Aterian, Inc. (Nasdaq: ATER) (“Aterian” or the “Company”) today
announced the appointment of Joe Risico and Arturo (Arty) Rodriguez
as Co-Chief Executive Officers effective July 26, 2023. They have
also joined the Company’s Board of Directors (the “Board”)
effective that same date. As part of these changes, Mr. William
(Bill) Kurtz, the Company’s current lead independent director and a
Board member since 2019, has been named the Chair of the Board. Mr.
Yaniv Sarig has resigned as CEO and from the Board effective
yesterday.
In their new roles as Co-CEO, Mr. Risico will
lead strategy and revenue generation, among other things, while Mr.
Rodriguez will lead the Company's technology and development and
continue to lead supply chain and finance. Mr. Rodriguez will also
continue his present role as Chief Financial Officer.
“On behalf of our board of directors, we thank
Yaniv for his tremendous efforts and commitment to Aterian. We
respect Yaniv’s desire to spend more time with his family”, said
Bill Kurtz, Chair of Aterian’s Board of Directors. “Joe and Arty
have been an integral part of Aterian's management and the Board
believes they are the right people to lead the Company through the
next phase of the Company's growth trajectory given their
experience, complementary skill sets and deep understanding of
Aterian’s business. I look forward to their success.”
“I am grateful for the opportunity to continue
my partnership with Arty, our board and our team at Aterian,” said
Joe Risico, Co-CEO. “Aterian has a strong set of core brands and
products and we will continue to focus them and Aterian towards
profitable growth as we navigate a challenging consumer
discretionary environment.”
“I am excited to partner with Joe in leading
Aterian,” said Arturo Rodriguez, Co-CEO. “Aterian’s core brands and
products, supported by our technology, supply chain, and most
importantly our people, will allow us to continue to execute on our
path towards profitability. I am honored and humbled to be given
this opportunity from our board to co-lead Aterian into its
future.”
“Aterian has been an incredible nine year
journey for me, I am extremely proud of the company that was built
from scratch and the team and culture that we fostered,” said Yaniv
Sarig, Aterian’s Co-Founder. “It is time for a change and I believe
that Joe and Arty will continue to be a great team and bring
Aterian even greater successes.”
Mr. Risico has been with Aterian since 2018,
serving as Aterian’s Chief Legal Officer and Head of M&A since
March 2021 and June 2021, respectively. Prior to joining Aterian,
Mr. Risico spent over 25 years in legal and business development
roles including earlier stage ventures. Mr. Risico started his
professional career as an auditor at Ernst & Young, during
which time he obtained his CPA and he began his legal career as a
corporate lawyer at Cravath, Swaine & Moore LLP. Mr. Risico
holds a B.A. from New York University with concentrations in
accounting and economics and a J.D. from Columbia Law School.
Mr. Rodriguez has been with Aterian since 2017
and served as the Company’s Chief Financial Officer since March
2021. Prior to joining Aterian, Mr. Rodriguez had spent the last 25
years in various finance and operational leadership roles for both
domestic and international public companies, including holding the
Chief Financial Officer role at Atari, Inc. (Nasdaq: ATAR) and the
Deputy Chief Financial Officer of Atari SA (Euronext: ATA). Mr.
Rodriguez started his career at Arthur Andersen LLP in 1997 and is
a CPA in the State of New York. Mr. Rodriguez holds a Bachelor of
Business Administration – Accounting from Hofstra University.
Mr. William H. Kurtz has served as an Aterian
director since August 2019. Mr. Kurtz is a senior financial and
operations executive with over 30 years of experience operating as
either a Chief Commercial and Financial Officer or a Chief
Operating and Financial Officer of several private and public
companies on the East Coast and in Silicon Valley. Mr. Kurtz holds
a Bachelor of Science in Commerce from Rider University and a
Master of Science in Management Sciences from Stanford
University.
Second Quarter Preliminary Net Revenue
and Adjusted EBITDA UpdateThe Company today also announced
an update to its previously stated net revenue and adjusted EBITDA
ranges for the second quarter ended June 30, 2023. The Company
expects net revenue to be in the range of $34.8 million to $35.4
million and adjusted EBITDA loss to be in the range of ($8.0)
million to $(9.0) million, excluding $1.2 million of restructuring
expenses expected to be reported.
The previously announced ranges of net revenue
and adjusted EBITDA loss were $37.0 million to $44.0 million and
$(4.2) million and $(5.2) million, respectively. The previously
announced adjusted EBITDA range has been adjusted to exclude the
previously announced $1.0 million of restructuring expense for
comparable purposes. The Company’s cash balance as of June 30, 2023
is expected to be approximately $28.9 million and borrowing under
its credit facility is expected to be approximately $15.7
million.
“We continue to see consumer softness in the
consumer discretionary space which has impacted our expected
results for the second quarter, however, we are still pleased with
the continued improvements of our balance sheet and continued
liquidity position,” commented Arturo Rodriguez, Co-CEO of Aterian.
“We are still very focused on driving the Company to profitability;
however, with our expected view of continued consumer softness in
2023, we believe adjusted EBITDA profitability will be more
realistic in the summer of 2024 versus the second half of
2023.”
The most directly comparable GAAP financial
measure for adjusted EBITDA is net loss and we expect to report a
net loss for the three months ending June 30, 2023, for the second
half of 2023 and for the year ending December 31, 2024, due
primarily to interest, restructuring, and stock-based compensation
expenses. We are unable to reconcile the forward-looking statement
of adjusted EBITDA in this press release to its nearest GAAP
measure because the nearest GAAP financial measure is not
accessible on a forward-looking basis and reconciling such
information is not available without unreasonable effort.
The net revenue and adjusted EBITDA information
in this press release is based on the Company’s current
expectations and may be adjusted as a result of, among other
things, the completion of customary quarter-end close review
procedures and financial review. The Company expects to report its
final second quarter 2023 results on or about August 8, 2023.
About Aterian, Inc.Aterian,
Inc. (Nasdaq: ATER) is a leading technology-enabled consumer
product company that builds, acquires, and partners with leading
e-commerce brands by harnessing proprietary software and an agile
supply chain to create top selling consumer products. The Company’s
cloud-based platform, Artificial Intelligence Marketplace Ecommerce
Engine (AIMEE™), leverages machine learning, natural language
processing and data analytics to streamline the management of
products at scale across the world's largest online marketplaces
with a focus on Amazon, Shopify and Walmart. Aterian owns and
operates a number of brands and sells its products in multiple
categories, including home and kitchen appliances, health and
wellness, beauty and consumer electronics.
Non-GAAP Financial Measure
Adjusted EBITDA, the non-GAAP financial measure
referenced herein, is a supplement to the corresponding financial
measure prepared in accordance with U.S. GAAP. The non-GAAP
financial measure referenced excludes the items described below.
Management believes that adjustments for these items assist
investors in making comparisons of period-to-period operating
results. Furthermore, management also believes that these items are
not indicative of the Company’s on-going core operating
performance. The non-GAAP financial measure has certain limitations
in that it does not reflect all of the costs associated with the
operations of the Company’s business as determined in accordance
with GAAP.
Therefore, investors should consider the
non-GAAP financial measure in addition to, and not as a substitute
for, or as superior to, measures of financial performance prepared
in accordance with GAAP. The non-GAAP financial measure referenced
by the Company may be different from the non-GAAP financial
measures used by other companies.
The Company has referenced adjusted EBITDA, a
non-GAAP measure, to assist investors in understanding the
Company’s core net operating results on an on-going basis. This
non-GAAP financial measure may also assist investors in making
comparisons of the Company’s core operating results with those of
other companies.
As used herein, EBITDA represents net loss plus
depreciation and amortization, interest expense, net and income tax
expense. As used herein, adjusted EBITDA represents EBITDA plus
stock-based compensation expense, restructuring expenses and other
expense, net. EBITDA and adjusted EBITDA do not represent, and
should not be considered as, alternatives to loss from operations
or net loss, as determined under GAAP.
We reference EBITDA and adjusted EBITDA because
we believe each of these measures provides an additional metric to
evaluate our operations and, when considered with both our GAAP
results and the reconciliation to net loss, provides useful
supplemental information for investors. We use EBITDA and adjusted
EBITDA, together with financial measures prepared in accordance
with GAAP, such as sales and gross margins, to assess our
historical and prospective operating performance, to provide
meaningful comparisons of operating performance across periods, to
enhance our understanding of our operating performance and to
compare our performance to that of our peers and competitors.
We believe EBITDA and adjusted EBITDA are useful
to investors in assessing the operating performance of our business
without the effect of non-cash items. EBITDA and adjusted EBITDA
should not be considered in isolation or as alternatives to net
loss, loss from operations or any other measure of financial
performance calculated and prescribed in accordance with GAAP.
Neither EBITDA nor adjusted EBITDA should be considered a measure
of discretionary cash available to us to invest in the growth of
our business. Our EBITDA and adjusted EBITDA may not be comparable
to similarly titled measures in other organizations because other
organizations may not calculate EBITDA or adjusted EBITDA in the
same manner as we do. Reference to adjusted EBITDA should not be
construed as an inference that our future results will be
unaffected by the expenses that are excluded from such financial
measure or by unusual or non-recurring items.
We recognize that both EBITDA and adjusted
EBITDA have limitations as analytical financial measures. For
example, neither EBITDA nor adjusted EBITDA reflects:
- our capital expenditures or future
requirements for capital expenditures or acquisitions;
- the interest expense or the cash
requirements necessary to service interest expense or principal
payments associated with indebtedness;
- depreciation and amortization,
which are non-cash charges, although the assets being depreciated
and amortized will likely have to be replaced in the future, or any
cash requirements for the replacement of assets; or
- changes in cash requirements for
our working capital needs.
Additionally, adjusted EBITDA excludes non-cash
expenses for stock-based compensation, which is and will remain a
key element of our overall long-term incentive compensation
strategy.
Forward Looking StatementsAll
statements, other than statements of historical facts, included in
this press release that address activities, events or developments
that we expect, believe or anticipate will or may occur in the
future are forward-looking statements including, in particular, the
statements regarding expectations of profitable growth for our core
brands and products; our expectations regarding consumer softness,
our expected net revenue and adjusted EBITDA range for the second
quarter of 2023; and cash balance and credit facility availability
as of June 30, 2023; our target of achieving adjusted EBITDA
profitability in the summer of 2024; and our expectations regarding
net loss for the three months ending June 30, 2023, for the second
half of 2023 and for the year ending December 31, 2024, due
primarily to interest, restructuring, and stock-based compensation
expenses These forward-looking statements are based on management’s
current expectations and beliefs and are subject to a number of
risks and uncertainties and other factors, all of which are
difficult to predict and many of which are beyond our control and
could cause actual results to differ materially and adversely from
those described in the forward-looking statements. These risks
include, but are not limited to, those related to consumer demand,
including inflation and other factors impacting consumer demand,
global shipping disruptions; our ability to continue as a going
concern; our ability to meet financial covenants with our lenders;
our ability to create operating leverage and efficiency when
integrating companies that we acquire or have acquired, including
through the use of our team’s expertise, the economies of scale of
our supply chain and automation driven by our platform; our ability
to grow internationally and through the launch of products under
our brands and the acquisition of additional brands; the impact of
COVID-19, the war in the Ukraine, the rising tensions between China
and Taiwan and other macroeconomic factors, including their impact
on consumer demand, our cash flows, financial condition,
forecasting and revenue growth rate; our supply chain including
sourcing, manufacturing, warehousing and fulfillment; our ability
to manage expenses, working capital (including liquidations of
inventory) and capital expenditures efficiently; our business model
and our technology platform; the impact of intangible assets such
as goodwill, and other impairments; disruptions to the Company's
information technology systems, including but not limited to
potential or actual security breaches of systems protecting
consumer and employee information or other types of cybercrimes or
cybersecurity attacks; our ability to disrupt the consumer products
industry; our ability to maintain and grow market share in existing
and new product categories; our ability to generate profitability
and stockholder value; international tariffs and trade measures;
product liability claims, recalls or other safety and regulatory
concerns; reliance on third party online marketplaces; seasonal and
quarterly variations in our revenue and expenses; acquisitions of
other companies and technologies and our ability to successfully
integrate such companies and technologies with our business; our
ability to continue to access debt and equity capital (including on
terms advantageous to the Company) and the extent of our leverage;
and other factors discussed in the “Risk Factors” section of our
most recent periodic reports filed with the Securities and Exchange
Commission (“SEC”), all of which you may obtain for free on the
SEC’s website at www.sec.gov.
Although we believe that the expectations
reflected in our forward-looking statements are reasonable, we do
not know whether our expectations will prove correct. You are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof, even if
subsequently made available by us on our website or otherwise. We
do not undertake any obligation to update, amend or clarify these
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws.
Investor Contact:
Ilya Grozovsky
Vice President of Investor Relations & Corp. Development
Aterian, Inc.
ilya@aterian.io
917-905-1699
Aterian.io
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