Snap One Holdings Corp. (Nasdaq: SNPO)
(“Snap One,” the “Company,” “we,” or “our”), a provider of
smart living products, services, and software to professional
integrators, reported financial results for the fiscal third
quarter ended September 29, 2023.
Fiscal Third Quarter 2023 and Recent Operational
Highlights
- Extended industry leadership
position through numerous recognitions at the 2023 CEDIA Expo
- CEDIA Best New Hardware award for
the Luma X20 family of video surveillance solutions, reflecting
expanded use cases across residential and commercial
applications
- Residential Tech Today Innovation
award for the Control4 single room bundle and Triad passive
soundbars, highlighting continued product innovation
- CEDIA Hall of Fame award for OvrC
and Control4 OS2, recognizing the Snap One software platforms that
have shaped the industry
- Expanded omni-channel presence with
the opening of two new local branches in Raleigh, NC and Chantilly,
VA, bringing the total number of North American branches to 43 at
quarter end
- Delivered further Control4 software
enhancements including voice control integration with leading
services such as Apple TV and Xfinity via the new Halo Touch remote
control
- Converged U.S. e-commerce portals to provide a unified partner
experience while further integrating company operations
Management Commentary“We closed the third
quarter with momentum following an impressive showing at the 2023
CEDIA Expo that reinforced our leadership position in the smart
living industry,” said Snap One CEO John Heyman. “In partnership
with our integrators, we’re delivering innovation in our products,
solutions, and service models that we believe are enhancing
integrator operational efficiency and improving consumer
satisfaction with the experiences our partners deliver. We continue
to believe that an aligned partnership between manufacturer,
integrator, and end consumer is the key to unlocking the full
potential of the smart living opportunity.”
“Reflecting on our financial performance, our team delivered
solid results in the third quarter. Despite continued channel
inventory destocking headwinds and macro uncertainty, we believe
our integrators are continuing to see stable demand drivers and, in
turn, are choosing our solutions, highlighting the resiliency of
our business model and success of our new products. Further, we
drove key margin enhancement initiatives, which allowed us to
deliver improved profitability in the quarter on a year-over-year
basis. We also continued to execute our plan to right-size
inventory levels, enabling us to fully repay our revolving credit
facility and to strengthen our liquidity position as we plan for
2024 and beyond.”
Fiscal Third Quarter 2023 Financial
ResultsResults compare 2023 fiscal third quarter end
(September 29, 2023) to 2022 fiscal third quarter end (September
30, 2022) unless otherwise indicated. The Company’s fiscal third
quarter in both years reflects a 13-week period. Results are
presented on an as-reported basis, unless otherwise indicated.
- Net sales decreased 3.9% to $270.1
million from $281.2 million in the comparable year-ago period.
- Selling, general and administrative
(SG&A) expenses decreased 6.0% to $84.0 million (31.1% of net
sales) from $89.4 million (31.8% of net sales) in the comparable
year-ago period.
- Net loss decreased to $0.9 million
(-0.3% of net sales) compared to net loss of $1.0 million (-0.4% of
net sales) in the comparable year-ago period.
- Contribution margin, a non-GAAP
measurement of operating performance reconciled below, decreased
0.2% to $113.6 million (42.0% of net sales) from $113.8 million
(40.5% of net sales) in the comparable year-ago period.
- Adjusted EBITDA, a non-GAAP
measurement of operating performance reconciled below, increased
3.7% to $33.0 million (12.2% of net sales) compared to $31.9
million (11.3% of net sales) in the comparable year-ago
period.
- Adjusted net income, a non-GAAP
measurement of operating performance reconciled below, decreased to
$11.3 million (4.2% of net sales) from $14.9 million (5.3% of net
sales) in the comparable year-ago period.
- Net cash provided by operating
activities totaled $65.7 million in the nine-month period ended
September 29, 2023, compared to net cash used in operating
activities of $15.4 million in the comparable year-ago period.
- As of September 29, 2023, cash and
cash equivalents were $40.0 million, compared to $21.1 million at
the end of fiscal year 2022.
- Free cash flow, a non-GAAP measurement of operating performance
reconciled below, totaled $45.7 million in the nine-month period
ended September 29, 2023, compared to $(25.4) million in the
comparable year-ago period.
Stock Repurchase ProgramOn May 12, 2022, Snap
One announced that its Board of Directors had approved a stock
repurchase program that authorized potential repurchases of up to
$25 million of its common stock from the date of approval through
the end of 2023. On November 6, 2023, the Company’s Board of
Directors amended the stock repurchase program to extend its
expiration date to December 31, 2024. Under the repurchase program,
the Company may purchase shares of common stock on a discretionary
basis from time to time through open market repurchases, privately
negotiated transactions or other means, including through Rule
10b5-1 trading plans or through the use of other techniques such as
tender offers or accelerated share repurchases. Snap One expects to
fund the repurchase with its existing cash balance and cash
generated from operations.
As of September 29, 2023, the Company had repurchased 296,467
shares of its common stock through this program for an aggregate
amount of $3.1 million.
Fiscal 2023 Financial Outlook“Heading into the
end of the year, we are continuing to maintain our focus on
increasing profitability while investing prudently for growth,”
Heyman continued. “Our enhanced liquidity position underscores this
commitment and provides us additional flexibility to operate the
business in response to the dynamic macroeconomic environment.”
“We are narrowing the range of our outlook for both net sales
and adjusted EBITDA for 2023. We now expect net sales in the fiscal
year ending December 29, 2023 to range between $1.06 billion and
$1.07 billion and adjusted EBITDA1 to range between $110 million
and $116 million. This outlook considers our performance through
the first nine months of 2023 as well as our expectation that an
inherent level of market uncertainty will continue for the
foreseeable future. We continue to believe in the long-term secular
growth of the smart living opportunity.”
Supplemental Earnings PresentationThe Company
has posted a supplemental earnings presentation accompanying its
fiscal third quarter 2023 results to the Events & Presentations
section of its Investor Relations website, which can be found at
investors.snapone.com.
Conference CallSnap One management will hold a
conference call today, November 7, 2023 at 4:30 p.m. Eastern Time
(1:30 p.m. Pacific Time) to discuss these results.
Company CEO John Heyman and CFO Mike Carlet will host the call,
followed by a question-and-answer period.
Registration Link: Click here to register
Please register online at least 10 minutes prior to the start
time. If you have any difficulty with registration or connecting to
the conference call, please contact Gateway Group at
949-574-3860.
The conference call will be broadcast live and available for
replay here and via the Investor Relations section of Snap One's
website.
About Snap OneAs a leading distributor of smart
living technology, Snap One empowers its vast network of
professional integrators to deliver entertainment, connectivity,
automation, and security solutions to residential and commercial
end users worldwide. Snap One distributes an expansive portfolio of
proprietary and third-party products through its intuitive online
portal and local branch network, blending the benefits of
e-commerce with the convenience of same-day pickup. The Company
provides software, award-winning support, and digital workflow
tools to help its integrator partners build thriving and profitable
businesses. Additional information about Snap One can be found
at snapone.com.
Snap One intends to use its website as a means of disclosing
material, non-public information and for complying with its
disclosure obligations under Regulation FD. Such disclosures will
be included in the Investor Relations section of the Snap One
website at investors.snapone.com. Accordingly, investors should
monitor such portion of the website, in addition to following the
Company’s press releases, Securities and Exchange Commission
(“SEC”) filings and public conference calls and webcasts.
Non-GAAP Financial MeasuresIn addition to the
financial measures prepared in accordance with generally accepted
accounting principles in the United States (“GAAP”), this press
release contains certain non-GAAP financial measures, including
contribution margin, adjusted EBITDA, adjusted net income, and free
cash flow. A non-GAAP financial measure is generally defined as a
numerical measure of a company’s financial or operating performance
that excludes or includes amounts so as to be different than the
most directly comparable measure calculated and presented in
accordance with GAAP. We use the following non-GAAP measures to
help us monitor the performance of our business, identify trends
affecting our business and assist us in making strategic
decisions:
Contribution margin, which is defined as net sales less cost of
sales, exclusive of depreciation and amortization, divided by net
sales.
Adjusted EBITDA, which is defined as net loss, plus interest
expense, income tax benefit, depreciation and amortization, other
income, net further adjusted to exclude equity-based compensation,
acquisition- and integration-related costs and certain other
non-recurring, non-core, infrequent or unusual charges as set forth
in the reconciliation in this section below.
Adjusted net income, which is defined as net loss plus
amortization further adjusted to exclude equity-based compensation,
acquisition- and integration-related costs, (income) expense
related to interest rate cap and certain non-recurring, non-core,
infrequent or unusual charges, including the estimated tax impacts
of these adjustments as set forth in the reconciliation in this
section below.
Free cash flow, which is defined as net cash (used in) provided
by operating activities less capital expenditures (which consist of
purchases of property and equipment as well as purchases of
information technology, software development and leasehold
improvements).
Contribution margin, adjusted EBITDA, adjusted net income and
free cash flow are key measures used by management to understand
and evaluate our financial performance, trends and generate future
operating plans, make strategic decisions regarding the allocation
of capital, and analyze investments in initiatives that are focused
on cultivating new markets for our products and services. We
believe contribution margin, adjusted EBITDA, adjusted net income
and free cash flow are useful measurements for analysts, investors,
and other interested parties to evaluate companies in our markets
as they help identify underlying trends that could otherwise be
masked by certain expenses that we do not consider indicative of
our ongoing performance.
Contribution margin, adjusted EBITDA, adjusted net income and
free cash flow have limitations as analytical tools. These measures
are not calculated in accordance with GAAP and should not be
considered in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP. In addition,
contribution margin, adjusted EBITDA, adjusted net income and free
cash flow may not be comparable to similarly titled metrics of
other companies due to differences among the methods of
calculation.
Cautionary Statements Concerning Forward-Looking
StatementsCertain statements contained in this press
release constitute forward-looking statements within the meaning of
the “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995, as amended, which reflect our current views
with respect to, among other things, our operations, earnings and
financial performance, including our guidance for 2023, and our
stock repurchase plans. You can identify these forward-looking
statements by the use of words such as “outlook,” “indicator,”
“believes,” “project,” “forecast,” “targets,” “expects,”
“potential,” “continues,” “may,” “will,” “should,” “seeks,”
“approximately,” “predicts,” “intends,” “plans,” “scheduled,”
“estimates,” “anticipates” or the negative version of these words
or other comparable words. Such forward-looking statements are
subject to various risks and uncertainties. Accordingly, there are
or will be important factors that could cause actual outcomes or
results to differ materially from those indicated in these
statements. We believe these factors include but are not limited to
the risks related to our business and industry, risks related to
our products, risks related to our manufacturing and supply chain,
risks related to our distribution channels, risks related to laws
and regulations, risks related to cybersecurity and privacy, risks
related to intellectual property, risks related to our
international operations, risks related to our indebtedness, risks
related to interest rate and exchange rate volatility, risks
related to our financial statements, risks related to our common
stock, and other risks as described under the section entitled
“Risk Factors” in our latest Annual Report on Form 10-K filed with
the SEC, as such factors may be updated from time to time in our
periodic filings with the SEC, which are accessible on the SEC’s
website at www.sec.gov. These factors should not be construed as
exhaustive and should be read in conjunction with the other
cautionary statements that are included in this report and in our
other periodic filings. The forward-looking statements speak only
as of the date of this report, and, except as required by law, we
undertake no obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments or otherwise.
Contacts
Media:
Danielle KarrDirector, Public Relations &
EventsDanielle.Karr@SnapOne.com
Investors:
Tom Colton and Matt GloverGateway
Group949-574-3860IR@SnapOne.com
-Financial Tables to Follow-
|
|
|
|
Snap One
Holdings Corp. and SubsidiariesCondensed
Consolidated Statements of Operations (unaudited,
in thousands, except per share amounts) |
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 29, |
|
September 30, |
|
September
29, |
|
September 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net sales |
$ |
270,144 |
|
|
$ |
281,234 |
|
|
$ |
796,591 |
|
|
$ |
855,573 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Cost of sales, exclusive of depreciation and amortization |
|
156,580 |
|
|
|
167,435 |
|
|
|
459,610 |
|
|
|
520,162 |
|
Selling, general and administrative expenses |
|
84,037 |
|
|
|
89,379 |
|
|
|
271,627 |
|
|
|
271,300 |
|
Depreciation and amortization |
|
15,371 |
|
|
|
14,812 |
|
|
|
45,967 |
|
|
|
44,667 |
|
Total costs and expenses |
|
255,988 |
|
|
|
271,626 |
|
|
|
777,204 |
|
|
|
836,129 |
|
Income from
operations |
|
14,156 |
|
|
|
9,608 |
|
|
|
19,387 |
|
|
|
19,444 |
|
Other
expenses (income): |
|
|
|
|
|
|
|
Interest expense |
|
14,893 |
|
|
|
10,244 |
|
|
|
43,730 |
|
|
|
24,687 |
|
Other expense (income), net |
|
511 |
|
|
|
620 |
|
|
|
(652 |
) |
|
|
137 |
|
Total other expenses |
|
15,404 |
|
|
|
10,864 |
|
|
|
43,078 |
|
|
|
24,824 |
|
Loss before
income taxes |
|
(1,248 |
) |
|
|
(1,256 |
) |
|
|
(23,691 |
) |
|
|
(5,380 |
) |
Income tax
benefit |
|
(348 |
) |
|
|
(238 |
) |
|
|
(8,119 |
) |
|
|
(762 |
) |
Net
loss |
|
(900 |
) |
|
|
(1,018 |
) |
|
|
(15,572 |
) |
|
|
(4,618 |
) |
Net loss
attributable to noncontrolling interest |
|
— |
|
|
|
(8 |
) |
|
|
— |
|
|
|
(45 |
) |
Net loss
attributable to Company |
$ |
(900 |
) |
|
$ |
(1,010 |
) |
|
$ |
(15,572 |
) |
|
$ |
(4,573 |
) |
|
|
|
|
|
|
|
|
Net loss per
share, basic and diluted |
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.21 |
) |
|
$ |
(0.06 |
) |
Weighted
average shares outstanding, basic and diluted |
|
75,854 |
|
|
|
74,650 |
|
|
|
75,577 |
|
|
|
74,567 |
|
|
|
|
|
Snap One
Holdings Corp. and SubsidiariesCondensed
Consolidated Balance Sheets(unaudited, in
thousands, except par value) |
|
|
|
As of |
|
September 29, 2023 |
|
December 30, 2022 |
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
40,030 |
|
|
$ |
21,117 |
|
Accounts receivable, net |
|
53,849 |
|
|
|
48,174 |
|
Inventories |
|
275,469 |
|
|
|
314,588 |
|
Prepaid expenses |
|
20,349 |
|
|
|
22,913 |
|
Other current assets |
|
2,712 |
|
|
|
5,930 |
|
Total current assets |
|
392,409 |
|
|
|
412,722 |
|
Long-term
assets: |
|
|
|
Property and equipment, net |
|
45,725 |
|
|
|
34,958 |
|
Goodwill |
|
592,214 |
|
|
|
592,186 |
|
Other intangible assets, net |
|
517,146 |
|
|
|
554,419 |
|
Operating lease right-of-use assets |
|
53,578 |
|
|
|
54,041 |
|
Other assets |
|
8,163 |
|
|
|
4,195 |
|
Total
assets |
$ |
1,609,235 |
|
|
$ |
1,652,521 |
|
Liabilities and stockholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Current maturities of long-term debt |
$ |
5,200 |
|
|
$ |
5,063 |
|
Accounts payable |
|
66,602 |
|
|
|
77,443 |
|
Accrued liabilities |
|
66,274 |
|
|
|
64,605 |
|
Current operating lease liability |
|
11,071 |
|
|
|
10,574 |
|
Current tax receivable agreement liability |
|
21,107 |
|
|
|
10,191 |
|
Total current liabilities |
|
170,254 |
|
|
|
167,876 |
|
Long-term
liabilities: |
|
|
|
Revolving credit facility, net |
|
— |
|
|
|
10,800 |
|
Long-term debt, net of current portion |
|
494,884 |
|
|
|
496,795 |
|
Deferred income tax liabilities, net |
|
32,045 |
|
|
|
43,515 |
|
Operating lease liability, net of current portion |
|
54,085 |
|
|
|
50,896 |
|
Tax receivable agreement liability, net of current portion |
|
80,929 |
|
|
|
101,262 |
|
Other liabilities |
|
19,284 |
|
|
|
24,206 |
|
Total liabilities |
|
851,481 |
|
|
|
895,350 |
|
Commitments
and contingencies (Note 14) |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, $0.01 par value, 500,000 shares authorized; 75,758
shares issued and outstanding as of September 29, 2023 and
75,042 shares issued and outstanding at December 30, 2022 |
|
758 |
|
|
|
750 |
|
Preferred stock, $0.01 par value; 50,000 shares authorized, no
shares issued and outstanding |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
865,453 |
|
|
|
848,703 |
|
Accumulated deficit |
|
(103,618 |
) |
|
|
(88,046 |
) |
Accumulated other comprehensive loss |
|
(4,839 |
) |
|
|
(4,236 |
) |
Total stockholders’ equity |
|
757,754 |
|
|
|
757,171 |
|
Total
liabilities and stockholders’ equity |
$ |
1,609,235 |
|
|
$ |
1,652,521 |
|
|
|
|
|
|
|
|
|
Snap One
Holdings Corp. and SubsidiariesCondensed
Consolidated Statements of Cash Flows(unaudited,
in thousands) |
|
|
|
Nine Months Ended |
|
September 29, 2023 |
|
September 30, 2022 |
Cash
flows from operating activities: |
|
|
|
Net loss |
$ |
(15,572 |
) |
|
$ |
(4,618 |
) |
Adjustments
to reconcile net loss to net cash from operating activities: |
|
|
|
Depreciation and amortization |
|
45,967 |
|
|
|
44,667 |
|
Amortization of debt issuance costs |
|
2,354 |
|
|
|
1,388 |
|
Deferred income taxes |
|
(11,592 |
) |
|
|
(6,169 |
) |
Equity-based compensation |
|
17,544 |
|
|
|
17,937 |
|
Non-cash operating lease expense |
|
8,250 |
|
|
|
9,859 |
|
Bad debt expense |
|
902 |
|
|
|
532 |
|
Unrealized gain on interest rate cap |
|
(813 |
) |
|
|
— |
|
Fair value adjustment to contingent value rights |
|
300 |
|
|
|
(6,200 |
) |
Valuation adjustment to TRA liability |
|
775 |
|
|
|
86 |
|
Provision for credit losses on notes receivable |
|
— |
|
|
|
5,872 |
|
Other, net |
|
(135 |
) |
|
|
81 |
|
Change in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(6,482 |
) |
|
|
2,117 |
|
Inventories |
|
38,413 |
|
|
|
(85,134 |
) |
Prepaid expenses and other assets |
|
1,994 |
|
|
|
3,286 |
|
Accounts payable, accrued liabilities and operating lease
liabilities |
|
(16,197 |
) |
|
|
935 |
|
Net cash provided by (used in) operating activities |
|
65,708 |
|
|
|
(15,361 |
) |
Cash
flows from investing activities: |
|
|
|
Acquisition
of business, net of cash acquired |
|
— |
|
|
|
(30,539 |
) |
Purchases of
property and equipment |
|
(19,988 |
) |
|
|
(10,024 |
) |
Issuance of
notes receivable |
|
— |
|
|
|
(600 |
) |
Other,
net |
|
51 |
|
|
|
75 |
|
Net cash used in investing activities |
|
(19,937 |
) |
|
|
(41,088 |
) |
Cash
flows from financing activities: |
|
|
|
Payments on
long-term debt |
|
(3,900 |
) |
|
|
(2,325 |
) |
Proceeds
from revolving credit facility |
|
38,000 |
|
|
|
57,000 |
|
Payments on
revolving credit facility |
|
(50,000 |
) |
|
|
— |
|
Proceeds
from interest rate cap |
|
539 |
|
|
|
— |
|
Repurchase
and retirement of common stock |
|
(293 |
) |
|
|
(2,410 |
) |
Proceeds
from employee stock purchase plan |
|
1,228 |
|
|
|
— |
|
Payment of
tax withholding obligation on settlement of equity awards |
|
(1,380 |
) |
|
|
— |
|
Payments of
tax receivable agreement |
|
(10,191 |
) |
|
|
— |
|
Payments of
contingent consideration |
|
(250 |
) |
|
|
— |
|
Net cash (used in) provided by financing activities |
|
(26,247 |
) |
|
|
52,265 |
|
Effect of
exchange rate changes on cash and cash equivalents |
|
(611 |
) |
|
|
(850 |
) |
Net
increase (decrease) in cash and cash equivalents |
|
18,913 |
|
|
|
(5,034 |
) |
Cash
and cash equivalents at beginning of the period |
|
21,117 |
|
|
|
40,577 |
|
Cash
and cash equivalents at end of the period |
$ |
40,030 |
|
|
$ |
35,543 |
|
Supplementary cash flow information: |
|
|
|
Cash paid for interest |
$ |
42,295 |
|
|
$ |
14,904 |
|
Cash paid for taxes, net |
$ |
6,014 |
|
|
$ |
4,943 |
|
Noncash
investing and financing activities: |
|
|
|
Capital expenditure in accounts payable |
$ |
218 |
|
|
$ |
613 |
|
|
|
|
|
|
|
|
|
Snap One
Holdings Corp. and SubsidiariesReconciliation of
Net Loss to Adjusted EBITDA(unaudited, in
thousands) |
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
September 29, |
|
September 30, |
|
September 29, |
|
September 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
(in
thousands) |
Net loss |
$ |
(900 |
) |
|
$ |
(1,018 |
) |
|
$ |
(15,572 |
) |
|
$ |
(4,618 |
) |
Interest
expense |
|
14,893 |
|
|
|
10,244 |
|
|
|
43,730 |
|
|
|
24,687 |
|
Income tax
benefit |
|
(348 |
) |
|
|
(238 |
) |
|
|
(8,119 |
) |
|
|
(762 |
) |
Depreciation
and amortization |
|
15,371 |
|
|
|
14,812 |
|
|
|
45,967 |
|
|
|
44,667 |
|
Other
expense (income), net |
|
511 |
|
|
|
620 |
|
|
|
(652 |
) |
|
|
137 |
|
Equity-based
compensation |
|
4,261 |
|
|
|
5,570 |
|
|
|
17,544 |
|
|
|
17,937 |
|
Compensation
expense for payouts in lieu of TRA participation(a) |
|
205 |
|
|
|
279 |
|
|
|
438 |
|
|
|
837 |
|
IT system
transition costs(b) |
|
11 |
|
|
|
268 |
|
|
|
219 |
|
|
|
268 |
|
Fair value
adjustment to contingent value rights(c) |
|
(1,700 |
) |
|
|
(125 |
) |
|
|
300 |
|
|
|
(6,200 |
) |
Severance
cost(d) |
|
— |
|
|
|
— |
|
|
|
1,276 |
|
|
|
— |
|
Deferred
acquisition payments(e) |
|
— |
|
|
|
(23 |
) |
|
|
133 |
|
|
|
1,007 |
|
Acquisition
and integration related costs(f) |
|
— |
|
|
|
284 |
|
|
|
— |
|
|
|
562 |
|
Provision
for credit losses on notes receivable(g) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,872 |
|
Deferred
revenue purchase accounting adjustment(h) |
|
— |
|
|
|
14 |
|
|
|
— |
|
|
|
164 |
|
Other
professional services costs(i) |
|
301 |
|
|
|
610 |
|
|
|
467 |
|
|
|
1,823 |
|
Other(j) |
|
436 |
|
|
|
578 |
|
|
|
1,638 |
|
|
|
765 |
|
Adjusted
EBITDA |
$ |
33,041 |
|
|
$ |
31,875 |
|
|
$ |
87,369 |
|
|
$ |
87,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Snap One
Holdings Corp. and SubsidiariesReconciliation of
Net Loss to Adjusted Net Income(unaudited, in
thousands) |
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
September 29, |
|
September 30, |
|
September 29, |
|
September 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
(in
thousands) |
Net loss |
$ |
(900 |
) |
|
$ |
(1,018 |
) |
|
$ |
(15,572 |
) |
|
$ |
(4,618 |
) |
Amortization |
|
12,439 |
|
|
|
12,536 |
|
|
|
37,316 |
|
|
|
37,794 |
|
Equity-based
compensation |
|
4,261 |
|
|
|
5,570 |
|
|
|
17,544 |
|
|
|
17,937 |
|
Foreign
currency losses |
|
101 |
|
|
|
137 |
|
|
|
17 |
|
|
|
124 |
|
Unrealized
losses (gains) on interest rate cap |
|
313 |
|
|
|
— |
|
|
|
(813 |
) |
|
|
— |
|
Compensation
expense for payouts in lieu of TRA participation(a) |
|
205 |
|
|
|
279 |
|
|
|
438 |
|
|
|
837 |
|
IT system
transition costs(b) |
|
11 |
|
|
|
268 |
|
|
|
219 |
|
|
|
268 |
|
Fair value
adjustment to contingent value rights(c) |
|
(1,700 |
) |
|
|
(125 |
) |
|
|
300 |
|
|
|
(6,200 |
) |
Severance
cost(d) |
|
— |
|
|
|
— |
|
|
|
1,276 |
|
|
|
— |
|
Deferred
acquisition payments(e) |
|
— |
|
|
|
(23 |
) |
|
|
133 |
|
|
|
1,007 |
|
Acquisition
and integration related costs(f) |
|
— |
|
|
|
284 |
|
|
|
— |
|
|
|
562 |
|
Provision
for credit losses on notes receivable(g) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,872 |
|
Deferred
revenue purchase accounting adjustment(h) |
|
— |
|
|
|
14 |
|
|
|
— |
|
|
|
164 |
|
Other
professional services costs(i) |
|
301 |
|
|
|
610 |
|
|
|
467 |
|
|
|
1,823 |
|
Other(j) |
|
441 |
|
|
|
976 |
|
|
|
1,547 |
|
|
|
1,028 |
|
Income tax
effect of adjustments(k) |
|
(4,167 |
) |
|
|
(4,619 |
) |
|
|
(13,857 |
) |
|
|
(14,492 |
) |
Adjusted Net
Income |
$ |
11,305 |
|
|
$ |
14,889 |
|
|
$ |
29,015 |
|
|
$ |
42,106 |
|
|
|
|
|
|
|
|
|
(a) Represents expense, net of forfeitures, related to payments
to certain pre-IPO owners in lieu of their participation in the Tax
Receivable Agreement entered into on July 29, 2021 (“TRA”).
Management does not believe such costs are indicative of our
ongoing operations as they are one-time awards specific to the
establishment of the TRA.
(b) Represents costs associated with the implementation of
enterprise resource planning systems, customer resource management
systems, and business intelligence systems as part of our
initiative to modernize our information technology (“IT”)
infrastructure.
(c) Represents noncash gains and losses recorded from fair value
adjustments related to contingent value right (“CVR”) liabilities.
Fair value adjustments related to CVR liabilities represent
potential obligations to the prior sellers in conjunction with the
acquisition of the Company by investment funds managed by Hellman
& Friedman, LLC (“H&F”) in August 2017.
(d) Severance cost associated with various restructuring actions
such as warehouse relocation, departmental reorganization and
focused reduction in workforce.
(e) Represents expenses incurred related to deferred payments to
employees associated with historical acquisitions. The deferred
payments are cash retention awards for key personnel from the
acquired companies and are expected to be paid to employees through
2023. Management does not believe such costs are indicative of our
ongoing operations as they are one-time awards specific to
acquisitions and are incremental to our typical compensation costs
incurred and we do not expect such costs to be reflective of future
increases in base compensation expense.
(f) Represents costs directly associated with
acquisitions and acquisition-related integration activities. These
costs also include certain restructuring costs (e.g., severance)
and other third-party transaction advisory fees associated with
planned and completed acquisitions.
(g) Represents provision for credit losses on notes receivable
related to the Company’s unsecured loan to Clare.
(h) Represents an adjustment related to the fair value of
deferred revenue related to the Control4 Corporation
acquisition.
(i) Represents professional service fees associated with the
preparation for compliance with the Sarbanes-Oxley Act (“SOX”), the
implementation of new accounting standards and accounting for
non-recurring transactions.
(j) Represents non-recurring expenses related to consulting,
restructuring, and other expenses which management believes are not
representative of our operating performance.
(k) Represents the tax impacts with respect to each adjustment
noted above after taking into account the impact of permanent
differences using the statutory tax rate related to the applicable
federal and foreign jurisdictions and the blended state tax
rate.
|
|
|
|
Snap One
Holdings Corp. and SubsidiariesContribution
Margin(unaudited, in thousands) |
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
September 29, |
|
September 30, |
|
September 29, |
|
September 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
(in
thousands) |
Net sales |
$ |
270,144 |
|
|
$ |
281,234 |
|
|
$ |
796,591 |
|
|
$ |
855,573 |
|
Cost of
sales, exclusive of depreciation and amortization(a) |
|
156,580 |
|
|
|
167,435 |
|
|
|
459,610 |
|
|
|
520,162 |
|
Net sales
less cost of sales, exclusive of depreciation and amortization |
$ |
113,564 |
|
|
$ |
113,799 |
|
|
$ |
336,981 |
|
|
$ |
335,411 |
|
Contribution
Margin |
|
42.0 |
% |
|
|
40.5 |
% |
|
|
42.3 |
% |
|
|
39.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Cost of sales for the three months ended September 29, 2023
and September 30, 2022 excludes depreciation and amortization of
$15.4 million and $14.8 million, respectively. Cost of sales for
the nine months ended September 29, 2023 and September 30, 2022
excludes depreciation and amortization of $46.0 million and $44.7
million, respectively.
|
Snap One
Holdings Corp. and SubsidiariesFree Cash
Flow(unaudited, in thousands) |
|
|
|
|
|
Nine Months Ended |
|
September
29, |
|
September 30, |
|
2023 |
|
|
2022 |
|
|
(in
thousands) |
Net cash provided by (used in) operating activities |
$ |
65,708 |
|
|
$ |
(15,361 |
) |
Purchases of
property and equipment |
|
(19,988 |
) |
|
|
(10,024 |
) |
Free Cash
Flow |
$ |
45,720 |
|
|
$ |
(25,385 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Snap One
Holdings Corp. and SubsidiariesRevenue by
Geography(unaudited, in thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September
29, |
|
September 30, |
|
September
29, |
|
September 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Domestic integrators(a) |
$ |
226,021 |
|
|
$ |
230,173 |
|
|
$ |
666,307 |
|
|
$ |
694,254 |
|
Domestic
other(b) |
|
9,962 |
|
|
|
14,940 |
|
|
|
30,389 |
|
|
|
46,107 |
|
International(c) |
|
34,161 |
|
|
|
36,121 |
|
|
|
99,895 |
|
|
|
115,212 |
|
Total |
$ |
270,144 |
|
|
$ |
281,234 |
|
|
$ |
796,591 |
|
|
$ |
855,573 |
|
|
|
|
|
|
|
|
|
(a) Domestic integrators is defined as professional
“do-it-for-me” integrator customers who transact with Snap One
through a traditional integrator channel in the United States,
excluding the impact of revenue earned by the Company’s Access
Networks enterprise grade network solution business.(b) Domestic
other is defined as Access Networks revenue and revenue generated
through managed transactions with non-integrator customers, such as
national accounts.(c) International consists of all integrators and
distributors who transact with Snap One outside of the United
States.
|
|
|
|
|
|
|
|
Snap One
Holdings Corp. and SubsidiariesRevenue by Product
Type(unaudited, in thousands) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September
29, |
|
September 30, |
|
September
29, |
|
September 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Proprietary products(a) |
$ |
176,172 |
|
|
$ |
192,172 |
|
|
$ |
531,372 |
|
|
$ |
588,165 |
|
Third-party
products(b) |
|
93,972 |
|
|
|
89,062 |
|
|
|
265,219 |
|
|
|
267,408 |
|
Total |
$ |
270,144 |
|
|
$ |
281,234 |
|
|
$ |
796,591 |
|
|
$ |
855,573 |
|
|
|
|
|
|
|
|
|
(a) Proprietary products consist of products and services
internally developed by or for Snap One and sold under one of Snap
One’s proprietary brands.(b) Third-party products consist of
products that Snap One distributes but for which Snap One does not
own the associated product brands.
1 We have not reconciled the forward-looking adjusted EBITDA
guidance included above to the most directly comparable GAAP
measure because this cannot be done without unreasonable effort due
to the variability and low visibility with respect to certain
costs, the most significant of which are incentive compensation
(including stock-based compensation), transaction-related expenses,
and certain value measurements, which are potential adjustments to
future earnings. We expect the variability of these items to have a
potentially unpredictable, and a potentially significant, impact on
our future GAAP financial results.
Snap One (NASDAQ:SNPO)
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Snap One (NASDAQ:SNPO)
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