a.k.a. Brands (AKA)

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a.k.a. Brands (AKA) - 2022 Q1 - Quarterly Report
2022-05-10 20:09
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 (AKA) - 2021 Q4 - Earnings Call Transcript
2022-03-02 03:38
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 (AKA) - 2021 Q3 - Earnings Call Transcript
2021-11-10 00:57
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 ...