYSE:AKA) Q1 2022 Earnings Conference Call May 10, 2022 4:30 PM ET Company Participants Emily Goldberg - Investor Relations Jill Ramsey - Chief Executive Officer Ciaran Long - Chief Financial Officer Conference Call Participants Randy Konik - Jefferies Lorraine Hutchinson - Bank of America Dana Telsey - Telsey Advisory Group Oliver Chen - Cowen & Company Operator Greetings and welcome to a.k.a. Brands Holding Corp. First Quarter 2022 Earnings Conference Call. [Operator Instructi ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's quarterly financial statements show significant acquisition-driven sales growth, increased assets and liabilities, and a negative shift in operating cash flow [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $727.6 million, driven by inventory and goodwill, while total liabilities rose to $259.3 million due to increased long-term debt Balance Sheet Summary (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $197,010 | $184,332 | | Inventory, net | $120,598 | $115,783 | | **Total Assets** | **$727,627** | **$687,846** | | **Total Current Liabilities** | $90,002 | $108,015 | | Long-term debt | $126,901 | $103,182 | | **Total Liabilities** | **$259,303** | **$236,820** | | **Total Stockholders' Equity** | **$468,324** | **$451,026** | [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Net sales more than doubled to $148.3 million, but higher operating expenses resulted in a slight decrease in net income to $1.5 million Income Statement Summary (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net sales | $148,319 | $68,779 | | Gross profit | $84,196 | $40,588 | | Income from operations | $3,349 | $2,680 | | Net income | $1,525 | $1,790 | | Diluted EPS | $0.01 | $0.02 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations turned to a $14.9 million outflow due to increased inventory and liability payments, a reversal from the prior year's inflow Cash Flow Summary (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(14,903) | $18,974 | | Net cash used in investing activities | $(4,703) | $(226,022) | | Net cash provided by financing activities | $22,337 | $219,743 | | Net increase in cash | $2,654 | $12,369 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business, recent acquisitions like Culture Kings and mnml, accounting policies, and new credit facilities - The company is an online fashion retailer targeting Gen Z and Millennial customers through a portfolio of digitally native brands[27](index=27&type=chunk) - In March 2021, the company acquired a **55% ownership stake in Culture Kings** for cash consideration of AUD $307.4 million ($235.9 million) and a noncontrolling interest valued at AUD $186.0 million ($142.7 million)[44](index=44&type=chunk) - In October 2021, the company acquired mnml for total consideration of **$46.1 million**, consisting of $28.2 million in cash and $17.3 million in common stock[52](index=52&type=chunk) Net Sales by Geography (in thousands) | Geography | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | United States | $77,668 | $42,830 | | Australia | $51,895 | $19,015 | | Rest of world | $18,756 | $6,934 | | **Total** | **$148,319** | **$68,779** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the 116% net sales growth driven by acquisitions, a decrease in gross margin, and ongoing remediation of two material weaknesses in internal controls Key Operating Metrics | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Active Customers (millions) | 3.8 | 1.6 | | Average Order Value | $83 | $78 | | Total Orders (millions) | 1.8 | 0.9 | Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net income | $1,525 | $1,790 | | Adjustments | $9,127 | $6,536 | | **Adjusted EBITDA** | **$10,652** | **$8,326** | | Adjusted EBITDA margin | 7% | 12% | - Net sales increased by **$79.5 million (116%) YoY**, driven by a 100% increase in orders processed and a 6% increase in average order value; acquisitions contributed $59.5 million to net sales[134](index=134&type=chunk) - **Gross margin decreased from 59% to 57%** primarily due to higher air freight expenses and the inclusion of Culture Kings, which has a lower mix of exclusive products[136](index=136&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate changes on its $109.4 million of variable-rate debt and foreign currency fluctuations, particularly with the Australian dollar - A hypothetical **100 basis point** increase or decrease in underlying interest rates would change annual interest expense by approximately **$1.0 million** based on debt levels at March 31, 2022[159](index=159&type=chunk) - The company has significant exposure to the Australian dollar; a hypothetical **10% change in the AUD exchange rate** could lead to a **$47.8 million** foreign currency translation fluctuation[160](index=160&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective as of March 31, 2022, due to two unremediated material weaknesses in internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **not effective** as of March 31, 2022, due to two material weaknesses[162](index=162&type=chunk) - The first material weakness is the **insufficient design, implementation, and documentation of internal controls** at the entity level and across key financial processes[163](index=163&type=chunk)[164](index=164&type=chunk) - The second material weakness is the failure to design and implement controls to maintain **appropriate segregation of duties** in manual and IT-based business processes[163](index=163&type=chunk)[164](index=164&type=chunk) - **Remediation efforts are in progress**, including hiring additional personnel and a third-party consulting firm, but the material weaknesses were not considered remediated as of March 31, 2022[165](index=165&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings that are not expected to have a material adverse financial impact - Management believes that ongoing legal proceedings **will not have a material adverse impact** on the company's financial condition or results[171](index=171&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - **No material changes** to the risk factors previously disclosed in the Annual Report have been identified[172](index=172&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including corporate governance documents, credit agreements, and officer certifications required by the Sarbanes-Oxley Act - The report includes standard corporate governance documents, credit agreements, and equity compensation plans as exhibits[176](index=176&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer, as required by **Sections 302 and 906 of the Sarbanes-Oxley Act**, are filed with the report[176](index=176&type=chunk)

a.k.a. Brands Holding Corp. (NYSE:AKA) Q4 2021 Earnings Conference Call March 1, 2022 4:30 PM ET Company Participants Emily Goldberg - Head of Corporate of Communications Jill Ramsey - Chief Executive Officer Ciaran Long - Chief Financial Officer Conference Call Participants Oliver Chen - Cowen Erinn Murphy - Piper Sandler Randy Konik - Jeffries Youssef Squali - Truist Securities Dana Telsey - Telsey Advisory Group Operator Greetings and welcome to the a.k.a. Brands Holding Corp’s Fourth Quarter and Fiscal ...

A.k.a. Brands Holding Corp. (NYSE:AKA) Q3 2021 Earnings Conference Call November 9, 2021 4:30 PM ET Company Participants Emily Goldberg - Head of Corporate of Communications Jill Ramsey - Chief Executive Officer Ciaran Long - Chief Financial Officer Conference Call Participants Randal Konik - Jefferies Erinn Murphy - Piper Sandler Lorraine Hutchinson - Bank of America Oliver Chen - Cowen Dana Telsey - Telsey Advisory Group Disclaimer*: This transcript is designed to be used alongside the freely available au ...