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a.k.a. Brands (AKA) - 2024 Q1 - Quarterly Results
a.k.a. Brands a.k.a. Brands (US:AKA)2024-05-08 20:07

a.k.a. Brands Holding Corp. First Quarter 2024 Financial Results Performance Overview In Q1 2024, the company exceeded guidance despite a 3.0% decline in total net sales, driven by U.S. growth and balance sheet improvements Q1 2024 Key Financial Metrics | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $116.8M | $120.5M | -3.0% | | U.S. Net Sales | - | - | +6.2% | | Net Loss | $(8.9)M | $(9.6)M | N/A | | Net Loss per Share | $(0.85) | $(0.89) | N/A | | Adjusted EBITDA | $0.9M | $2.2M | -59.1% | - The company successfully grew its active customer base by 5.5% on a trailing twelve-month basis compared to Q1 202336 - Significant balance sheet improvements were made year-over-year, with a 19% reduction in inventory and a 22% reduction in debt3 - Management highlighted strong execution of strategic priorities, including customer acquisition and retention, omnichannel presence, and operational streamlining68 Brand Highlights Key brands executed strategic initiatives, including physical store expansion, new marketplace launches, and strong U.S. sales growth - Princess Polly is expanding its physical retail footprint with three new stores planned for Q3 2024 in Scottsdale, Boston, and San Diego12 - Petal & Pup expanded its omnichannel strategy by launching on Nordstrom's website, building on previous successes with Macy's and Target12 - Culture Kings U.S. delivered another quarter of strong double-digit net sales growth, driven by its first-party brands which made up over 50% of its U.S. sales12 Financial Performance Analysis The company experienced mixed financial results with declining net sales and gross margin, offset by reduced administrative expenses First Quarter Financial Details Net sales decreased 3.0% and gross margin contracted slightly, while G&A expenses improved as a percentage of sales Q1 2024 vs Q1 2023 Operating Results | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Sales | $116.8M | $120.5M | | Gross Margin | 56.2% | 56.9% | | Selling Expenses (% of sales) | 29.3% | 28.6% | | Marketing Expenses (% of sales) | 12.7% | 12.3% | | G&A Expenses (% of sales) | 19.4% | 21.5% | | Adjusted EBITDA | $0.9M | $2.2M | - The decrease in net sales was driven by a decline in average order value, primarily due to adverse macroeconomic conditions in Australia and New Zealand18 - G&A expenses decreased primarily due to reductions in sales tax penalties and interest, professional fees, intangible amortization, and insurance costs18 Balance Sheet and Cash Flow The company strengthened its balance sheet by reducing inventory and debt, though cash flow from operations saw increased usage Balance Sheet and Cash Flow Highlights (as of March 31, 2024) | Metric | Q1 2024 | Q1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $21.9M | $30.2M | -27.5% | | Inventory | $91.5M | $112.5M | -18.7% | | Total Debt | $103.6M | $132.4M | -21.8% | | Cash flow used in operations | $(7.7)M | $(3.0)M | +156.7% | Outlook The company provides guidance for Q2 and the full fiscal year 2024, anticipating net sales of $545 million to $555 million for the year Q2 2024 Outlook | Metric | Guidance Range | | :--- | :--- | | Net Sales | $133M - $138M | | Adjusted EBITDA | $4.5M - $5.5M | | Weighted Avg. Diluted Shares | 10.5M | Full Year 2024 Outlook | Metric | Guidance Range | | :--- | :--- | | Net Sales | $545M - $555M | | Adjusted EBITDA | $17M - $19M | | Weighted Avg. Diluted Shares | 10.6M | - The outlook assumes continued macroeconomic pressures, particularly in Australia and New Zealand, and the opening of three to four Princess Polly stores16 Key Financial and Operating Metrics Active customers grew 5.5%, but average order value declined, with U.S. sales growth contrasting a sharp decline in Australia/New Zealand Key Operational Metrics (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Active customers (millions) | 3.83 | 3.63 | 5.5% | | Average order value | $77 | $80 | (3.8)% | | Number of orders (millions) | 1.52 | 1.50 | 1.3% | Sales by Region (Q1 2024 vs Q1 2023) | Region | Q1 2024 Sales | Q1 2023 Sales | % Change | | :--- | :--- | :--- | :--- | | U.S. | $77.1M | $72.6M | 6.2% | | Australia/New Zealand | $33.5M | $41.4M | (19.1)% | | Rest of world | $6.2M | $6.4M | (3.5)% | | Total | $116.8M | $120.5M | (3.0)% | Consolidated Financial Statements This section presents the unaudited condensed consolidated statements of income, balance sheets, and cash flows for Q1 2024 Condensed Consolidated Statements of Income The company reported a net loss of $8.9 million on net sales of $116.8 million for the first quarter of 2024 Q1 2024 Income Statement Summary (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net sales | $116,840 | $120,485 | | Gross profit | $65,674 | $68,500 | | Loss from operations | $(6,093) | $(6,551) | | Net loss | $(8,933) | $(9,553) | | Net loss per share | $(0.85) | $(0.89) | Condensed Consolidated Balance Sheets As of March 31, 2024, the company held total assets of $355.8 million and total liabilities of $220.2 million Balance Sheet Summary (in thousands) | Line Item | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $21,939 | $21,859 | | Inventory | $91,489 | $91,024 | | Total assets | $355,754 | $361,721 | | Total liabilities | $220,244 | $213,103 | | Total stockholders' equity | $135,510 | $148,618 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $7.7 million, while financing activities provided $8.9 million in cash Cash Flow Summary (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,687) | $(2,960) | | Net cash used in investing activities | $(755) | $(1,880) | | Net cash (used in) provided by financing activities | $8,899 | $(11,443) | | Net decrease in cash | $(133) | $(16,129) | Reconciliation of Non-GAAP Financial Measures This section reconciles the Q1 2024 GAAP net loss of $8.9 million to the non-GAAP Adjusted EBITDA of $0.9 million Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net loss | $ (8,933) | $ (9,553) | | Total other expense, net | 2,821 | 3,885 | | Provision for (benefit from) income tax | 19 | (883) | | Depreciation and amortization expense | 4,298 | 5,440 | | Equity-based compensation expense | 1,956 | 1,936 | | Non-routine items | 713 | 1,361 | | Adjusted EBITDA | $ 874 | $ 2,186 |