Duluth Holdings Inc. (NASDAQ:DLTH) Q1 2023 Earnings Conference Call June 1, 2023 9:30 AM ET Company Participants Nitza McKee - Investor Relations Sam Sato - President and Chief Executive Officer Dave Loretta - Senior Vice President and Chief Financial Officer Conference Call Participants Ethan Saghi - BTIG Jonathan Komp - Baird Peter McGoldrick - Stifel Dylan Carden - William Blair Operator Good day, and welcome to the Duluth Holdings Inc. First Quarter 2023 Conference Call. [Operator Instructions] I would ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________ FORM 10-Q _________________________________________ þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number 001-37641 _________________________________ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended January 29, 2023 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file No. 001-37641 DULUTH HOLDINGS INC. (Exact name of registrant as specified in its charter) | Wisconsin | | 39-1564801 | | --- | --- | --- | | (State or other j ...

Duluth Holdings Inc. (NASDAQ:DLTH) Q4 2022 Earnings Conference Call March 9, 2023 9:30 AM ET Company Participants Nitza McKee - Investor Relations Sam Sato - President and Chief Executive Officer Dave Loretta - Senior Vice President and Chief Financial Officer Conference Call Participants Jonathan Komp - Robert W. Baird & Co. James Duffy - Stifel, Nicolaus & Company, Inc. Janine Stichter - BTIG Dylan Carden - William Blair & Company LLC Operator Good day, and welcome to the Duluth Holdings Fourth Quarter 20 ...

Duluth Holdings Inc. (NASDAQ:DLTH) Q3 2022 Earnings Conference Call December 1, 2022 9:30 AM ET Company Participants Nitza McKee - Investor Relations Sam Sato - President and Chief Executive Officer David Loretta - Chief Financial Officer. Conference Call Participants Jonathan Komp - Baird Jim Duffy - Stifel Dylan Carden - William Blair Operator Good day, and welcome to the Duluth Holdings, Inc. Third Quarter 2022 Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please ...

[Part I—Financial Information](index=3&type=section&id=Part%20I%E2%80%94Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q3 2022 report a net loss due to lower gross margins and increased expenses [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of October 30, 2022, total assets increased to $547.7 million from $515.6 million at the end of fiscal 2021, primarily due to a substantial rise in inventory to $204.7 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Oct 30, 2022 | Jan 30, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $9,407 | $77,051 | | Inventory, less reserves | $204,717 | $122,672 | | Total current assets | $240,017 | $222,521 | | Total assets | $547,650 | $515,550 | | **Liabilities & Equity** | | | | Trade accounts payable | $77,842 | $45,402 | | Duluth line of credit | $10,000 | $0 | | Total liabilities | $329,013 | $292,832 | | Total shareholders' equity | $218,637 | $222,718 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q3 2022, the company reported a net loss of $6.2 million, a significant downturn from prior-year net income, driven by decreased gross profit and increased SG&A expenses Q3 Statement of Operations Highlights (in thousands, except per share) | Metric | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Net sales | $147,126 | $145,277 | | Gross profit | $76,921 | $83,650 | | Operating (loss) income | $(7,390) | $4,858 | | Net (loss) income | $(6,243) | $2,763 | | Diluted EPS | $(0.19) | $0.09 | Nine Months Statement of Operations Highlights (in thousands, except per share) | Metric | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | | Net sales | $411,541 | $427,823 | | Gross profit | $219,592 | $231,619 | | Operating (loss) income | $(4,452) | $19,840 | | Net (loss) income | $(5,225) | $12,209 | | Diluted EPS | $(0.16) | $0.38 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities for the nine months ended October 30, 2022, was $51.0 million, primarily due to an $82.0 million increase in inventory Nine-Month Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(51,008) | $32,758 | | Net cash used in investing activities | $(24,117) | $(8,945) | | Net cash provided by (used in) financing activities | $7,481 | $(50,644) | | **Decrease in cash and cash equivalents** | **$(67,644)** | **$(26,831)** | - The significant cash used in operations was primarily driven by an **$82.0 million increase in inventory** during the first nine months of fiscal 2022[23](index=23&type=chunk)[136](index=136&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details accounting policies, revenue by channel, lease obligations, and the company's amended credit facility, operating as a single segment - The company operates as a lifestyle brand of men's and women's apparel and accessories through an omnichannel platform and reports as a single external segment[26](index=26&type=chunk)[27](index=27&type=chunk) Revenue by Sales Channel (in thousands) | Channel | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Direct-to-consumer | $90,999 | $85,200 | $254,000 | $258,830 | | Stores | $56,127 | $60,077 | $157,541 | $168,993 | | **Total** | **$147,126** | **$145,277** | **$411,541** | **$427,823** | - On July 8, 2022, the company amended its credit agreement, increasing the revolving commitment from **$150 million to $200 million** and extending the maturity date to July 8, 2027[54](index=54&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20(MD%26A)) Management discusses financial results, noting a Q3 net sales increase but a significant profitability drop due to decreased gross margins and higher SG&A expenses amid economic uncertainties - The company is progressing on its "Big Dam Blueprint" strategy, which focuses on key areas such as a digital-first mindset, optimizing retail channels, evolving its multi-brand platform, and making investments to future-proof the business[98](index=98&type=chunk) - Management notes that high inflation in the U.S. economy and the ultimate impact of COVID-19 remain uncertainties that could affect operational and financial performance[100](index=100&type=chunk)[101](index=101&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Q3 2022 net sales rose 1.3% to $147.1 million, but gross margin declined to 52.3% and SG&A expenses increased, resulting in a net loss of $6.2 million - Q3 net sales increased **1.3% to $147.1 million**, while nine-month net sales decreased **3.8% to $411.5 million**, with the latter driven by slower store traffic[111](index=111&type=chunk)[119](index=119&type=chunk) - Q3 gross margin decreased to **52.3% from 57.6%** year-over-year, primarily due to a higher mix of promotional sales[114](index=114&type=chunk) - Q3 SG&A expenses increased **7.0% to $84.3 million**, mainly due to increased digital advertising to drive brand awareness and higher depreciation from capital investments[115](index=115&type=chunk)[116](index=116&type=chunk) [Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA](index=25&type=section&id=Reconciliation%20of%20Net%20(Loss)%20Income%20to%20EBITDA%20and%20Adjusted%20EBITDA) This section reconciles GAAP net income to non-GAAP EBITDA and Adjusted EBITDA, showing a sharp decline in Adjusted EBITDA for both Q3 and the nine-month period Adjusted EBITDA Reconciliation (in thousands) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | $(6,243) | $2,763 | $(5,225) | $12,209 | | EBITDA | $1,021 | $12,377 | $20,877 | $42,721 | | **Adjusted EBITDA** | **$1,747** | **$12,982** | **$22,877** | **$44,333** | [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity relies on cash from operations and its credit facility, with $9.4 million in cash and planned capital expenditures of $35.0 million for fiscal 2022 - The company expects to spend approximately **$35.0 million** in fiscal 2022 on capital expenditures, primarily for investments in logistics optimization and information technology[131](index=131&type=chunk) - Net cash used in operating activities for the first nine months of 2022 was **$51.0 million**, a significant reversal from **$32.8 million** provided in the prior year, mainly due to an **$82.0 million increase in inventory**[134](index=134&type=chunk)[136](index=136&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No significant changes in market risks have occurred since the 2021 Form 10-K, with details on interest rate risk provided in Note 3 - There have been no significant changes in the market risks described in the company's 2021 Form 10-K[147](index=147&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of October 30, 2022, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of October 30, 2022[148](index=148&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[149](index=149&type=chunk) [Part II—Other Information](index=27&type=section&id=Part%20II%E2%80%94Other%20Information) [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company is not presently party to any legal proceedings expected to have a material adverse effect on its business - The company is not presently party to any legal proceedings expected to have a material adverse effect on its business[150](index=150&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors as previously disclosed in the fiscal 2021 Annual Report on Form 10-K - There have been no material changes to the company's risk factors as previously disclosed in the fiscal 2021 Annual Report on Form 10-K[151](index=151&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell unregistered equity securities, only acquiring a small number of shares from employees for tax withholding upon restricted stock vesting Share Repurchases for Tax Withholding (Q3 2022) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Aug 1 - Aug 28, 2022 | 135 | $8.99 | | Aug 29 - Oct 2, 2022 | 64 | $7.07 | | Oct 3 - Oct 30, 2022 | 0 | N/A | | **Total** | **199** | **$8.37** | [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section provides an index of the exhibits filed with the Form 10-Q, which includes certifications from the Chief Executive Officer and Chief Financial Officer, as well as XBRL data files - The exhibits filed with this report include CEO and CFO certifications pursuant to SEC rules and the Sarbanes-Oxley Act, along with XBRL instance and taxonomy documents[156](index=156&type=chunk)

Financial Data and Key Metrics Changes - The company reported second quarter net sales of $141.5 million, a decrease of 5.1% compared to $149.1 million last year, but an increase of 3% compared to the same period in 2020 [21] - Net income for the quarter was $2.4 million, or $0.07 per diluted share, down from $0.27 per diluted share reported in the second quarter last year [28] - Adjusted EBITDA for the second quarter was $13.2 million, a 38% decrease from last year [28] Business Line Data and Key Metrics Changes - Women's apparel categories grew nearly 4% over last year and represented a nearly 30% increase from the pre-pandemic period in 2019 [5] - The AKHG sub-brand led total sales growth of 21% in the second quarter, while the overall Duluth by Duluth Trading was down 9% due to reduced clearance sales [17] Market Data and Key Metrics Changes - Direct channel sales were up 0.1% from last year, while retail channel sales were down 12% driven by a decline in store traffic [21] - The company experienced a high single-digit increase in website visits, with nearly 70% of all visits coming through mobile devices [15] Company Strategy and Development Direction - The company is focusing on expanding its women's apparel offerings and enhancing its digital marketing strategy to attract high-value customers [4][12] - Investments are being made in logistics automation and technology upgrades to support long-term growth [11][31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic uncertainties and inflationary pressures impacting discretionary spending but expressed confidence in recapturing lost sales due to improved inventory positions [7][9] - The company expects sales in the direct channel to be up high single-digits in the third and fourth quarters, while retail sales are expected to be down mid-single-digits [32] Other Important Information - The company is committed to building its family of brands and enhancing customer data insights to inform marketing strategies [12] - A new Chief Technology and Logistics Officer has been hired to support the company's strategic initiatives [11] Q&A Session Summary Question: Changes to the guidance for the year - Management explained that the reduction in revenue guidance was primarily due to macro headwinds, but they expect to recapture lost sales from last year due to improved inventory [36][37] Question: Promotions across the industry - Management noted that while there is a shift towards more promotional periods, their gross margins remain healthy, and they are focused on maintaining brand positioning [38] Question: Long-term adjusted EBITDA margin targets - Management confirmed that long-term targets for adjusted EBITDA margins of 14% to 15% remain viable despite current challenges [39][40] Question: Trends across the quarter and into Q3 - Management indicated that retail foot traffic has improved since August, but they still expect slight declines compared to last year [44][45] Question: Marketing spend in Q4 - Management clarified that the reduction in marketing spend for Q4 is a shift in strategy rather than a decrease in overall marketing efforts, focusing more on digital channels [50] Question: Wholesale performance - Management reported positive momentum in their partnership with Tractor Supply, expanding their test to additional stores [53]

Financial Performance - Net sales decreased by 5.1% year-over-year in Q2 2022 to $141.5 million, and decreased by 6.4% in the first six months of fiscal 2022 to $264.4 million[102]. - Net income for Q2 2022 was $2.4 million, down from $9.0 million in Q2 2021, and net income for the first six months of fiscal 2022 was $1.1 million compared to $9.5 million in the same period of the prior year[102]. - Adjusted EBITDA decreased to $13.2 million in Q2 2022 from $21.4 million in Q2 2021, and for the first six months of fiscal 2022, it was $21.1 million compared to $31.4 million in the prior year[102]. - Net sales decreased by $7.6 million, or 5.1%, to $141.5 million for the three months ended July 31, 2022, compared to $149.1 million for the same period in 2021[118]. - Gross profit decreased by $5.8 million, or 7.1%, to $75.6 million for the three months ended July 31, 2022, with a gross margin of 53.4%, down from 54.6% in the prior year[121]. - Selling, general and administrative expenses increased by $3.4 million, or 5.0%, to $71.7 million for the three months ended July 31, 2022, representing 50.7% of net sales compared to 45.8% in the prior year[122]. - For the six months ended July 31, 2022, net sales decreased by $18.1 million, or 6.4%, to $264.4 million compared to $282.6 million in the prior year[126]. - Gross profit for the six months ended July 31, 2022, decreased by $5.3 million, or 3.6%, to $142.7 million, with a gross margin of 54.0%, up from 52.4% in the prior year[128]. - Selling, general and administrative expenses increased by $6.7 million, or 5.1%, to $139.7 million for the six months ended July 31, 2022, representing 52.8% of net sales compared to 47.1% in the prior year[130]. - Adjusted EBITDA decreased by $8.2 million to $13.2 million for the three months ended July 31, 2022, representing 9.4% of net sales compared to 14.4% in the prior year[135]. Cash Flow and Capital Expenditures - As of July 31, 2022, the company's net working capital was $102.4 million, including $15.4 million in cash and cash equivalents[137]. - For the six months ended July 31, 2022, net cash used in operating activities was $41.1 million, compared to net cash provided of $26.5 million for the same period in 2021[143][144]. - Cash used in operating assets and liabilities for the six months ended July 31, 2022, was $58.9 million, primarily due to a $41.8 million increase in inventory[143]. - Net cash used in investing activities for the six months ended July 31, 2022, was $18.7 million, driven by capital expenditures of $18.8 million for new investments[145]. - Net cash used in financing activities for the six months ended July 31, 2022, was $1.8 million, primarily consisting of payments on finance lease obligations[147]. - The decrease in cash and cash equivalents for the six months ended July 31, 2022, was $61.7 million, compared to a decrease of $28.3 million for the same period in 2021[141]. - The company believes that cash flow from operating activities and available cash under its credit facility will be sufficient to cover working capital requirements and anticipated capital expenditures for the foreseeable future[139]. Strategic Initiatives - The company operates 62 retail stores and three outlet stores as of July 31, 2022, having expanded its retail presence since initiating its omnichannel platform in 2010[98]. - The "Big Dam Blueprint" focuses on a digital-first mindset, optimizing retail channels, evolving the multi-brand platform, and increasing investments for long-term growth[104]. - The company is analyzing opportunities for greater automation in logistics and technology improvements to support growth and integrate new brands[104]. Economic Environment - The U.S. economy has faced high inflation in the first two quarters of 2022, impacting operational and financial performance[107]. - The company continues to evaluate federal, state, and local regulations to ensure compliance in store operations amid ongoing economic challenges[108]. Market Risks - Forward-looking statements indicate potential risks including supply chain disruptions, competition, and changing consumer preferences[97]. - Net income attributable to controlling interest was $2.4 million for the three months ended July 31, 2022, down from $9.0 million in the same period in 2021[125].

Financial Data and Key Metrics Changes - The company reported first quarter net sales of nearly $123 million, a decrease of 7.9% compared to $133.4 million last year, but an increase of 11.8% compared to the same period in 2020 [30][42] - The net income loss for the quarter was $1.3 million, resulting in an earnings loss per share of $0.04, compared to a net income of $500,000 or $0.02 per diluted share reported in the first quarter last year [42] - Gross profit margin for Q1 was 54.6%, an increase of 470 basis points from 49.9% last year, despite incurring approximately $4 million in expedited freight costs [10][33] Business Line Data and Key Metrics Changes - The retail store channel saw a slight increase in net sales of 0.4%, driven by a 6% increase in average transaction value [16] - Direct channel sales were down 12.1% for the quarter, largely due to heavy clearance volume in the previous year and a strategic decision to reduce marketing spend early in the quarter [30][31] - The women's collection under the AKHG brand quickly reached a similar penetration level as the Duluth brand, indicating strong consumer reception [21] Market Data and Key Metrics Changes - The overall inventory position at quarter-end was 6% higher than last year, with clearance goods making up only 3% of total inventory compared to 8% last year [10][44] - Customer traffic and conversion improved in the latter half of the quarter, with high single-digit sales growth reported in April [9][32] Company Strategy and Development Direction - The company is focusing on creating distinct positions for each sub-brand to better meet customer needs and attract new customers [5][6] - Investments are being made in digital marketing and brand awareness campaigns to support new product launches and enhance customer engagement [12][14] - The company is implementing logistics expansion and automation projects to improve operational efficiency and support long-term growth [24][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by inflationary pressures in fuel, labor markets, and commodity prices but expressed confidence in the underlying demand for their products [11][28] - The company anticipates being well-positioned with merchandise to meet customer demand during key sales periods, including Father's Day and the fall and winter seasons [13][48] - The outlook for the second quarter and back-half of 2022 includes expectations for sales growth in both direct and retail channels [48][49] Other Important Information - The company ended the quarter with net working capital of $106 million, including $40 million in cash and no outstanding balance on its line of credit [43] - Capital expenditures for 2022 are expected to be $40 million, lower than previous guidance due to timing of progress payments for a new fulfillment center [45][46] Q&A Session Summary Question: Consumer reception of brand realignment - Management noted strong consumer response to the brand realignment, particularly with the AKHG brand, which has seen rapid penetration in the women's segment [52][54] Question: Full-year outlook and conservatism - Management maintained the full-year outlook, factoring in earlier receipt dates to mitigate supply chain constraints and ensure inventory availability [55][56] Question: Return on incremental marketing spend - Management confirmed the ability to flex marketing spend based on inventory flow and highlighted upcoming product launches that will drive marketing efforts [61][62] Question: Addressable market and revenue base - Management indicated that the focus on conventional buyers would not narrow the revenue base but rather improve structural margin opportunities [66] Question: Marketing strategy and catalog use - Management clarified that while catalog use has been reduced, it remains a valuable brand-building tool, and they are focusing on targeted digital marketing [78][80]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=Part%20I%E2%80%94Financial%20Information) This section presents Duluth Holdings Inc.'s unaudited condensed consolidated financial statements and management's analysis for the quarter ended May 1, 2022 [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Duluth Holdings Inc.'s unaudited condensed consolidated financial statements and related notes for the quarter ended May 1, 2022 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity | ASSETS | May 1, 2022 ($ thousands) | January 30, 2022 ($ thousands) | |:--------------------------------------------------------------------------|:--------------------------|:-------------------------------| | Cash and cash equivalents | 40,370 | 77,051 | | Inventory, less reserves | 152,244 | 122,672 | | Total current assets | 214,133 | 222,521 | | Total assets | 502,793 | 515,550 | | LIABILITIES AND SHAREHOLDERS' EQUITY | May 1, 2022 ($ thousands) | January 30, 2022 ($ thousands) | |:--------------------------------------------------------------------------|:--------------------------|:-------------------------------| | Trade accounts payable | 54,523 | 45,402 | | Accrued expenses and other current liabilities | 32,214 | 47,504 | | Total current liabilities | 108,151 | 115,996 | | Total liabilities | 281,404 | 292,832 | | Total shareholders' equity | 221,389 | 222,718 | | Total liabilities and shareholders' equity | 502,793 | 515,550 | - Total assets decreased from **$515.55 million** at January 30, 2022, to **$502.79 million** at May 1, 2022. This was primarily driven by a decrease in cash and cash equivalents from **$77.05 million** to **$40.37 million**, despite an increase in inventory from **$122.67 million** to **$152.24 million**[8](index=8&type=chunk) - Total liabilities decreased from **$292.83 million** to **$281.40 million**, mainly due to a reduction in accrued expenses and other current liabilities from **$47.50 million** to **$32.21 million**, partially offset by an increase in trade accounts payable[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance, including net sales, gross profit, operating income, and net income | Metric | Three Months Ended May 1, 2022 ($ thousands) | Three Months Ended May 2, 2021 ($ thousands) | |:------------------------------------------------|:---------------------------------------------|:---------------------------------------------| | Net sales | 122,904 | 133,419 | | Cost of goods sold | 55,841 | 66,876 | | Gross profit | 67,063 | 66,543 | | Selling, general and administrative expenses | 67,994 | 64,648 | | Operating (loss) income | (931) | 1,895 | | Net (loss) income attributable to controlling interest | (1,294) | 544 | | Basic (loss) earnings per share | (0.04) | 0.02 | | Diluted (loss) earnings per share | (0.04) | 0.02 | - Net sales decreased by **7.9%** from **$133.4 million** in Q1 2021 to **$122.9 million** in Q1 2022. Despite this, gross profit slightly increased by **0.8%** to **$67.1 million**, and gross margin improved from **49.9%** to **54.6%**[14](index=14&type=chunk) - The company reported a net loss attributable to controlling interest of **$(1.29) million**, or **$(0.04)** per share, in Q1 2022, a significant decline from net income of **$0.54 million**, or **$0.02** per share, in Q1 2021[14](index=14&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's comprehensive income, including net income and other comprehensive income components | Metric | Three Months Ended May 1, 2022 ($ thousands) | Three Months Ended May 2, 2021 ($ thousands) | |:------------------------------------------------|:---------------------------------------------|:---------------------------------------------| | Net (loss) income | (1,323) | 498 | | Other comprehensive (loss) income | (336) | 202 | | Comprehensive (loss) income | (1,659) | 700 | | Comprehensive (loss) income attributable to controlling interest | (1,630) | 746 | - Comprehensive loss attributable to controlling interest was **$(1.63) million** for the three months ended May 1, 2022, a decrease from comprehensive income of **$0.75 million** in the prior year, primarily due to the net loss and unrealized security losses[17](index=17&type=chunk) [Condensed Consolidated Statement of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Shareholders%27%20Equity) This section outlines changes in the company's shareholders' equity, including capital stock, retained earnings, and comprehensive income | Metric | January 30, 2022 ($ thousands) | May 1, 2022 ($ thousands) | |:------------------------------------------------|:-------------------------------|:--------------------------| | Capital stock | 95,515 | 96,299 | | Treasury stock | (1,002) | (1,457) | | Retained earnings | 130,868 | 129,575 | | Accumulated other comprehensive income | 489 | 153 | | Noncontrolling interest | (3,152) | (3,181) | | Total shareholders' equity | 222,718 | 221,389 | - Total shareholders' equity decreased from **$222.72 million** at January 30, 2022, to **$221.39 million** at May 1, 2022, primarily driven by a net loss of **$(1.29) million** and other comprehensive loss of **$(0.34) million**[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three Months Ended May 1, 2022 ($ thousands) | Three Months Ended May 2, 2021 ($ thousands) | |:------------------------------------------------|:---------------------------------------------|:---------------------------------------------| | Net cash (used in) provided by operating activities | (31,717) | 12,423 | | Net cash used in investing activities | (3,843) | (1,974) | | Net cash used in financing activities | (1,121) | (31,616) | | Decrease in cash, cash equivalents | (36,681) | (21,167) | | Cash and cash equivalents at end of period | 40,370 | 26,054 | - Net cash used in operating activities was **$(31.72) million** in Q1 2022, a significant shift from **$12.42 million** provided in Q1 2021, primarily due to a **$29.57 million** increase in inventory and a **$17.50 million** decrease in accrued expenses[26](index=26&type=chunk)[133](index=133&type=chunk) - Net cash used in investing activities increased to **$(3.84) million** in Q1 2022 from **$(1.97) million** in Q1 2021, driven by higher capital expenditures for information technology investments[26](index=26&type=chunk)[135](index=135&type=chunk) - Net cash used in financing activities decreased substantially to **$(1.12) million** in Q1 2022 from **$(31.62) million** in Q1 2021, as the prior year included significant payments on long-term debt[26](index=26&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies, significant estimates, and other financial information [1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION](index=10&type=section&id=1.%20NATURE%20OF%20OPERATIONS%20AND%20BASIS%20OF%20PRESENTATION) This note describes Duluth Holdings Inc.'s business, omnichannel operations, accounting principles, and seasonal financial performance - Duluth Holdings Inc. is a lifestyle brand specializing in men's and women's casual wear, workwear, and accessories, sold primarily through its omnichannel platform[29](index=29&type=chunk) - The company operates as one reportable external segment and consolidates TRI Holdings, LLC as a variable interest entity[30](index=30&type=chunk)[32](index=32&type=chunk) - Inventory is valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method, with reserves for excess and obsolete items totaling **$2.0 million** as of May 1, 2022[38](index=38&type=chunk)[40](index=40&type=chunk) - The business is seasonal, with a significant portion of revenue and operating profit historically recognized in the fourth fiscal quarter due to the holiday season[42](index=42&type=chunk) [2. LEASES](index=12&type=section&id=2.%20LEASES) This note details the company's lease accounting, including Right-of-use assets, lease liabilities, and future minimum payments - The Company recognizes Right-of-use (ROU) assets and lease liabilities for non-cancelable retail space leases, with terms typically ranging from five to fifteen years and expiring through 2036[47](index=47&type=chunk)[48](index=48&type=chunk) | Lease Expense Type | Three Months Ended May 1, 2022 ($ thousands) | Three Months Ended May 2, 2021 ($ thousands) | |:-------------------------------------------------|:---------------------------------------------|:---------------------------------------------| | Total finance lease expense | 1,306 | 1,333 | | Operating lease expense | 4,389 | 3,951 | | Amortization of build-to-suit leases capital contribution | 321 | 328 | | Variable lease expense | 1,972 | 2,059 | | Total lease expense | 7,988 | 7,671 | | Fiscal Year (in thousands) | Finance Lease Payments | Operating Lease Payments | |:---------------------------|:-----------------------|:-------------------------| | 2022 (remainder) | $3,393 | $13,261 | | 2023 | $4,551 | $17,919 | | 2024 | $4,736 | $17,304 | | 2025 | $5,098 | $16,554 | | 2026 | $3,993 | $15,612 | | Thereafter | $33,225 | $59,227 | | Total future minimum lease payments | $54,996 | $139,877 | [3. DEBT AND CREDIT AGREEMENT](index=13&type=section&id=3.%20DEBT%20AND%20CREDIT%20AGREEMENT) This note outlines the company's debt structure, including TRI Holdings' notes and the $150.0 million revolving senior credit facility | Debt Type | May 1, 2022 ($ thousands) | January 30, 2022 ($ thousands) | |:------------------------------|:--------------------------|:-------------------------------| | TRI Senior Secured Note | 23,651 | 23,801 | | TRI Note | 3,500 | 3,500 | | Total Debt | 27,151 | 27,301 | | Less: current maturities | 711 | 693 | | TRI long-term debt | 26,440 | 26,608 | - The company entered into a new credit agreement on May 14, 2021, providing a **$150.0 million** revolving senior credit facility, maturing on May 14, 2026[58](index=58&type=chunk) - As of May 1, 2022, the company was in compliance with all financial and non-financial covenants of the New Credit Agreement[59](index=59&type=chunk) [4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=14&type=section&id=4.%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) This note details the components and changes in accrued expenses and other current liabilities, which decreased to $32.21 million | Category | May 1, 2022 ($ thousands) | January 30, 2022 ($ thousands) | |:-------------------------------------------------|:--------------------------|:-------------------------------| | Salaries and benefits | 5,206 | 11,773 | | Deferred revenue | 9,054 | 10,791 | | Freight | 4,174 | 8,942 | | Product returns | 4,381 | 5,439 | | Unpaid purchases of property & equipment | 3,004 | 794 | | Accrued advertising | 3,178 | 600 | | Total accrued expenses and other current liabilities | 32,214 | 47,504 | - Total accrued expenses and other current liabilities decreased by **$15.29 million**, or **32.2%**, from **$47.50 million** at January 30, 2022, to **$32.21 million** at May 1, 2022[60](index=60&type=chunk) [5. FAIR VALUE](index=14&type=section&id=5.%20FAIR%20VALUE) This note explains the company's fair value measurements for its available-for-sale security and TRI long-term debt - The company's available-for-sale security (corporate trust) is valued using a Level 3 discounted cash flow method[65](index=65&type=chunk) | Metric | May 1, 2022 ($ thousands) | January 30, 2022 ($ thousands) | |:-------------------------------------|:--------------------------|:-------------------------------| | Available-for-sale security (Fair Value) | 6,066 | 6,554 | | TRI Long-term debt (Fair Value) | 25,731 | 27,804 | - The fair value of the available-for-sale security decreased from **$6.55 million** to **$6.07 million**, with an unrealized security loss of **$(0.45) million** recognized during the three months ended May 1, 2022[17](index=17&type=chunk)[66](index=66&type=chunk) [6. VARIABLE INTEREST ENTITY](index=16&type=section&id=6.%20VARIABLE%20INTEREST%20ENTITY) This note explains the consolidation of TRI Holdings, LLC as a variable interest entity, which owns the company's headquarters - Duluth Holdings Inc. consolidates TRI Holdings, LLC (TRI) as a variable interest entity (VIE) because it is deemed the primary beneficiary, having the power to direct TRI's activities and receive significant benefits[71](index=71&type=chunk)[72](index=72&type=chunk) - TRI's primary purpose is to own the real property for the company's headquarters, which Duluth leases[72](index=72&type=chunk) | TRI Consolidated Amounts (in thousands) | May 1, 2022 | January 30, 2022 | |:----------------------------------------|:------------|:-----------------| | Property and equipment, net | $24,025 | $24,180 | | Total assets | $24,049 | $24,201 | | TRI Long-term debt | $26,440 | $26,608 | | Noncontrolling interest in VIE | $(3,181) | $(3,152) | | Total liabilities and shareholders' equity | $24,049 | $24,201 | [7. (LOSS) EARNINGS PER SHARE](index=16&type=section&id=7.%20%28LOSS%29%20EARNINGS%20PER%20SHARE) This note presents basic and diluted loss per share for the three months ended May 1, 2022, and explains anti-dilutive impacts | Metric | Three Months Ended May 1, 2022 | Three Months Ended May 2, 2021 | |:------------------------------------------------|:-------------------------------|:-------------------------------| | Net (loss) income attributable to controlling interest ($ thousands) | (1,294) | 544 | | Weighted average shares outstanding (Basic) | 32,714 | 32,540 | | Weighted average shares outstanding (Diluted) | 32,714 | 32,720 | | Basic (loss) earnings per share | (0.04) | 0.02 | | Diluted (loss) earnings per share | (0.04) | 0.02 | - Diluted (loss) earnings per share was **$(0.04)** for the three months ended May 1, 2022, compared to **$0.02** for the same period in 2021[76](index=76&type=chunk) - **0.2 million** shares of unvested restricted stock were excluded from the diluted EPS calculation for Q1 2022 because their inclusion would have been anti-dilutive due to the net loss[76](index=76&type=chunk) [8. STOCK-BASED COMPENSATION](index=17&type=section&id=8.%20STOCK-BASED%20COMPENSATION) This note details stock-based compensation expense and outstanding unvested restricted stock awards, including unrecognized expense - Total stock compensation expense associated with restricted stock was **$0.6 million** for the three months ended May 1, 2022, up from **$0.4 million** in the prior year[78](index=78&type=chunk) | Restricted Stock Activity | Shares | Weighted average fair value per share | |:--------------------------------|:----------|:--------------------------------------| | Outstanding at January 30, 2022 | 405,334 | $13.54 | | Granted | 279,638 | $12.77 | | Vested | (96,207) | $13.75 | | Forfeited | (969) | $15.61 | | Outstanding at May 1, 2022 | 587,796 | $13.19 | - As of May 1, 2022, unrecognized compensation expense related to restricted stock awards was **$6.6 million**, to be recognized over a weighted average period of **3.0 years**[79](index=79&type=chunk) [9. PROPERTY AND EQUIPMENT](index=18&type=section&id=9.%20PROPERTY%20AND%20EQUIPMENT) This note provides a breakdown of property and equipment, net, which decreased to $108.28 million due to depreciation and new investments | Category | May 1, 2022 ($ thousands) | January 30, 2022 ($ thousands) | |:----------------------------------------|:--------------------------|:-------------------------------| | Land and land improvements | 4,486 | 4,486 | | Leasehold improvements | 48,125 | 48,093 | | Buildings | 35,359 | 35,359 | | Software | 35,413 | 34,207 | | Total gross property and equipment | 202,976 | 201,973 | | Accumulated depreciation and amortization | (101,426) | (97,473) | | Construction in progress | 6,733 | 5,578 | | Property and equipment, net | 108,283 | 110,078 | - Net property and equipment decreased by **$1.79 million**, or **1.6%**, from **$110.08 million** at January 30, 2022, to **$108.28 million** at May 1, 2022[82](index=82&type=chunk) [10. REVENUE](index=18&type=section&id=10.%20REVENUE) This note describes the company's revenue recognition policies, sales channel performance, and contract balances - Revenue is recognized upon shipment for direct-to-consumer sales and at the point of sale for store sales, net of returns and excluding taxes[83](index=83&type=chunk) | Sales Channel | Three Months Ended May 1, 2022 ($ thousands) | Three Months Ended May 2, 2021 ($ thousands) | |:-------------------|:---------------------------------------------|:---------------------------------------------| | Direct-to-consumer | 77,680 | 88,366 | | Stores | 45,224 | 45,053 | | Total | 122,904 | 133,419 | | Contract Balances (in thousands) | May 1, 2022 | January 30, 2022 | |:---------------------------------|:------------|:-----------------| | Contract assets | $1,852 | $2,235 | | Contract liabilities | $9,054 | $10,791 | - Gift card breakage revenue is recorded within Net sales when no escheat liability to relevant jurisdictions exists[89](index=89&type=chunk) [11. INCOME TAXES](index=19&type=section&id=11.%20INCOME%20TAXES) This note details the company's income tax benefit and effective tax rate for Q1 2022, excluding TRI's income - Income tax benefit was **$(0.44) million** for the three months ended May 1, 2022, compared to an income tax expense of **$0.11 million** in the prior year[14](index=14&type=chunk)[122](index=122&type=chunk) - The effective tax rate related to controlling interest increased to **25%** for Q1 2022 from **16%** for Q1 2021[90](index=90&type=chunk)[122](index=122&type=chunk) - Income from TRI Holdings, LLC is excluded from the effective tax rate calculation as TRI is a limited liability company and not subject to income taxes[90](index=90&type=chunk) [12. RECENT ACCOUNTING PRONOUNCEMENTS](index=19&type=section&id=12.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) This note discusses the company's evaluation of ASU 2016-13, expected to be adopted in fiscal year 2023 - The company is evaluating the impact of adopting ASU 2016-13, which requires a forward-looking approach to estimate credit losses on financial instruments[91](index=91&type=chunk) - As a smaller reporting company, Duluth Holdings Inc. expects to adopt ASU 2016-13 on January 30, 2023, for its fiscal year 2023[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of Duluth Holdings Inc.'s financial condition and operational results [Overview](index=20&type=section&id=Overview) This section provides an overview of Duluth Holdings Inc.'s business, key Q1 2022 financial results, and strategic initiatives - Duluth Holdings Inc. is a lifestyle brand offering men's and women's casual wear, workwear, and accessories through its omnichannel platform, operating **62 retail stores** and **three outlet stores** as of May 1, 2022[96](index=96&type=chunk) - Key financial results for Q1 fiscal 2022 include a **7.9%** decrease in net sales to **$122.9 million**, a net loss of **$(1.3) million** (compared to **$0.5 million** net income in prior year), and Adjusted EBITDA decreasing to **$7.9 million** (from **$9.6 million**)[100](index=100&type=chunk)[125](index=125&type=chunk) - The company is executing its "Big Dam Blueprint" strategy, focusing on a digital-first mindset, optimizing owned retail channels, evolving its multi-brand platform, testing new opportunities, and accelerating investments in logistics automation and technology[102](index=102&type=chunk) [How We Assess the Performance of Our Business](index=21&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) This section explains key financial metrics used to evaluate the company's performance, including net sales, gross profit, and EBITDA - Net sales include merchandise sales plus shipping and handling revenue, less returns and discounts, recognized upon shipment for direct-to-consumer and at point of sale for stores[107](index=107&type=chunk) - Gross profit is net sales less cost of goods sold, with gross margin as a percentage of net sales. Cost of goods sold includes direct merchandise cost, inventory shrinkage, adjustments, and inbound/distribution center freight[108](index=108&type=chunk) - Selling, general and administrative (SG&A) expenses include payroll, occupancy, marketing, logistics, consulting, and software costs. SG&A as a percentage of net sales is typically higher in lower-volume quarters[109](index=109&type=chunk) - Adjusted EBITDA is a non-GAAP measure defined as consolidated net income before depreciation, amortization, interest, and income taxes, adjusted for non-cash and other non-representative items. It is used to assess operating performance and determine bonus compensation[111](index=111&type=chunk)[112](index=112&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section analyzes the company's operational results for the three months ended May 1, 2022, focusing on key financial metrics | Metric | Three Months Ended May 1, 2022 ($ thousands) | Three Months Ended May 2, 2021 ($ thousands) | |:------------------------------------------------|:---------------------------------------------|:---------------------------------------------| | Net sales | 122,904 | 133,419 | | Gross profit | 67,063 | 66,543 | | Gross margin | 54.6% | 49.9% | | Selling, general and administrative expenses | 67,994 | 64,648 | | Operating (loss) income | (931) | 1,895 | | Net (loss) income attributable to controlling interest | (1,294) | 544 | | Adjusted EBITDA | 7,886 | 9,556 | - Net sales decreased by **$10.5 million** (**7.9%**) to **$122.9 million**, primarily due to supply chain disruptions and heavier clearance sales in the prior year. Store market sales decreased by **5.4%**, and non-store market sales decreased by **12.5%**[116](index=116&type=chunk)[117](index=117&type=chunk) - Gross profit increased by **$0.5 million** (**0.8%**) to **$67.1 million**, with gross margin improving to **54.6%** from **49.9%**, driven by a higher mix of full-price sales due to reduced promotional activity[119](index=119&type=chunk) - Selling, general and administrative expenses increased by **$3.3 million** (**5.2%**) to **$68.0 million**, rising to **55.3%** of net sales from **48.5%**, mainly due to investments in new headcount, increased depreciation, and higher advertising expense[120](index=120&type=chunk)[121](index=121&type=chunk) - Adjusted EBITDA decreased by **$1.7 million** to **$7.9 million**, representing **6.4%** of net sales, down from **7.2%** in the prior year[125](index=125&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity sources, cash needs, working capital, and cash flow activities - The company's primary liquidity sources are cash from operating activities and its credit facility. Key cash needs include inventory, marketing, payroll, store leases, and capital expenditures for infrastructure, IT, and new stores[126](index=126&type=chunk) - Net working capital was **$106.0 million** at May 1, 2022, including **$40.4 million** in cash and cash equivalents[127](index=127&type=chunk) - Expected capital expenditures for fiscal 2022 are approximately **$40.0 million**, primarily for logistics optimization and automated fulfillment centers[128](index=128&type=chunk) - Net cash used in operating activities was **$(31.7) million** in Q1 2022, primarily due to a **$29.6 million** increase in inventory and a **$17.5 million** decrease in accrued expenses[133](index=133&type=chunk) - Net cash used in investing activities was **$(3.8) million**, driven by **$3.9 million** in capital expenditures for information technology[135](index=135&type=chunk) - Net cash used in financing activities was **$(1.1) million**, mainly for payments on finance lease obligations[137](index=137&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no significant changes in the company's market risks since its 2021 Form 10-K filing - No significant changes in market risks were reported compared to the 2021 Form 10-K[144](index=144&type=chunk) - Disclosure on interest rate risk related to the credit agreement is available in Note 3 of the Condensed Consolidated Financial Statements[144](index=144&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of May 1, 2022[145](index=145&type=chunk) - No material changes in internal control over financial reporting occurred during the period covered by this Quarterly Report on Form 10-Q[146](index=146&type=chunk) [PART II. OTHER INFORMATION](index=26&type=section&id=Part%20II%E2%80%94Other%20Information) This section provides additional information, including legal proceedings, risk factors, equity security sales, and exhibits [Item 1. Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the company is not currently involved in any legal proceedings expected to have a material adverse effect - The company is not currently party to any legal proceedings expected to have a material adverse effect on its business, financial condition, operating results, or cash flows[147](index=147&type=chunk) - Reserves are established for specific legal matters when an unfavorable outcome is probable and the loss is reasonably estimable[147](index=147&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to the company's risk factors since its fiscal 2021 Annual Report on Form 10-K - No material changes to risk factors were reported compared to the fiscal 2021 Annual Report on Form 10-K[149](index=149&type=chunk) - The company operates in a rapidly changing environment with inherent risks that may materially affect its business, financial condition, and results of operations[149](index=149&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered equity security sales and details shares acquired from employees for tax withholding - No unregistered equity securities were sold during the quarter ended May 1, 2022[151](index=151&type=chunk) | Period | Total number of shares purchased | Average price per share | |:--------------------------------------|:---------------------------------|:------------------------| | January 31, 2022 - February 27, 2022 | 50,817 | $14.40 | | February 28, 2022 - April 3, 2022 | 30,048 | $13.12 | | April 4, 2022 - May 1, 2022 | 15,342 | $12.32 | | Total | 96,207 | $13.67 | - The company acquired **96,207 shares** from employees to cover tax withholding requirements on vested restricted stock, with an average price of **$13.67** per share[152](index=152&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including executive compensation plans and various certifications - Exhibits include executive severance plans, director compensation summaries, and CEO/CFO certifications[154](index=154&type=chunk) - XBRL Instance Document and Taxonomy Extension documents are furnished, not filed, in accordance with Regulation S-T[154](index=154&type=chunk) [Signatures](index=30&type=section&id=Signatures) This section confirms the due signing of the Quarterly Report on Form 10-Q by the company's key financial officers - The report was signed on June 3, 2022, by David Loretta, Senior Vice President and Chief Financial Officer, and Michael Murphy, Vice President and Chief Accounting Officer[158](index=158&type=chunk)