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 second
quarter ended June 30, 2023.
Fiscal Second Quarter 2023 and Recent Operational
Highlights
- Recognized for providing a
best-in-class integrator partner experience
- Ranked a top-five brand 45 times
across 62 product sub-categories in the 2023 CE Pro 100 Brand
Analysis awards, representing approximately 5x the number of
recognitions of the next closest competitor
- Delivered on new product innovation
and enhanced software platform capabilities
- Launched exciting new solutions
across audio, control, surveillance and networking
- Introduced the Control4 CORE lite
controller to provide an automation solution for single-room
applications, making the Control4 ecosystem more accessible
- Launched a new series of Araknis
routers that feature a multi-Gigabit interface for high bandwidth
installations including commercial deployments
- Released a new lineup of Triad
passive soundbars, underscoring a continued investment in premium
audio solutions
- Continued momentum in Security and
Commercial markets
- Earned four Security Sales &
Integration 2023 Supplier Stellar Service Awards in categories such
as Technical Support and Dealer Program/Incentives
- Recognized as a 2023 InfoComm Best
of Show award-winner for Strong Carbon Series display mounts,
reflecting continued product innovation in the commercial
market
Management Commentary“Our team delivered
another solid quarter of financial results in the face of channel
partners destocking inventory and an uncertain macroeconomic
environment,” said Snap One CEO John Heyman. “We believe that our
differentiated solutions are enabling us to extend our leadership
position within the industry and to drive market share gains for
Snap One.”
“During the quarter, we focused on driving higher adoption
by our partners by introducing new products and related
go-to-market initiatives. From a profitability perspective, we
continued to drive supply chain efficiencies, as evidenced in this
quarter’s results. Accordingly, we remain confident in our
operating margin expansion expectations for the year.”
Fiscal Second Quarter 2023 Financial
ResultsResults compare 2023 fiscal second quarter end
(June 30, 2023) to 2022 fiscal second quarter end (July 1, 2022)
unless otherwise indicated. The Company’s fiscal second quarter in
both years reflects a 13-week period. Results are presented on an
as-reported basis, unless otherwise indicated.
- Net sales decreased 7.6% to $274.4
million from $296.9 million in the comparable year-ago period,
primarily attributable to channel inventory destocking
headwinds.
- Selling, general and administrative
(SG&A) expenses decreased 1.7% to $93.8 million (34.2% of net
sales) from $95.4 million (32.1% of net sales) in the comparable
year-ago period. As a percentage of net sales, SG&A increased
due to a lower net sales base in the current period compared to the
year-ago period as well as increased interest expense.
- Net loss decreased to $0.1 million
(-0.0% of net sales) compared to net loss of $1.3 million (-0.5% of
net sales) in the comparable year-ago period.
- Contribution margin, a non-GAAP
measurement of operating performance reconciled below, increased
0.6% to $117.2 million (42.7% of net sales) from $116.5 million
(39.2% of net sales) in the comparable year-ago period.
- Adjusted EBITDA, a non-GAAP
measurement of operating performance reconciled below, remained
flat at $31.7 million (11.5% of net sales) compared to $31.7
million (10.7% of net sales) in the comparable year-ago
period.
- Adjusted net income, a non-GAAP
measurement of operating performance reconciled below, decreased to
$14.3 million (5.2% of net sales) from $16.5 million (5.6% of net
sales) in the comparable year-ago period.
- Net cash provided by operating
activities totaled $25.4 million in the six-month period ended June
30, 2023, compared to net cash used in operating activities of
$19.6 million in the comparable year-ago period.
- As of June 30, 2023, cash and cash
equivalents were $33.8 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 $9.7 million in the six-month period
ended June 30, 2023, compared to $(26.0) million in the comparable
year-ago period.
Fiscal 2023 Financial Outlook“Our full year
2023 outlook remains consistent,” Heyman continued. “Our
strengthening contribution margin rate and disciplined cost
management provide us with confidence in our full-year
profitability expectations.”
“Therefore, we are reaffirming our outlook for both net sales
and adjusted EBITDA1 for 2023. We continue to expect net sales in
the fiscal year ending December 29, 2023 to range between $1.06
billion and $1.09 billion and adjusted EBITDA to range between $110
million and $118 million. This outlook considers our first half
2023 performance as well as our expectation that market uncertainty
will continue through the remainder of the year. Our long-term
growth algorithm remains intact.”
__________________________________
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 fair 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.
Supplemental Earnings PresentationThe Company
has posted a supplemental earnings presentation accompanying its
fiscal second 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, August 8, 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 Investor Relations 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, measure our
performance, 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. 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 Investor
Relations949-574-3860IR@SnapOne.com
-Financial Tables to Follow-
Snap One
Holdings Corp. and Subsidiaries |
Condensed
Consolidated Statements of Operations |
(unaudited,
in thousands, except per share amounts) |
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
July 1, |
|
June 30, |
|
July 1, |
2023 |
|
2022 |
|
2023 |
|
2022 |
Net sales |
$ |
274,407 |
|
|
$ |
296,905 |
|
|
$ |
526,447 |
|
|
$ |
574,339 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
Cost of sales, exclusive of depreciation and amortization |
157,217 |
|
|
180,395 |
|
|
303,030 |
|
|
352,727 |
|
Selling, general and administrative expenses |
93,793 |
|
|
95,394 |
|
|
187,590 |
|
|
181,921 |
|
Depreciation and amortization |
15,394 |
|
|
14,966 |
|
|
30,596 |
|
|
29,855 |
|
Total costs and expenses |
266,404 |
|
|
290,755 |
|
|
521,216 |
|
|
564,503 |
|
Income from
operations |
8,003 |
|
|
6,150 |
|
|
5,231 |
|
|
9,836 |
|
Other
expenses (income): |
|
|
|
|
|
|
|
Interest expense |
14,888 |
|
|
7,720 |
|
|
28,837 |
|
|
14,443 |
|
Other income, net |
(1,990 |
) |
|
(63 |
) |
|
(1,163 |
) |
|
(483 |
) |
Total other expenses |
12,898 |
|
|
7,657 |
|
|
27,674 |
|
|
13,960 |
|
Loss before
income taxes |
(4,895 |
) |
|
(1,507 |
) |
|
(22,443 |
) |
|
(4,124 |
) |
Income tax
benefit |
(4,771 |
) |
|
(163 |
) |
|
(7,771 |
) |
|
(524 |
) |
Net
loss |
(124 |
) |
|
(1,344 |
) |
|
(14,672 |
) |
|
(3,600 |
) |
Net loss
attributable to noncontrolling interest |
— |
|
|
(17 |
) |
|
— |
|
|
(37 |
) |
Net loss
attributable to Company |
$ |
(124 |
) |
|
$ |
(1,327 |
) |
|
$ |
(14,672 |
) |
|
$ |
(3,563 |
) |
|
|
|
|
|
|
|
|
Net loss per
share, basic and diluted |
$ |
(0.00 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.05 |
) |
Weighted
average shares outstanding, basic and diluted |
74,757 |
|
|
74,588 |
|
|
75,024 |
|
|
74,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Snap One
Holdings Corp. and Subsidiaries |
Condensed
Consolidated Balance Sheets |
(unaudited,
in thousands, except par value) |
|
|
As of |
|
June 30, 2023 |
|
December 30, 2022 |
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
33,846 |
|
|
$ |
21,117 |
|
Accounts receivable, net |
54,703 |
|
|
48,174 |
|
Inventories |
292,531 |
|
|
314,588 |
|
Prepaid expenses |
22,261 |
|
|
22,913 |
|
Other current assets |
2,957 |
|
|
5,930 |
|
Total current assets |
406,298 |
|
|
412,722 |
|
Long-term
assets: |
|
|
|
Property and equipment, net |
45,074 |
|
|
34,958 |
|
Goodwill |
592,380 |
|
|
592,186 |
|
Other intangible assets, net |
529,792 |
|
|
554,419 |
|
Operating lease right-of-use assets |
54,775 |
|
|
54,041 |
|
Other assets |
6,092 |
|
|
4,195 |
|
Total
assets |
$ |
1,634,411 |
|
|
$ |
1,652,521 |
|
Liabilities and stockholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Current maturities of long-term debt |
$ |
5,200 |
|
|
$ |
5,063 |
|
Accounts payable |
62,753 |
|
|
77,443 |
|
Accrued liabilities |
64,537 |
|
|
64,605 |
|
Current operating lease liability |
10,702 |
|
|
10,574 |
|
Current tax receivable agreement liability |
23,195 |
|
|
10,191 |
|
Total current liabilities |
166,387 |
|
|
167,876 |
|
Long-term
liabilities: |
|
|
|
Revolving credit facility, net |
26,952 |
|
|
10,800 |
|
Long-term debt, net of current portion |
495,462 |
|
|
496,795 |
|
Deferred income tax liabilities, net |
34,542 |
|
|
43,515 |
|
Operating lease liability, net of current portion |
55,649 |
|
|
50,896 |
|
Tax receivable agreement liability, net of current portion |
78,211 |
|
|
101,262 |
|
Other liabilities |
20,952 |
|
|
24,206 |
|
Total liabilities |
878,155 |
|
|
895,350 |
|
Commitments
and contingencies (Note 14) |
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, $0.01 par value, 500,000 shares authorized; 75,615
shares issued and outstanding as of June 30, 2023 and 75,042 shares
issued and outstanding at December 30, 2022 |
756 |
|
|
750 |
|
Preferred stock, $0.01 par value; 50,000 shares authorized, no
shares issued and outstanding |
— |
|
|
— |
|
Additional paid-in capital |
861,550 |
|
|
848,703 |
|
Accumulated deficit |
(102,718 |
) |
|
(88,046 |
) |
Accumulated other comprehensive loss |
(3,332 |
) |
|
(4,236 |
) |
Total stockholders’ equity |
756,256 |
|
|
757,171 |
|
Total
liabilities and stockholders’ equity |
$ |
1,634,411 |
|
|
$ |
1,652,521 |
|
|
|
|
|
|
|
Snap One
Holdings Corp. and Subsidiaries |
Condensed
Consolidated Statements of Cash Flows |
(unaudited,
in thousands) |
|
|
Six Months
Ended |
|
June 30, 2023 |
|
July 1, 2022 |
Cash
flows from operating activities: |
|
|
|
|
|
Net loss |
$ |
(14,672 |
) |
|
$ |
(3,600 |
) |
Adjustments
to reconcile net loss to net cash from operating activities: |
|
|
|
|
|
Depreciation and amortization |
|
30,596 |
|
|
|
29,855 |
|
Amortization of debt issuance costs |
|
1,556 |
|
|
|
921 |
|
Unrealized gain on interest rate cap |
|
(1,126 |
) |
|
|
— |
|
Deferred income taxes |
|
(9,023 |
) |
|
|
(6,462 |
) |
Equity-based compensation |
|
13,283 |
|
|
|
12,367 |
|
Non-cash operating lease expense |
|
5,766 |
|
|
|
6,298 |
|
Bad debt expense |
|
548 |
|
|
|
100 |
|
Fair value adjustment to contingent value rights |
|
2,000 |
|
|
|
(6,075 |
) |
Valuation adjustment to TRA liability |
|
144 |
|
|
|
— |
|
Provision for credit losses on notes receivable |
|
— |
|
|
|
5,872 |
|
Other, net |
|
(158 |
) |
|
|
81 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
Accounts receivable |
|
(6,987 |
) |
|
|
(4,851 |
) |
Inventories |
|
22,695 |
|
|
|
(58,262 |
) |
Prepaid expenses and other assets |
|
895 |
|
|
|
5,273 |
|
Accounts payable, accrued liabilities and operating lease
liabilities |
|
(20,100 |
) |
|
|
(1,070 |
) |
Net cash provided by (used in) operating activities |
|
25,417 |
|
|
|
(19,553 |
) |
Cash
flows from investing activities: |
|
|
|
|
|
Acquisition
of business, net of cash acquired |
|
— |
|
|
|
(25,639 |
) |
Purchases of
property and equipment |
|
(15,685 |
) |
|
|
(6,414 |
) |
Issuance of
notes receivable |
|
— |
|
|
|
(600 |
) |
Other,
net |
|
51 |
|
|
|
45 |
|
Net cash used in investing activities |
|
(15,634 |
) |
|
|
(32,608 |
) |
Cash
flows from financing activities: |
|
|
|
|
|
Payments on
long-term debt |
|
(2,600 |
) |
|
|
(1,163 |
) |
Proceeds
from revolving credit facility |
|
38,000 |
|
|
|
47,000 |
|
Payments on
revolving credit facility |
|
(22,000 |
) |
|
|
— |
|
Repurchase
and retirement of common stock |
|
(293 |
) |
|
|
(918 |
) |
Proceeds
from employee stock purchase plan |
|
1,228 |
|
|
|
— |
|
Payments of
tax withholding obligation on settlement of equity awards |
|
(1,024 |
) |
|
|
— |
|
Payments of
tax receivable agreement |
|
(10,191 |
) |
|
|
— |
|
Contingent
consideration payments |
|
(250 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
2,870 |
|
|
|
44,919 |
|
Effect of
exchange rate changes on cash and cash equivalents |
|
76 |
|
|
|
(2,017 |
) |
Net
increase (decrease) in cash and cash equivalents |
|
12,729 |
|
|
|
(9,259 |
) |
Cash
and cash equivalents at beginning of the period |
|
21,117 |
|
|
|
40,577 |
|
Cash
and cash equivalents at end of the period |
$ |
33,846 |
|
|
$ |
31,318 |
|
Supplementary cash flow information: |
|
|
|
|
|
Cash paid for interest |
$ |
28,245 |
|
|
$ |
14,657 |
|
Cash paid for taxes, net |
$ |
4,413 |
|
|
$ |
3,445 |
|
Noncash
investing and financing activities: |
|
|
|
|
|
Capital
expenditure in accounts payable |
$ |
1,004 |
|
|
$ |
321 |
|
|
|
|
|
|
|
Snap One
Holdings Corp. and Subsidiaries |
Reconciliation of Net Loss to Adjusted EBITDA |
(unaudited,
in thousands) |
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
July 1, |
|
June 30, |
|
July 1, |
2023 |
|
2022 |
|
2023 |
|
2022 |
Net loss |
$ |
(124 |
) |
|
$ |
(1,344 |
) |
|
$ |
(14,672 |
) |
|
$ |
(3,600 |
) |
Interest expense |
|
14,888 |
|
|
|
7,720 |
|
|
|
28,837 |
|
|
|
14,443 |
|
Income tax benefit |
|
(4,771 |
) |
|
|
(163 |
) |
|
|
(7,771 |
) |
|
|
(524 |
) |
Depreciation and amortization |
|
15,394 |
|
|
|
14,966 |
|
|
|
30,596 |
|
|
|
29,855 |
|
Other income, net |
|
(1,990 |
) |
|
|
(63 |
) |
|
|
(1,163 |
) |
|
|
(483 |
) |
Equity-based compensation |
|
5,520 |
|
|
|
6,768 |
|
|
|
13,283 |
|
|
|
12,367 |
|
Fair value adjustment to contingent value rights(a) |
|
1,400 |
|
|
|
(3,275 |
) |
|
|
2,000 |
|
|
|
(6,075 |
) |
IT system transition costs(b) |
|
75 |
|
|
|
— |
|
|
|
208 |
|
|
|
— |
|
Deferred acquisition payments(c) |
|
55 |
|
|
|
327 |
|
|
|
133 |
|
|
|
1,030 |
|
Compensation expense for payouts in lieu of TRA
participation(d) |
|
(46 |
) |
|
|
279 |
|
|
|
233 |
|
|
|
558 |
|
Severance cost(e) |
|
— |
|
|
|
— |
|
|
|
1,276 |
|
|
|
— |
|
Provision for credit losses on notes receivable(f) |
|
— |
|
|
|
5,872 |
|
|
|
— |
|
|
|
5,872 |
|
Acquisition and integration related costs(g) |
|
— |
|
|
|
64 |
|
|
|
— |
|
|
|
278 |
|
Deferred revenue purchase accounting adjustment(h) |
|
— |
|
|
|
53 |
|
|
|
— |
|
|
|
150 |
|
Other professional services costs(i) |
|
128 |
|
|
|
376 |
|
|
|
166 |
|
|
|
1,213 |
|
Other(j) |
|
1,127 |
|
|
|
100 |
|
|
|
1,202 |
|
|
|
187 |
|
Adjusted
EBITDA |
$ |
31,656 |
|
|
$ |
31,680 |
|
|
$ |
54,328 |
|
|
$ |
55,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Snap One
Holdings Corp. and Subsidiaries |
Reconciliation of Net Loss to Adjusted Net
Income |
(unaudited,
in thousands) |
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
July 1, |
|
June 30, |
|
July 1, |
2023 |
|
2022 |
|
2023 |
|
2022 |
Net loss |
$ |
(124 |
) |
|
$ |
(1,344 |
) |
|
$ |
(14,672 |
) |
|
$ |
(3,600 |
) |
Amortization |
|
12,440 |
|
|
|
12,597 |
|
|
|
24,877 |
|
|
|
25,258 |
|
Equity-based compensation |
|
5,520 |
|
|
|
6,768 |
|
|
|
13,283 |
|
|
|
12,367 |
|
Foreign currency (gains) losses |
|
(26 |
) |
|
|
166 |
|
|
|
(84 |
) |
|
|
(13 |
) |
Interest rate cap (income) expense |
|
(1,944 |
) |
|
|
— |
|
|
|
(1,126 |
) |
|
|
— |
|
Fair value adjustment to contingent value rights(a) |
|
1,400 |
|
|
|
(3,275 |
) |
|
|
2,000 |
|
|
|
(6,075 |
) |
IT system transition costs(b) |
|
75 |
|
|
|
— |
|
|
|
208 |
|
|
|
— |
|
Deferred acquisition payments(c) |
|
55 |
|
|
|
327 |
|
|
|
133 |
|
|
|
1,030 |
|
Compensation expense for payouts in lieu of TRA
participation(d) |
|
(46 |
) |
|
|
279 |
|
|
|
233 |
|
|
|
558 |
|
Severance cost(e) |
|
— |
|
|
|
— |
|
|
|
1,276 |
|
|
|
— |
|
Provision for credit losses on notes receivable(f) |
|
— |
|
|
|
5,872 |
|
|
|
— |
|
|
|
5,872 |
|
Acquisition and integration related costs(g) |
|
— |
|
|
|
64 |
|
|
|
— |
|
|
|
278 |
|
Deferred revenue purchase accounting adjustment(h) |
|
— |
|
|
|
53 |
|
|
|
— |
|
|
|
150 |
|
Other professional services costs(i) |
|
128 |
|
|
|
376 |
|
|
|
166 |
|
|
|
1,213 |
|
Other(j) |
|
1,106 |
|
|
|
33 |
|
|
|
1,106 |
|
|
|
52 |
|
Income tax effect of adjustments(k) |
|
(4,240 |
) |
|
|
(5,416 |
) |
|
|
(9,690 |
) |
|
|
(9,873 |
) |
Adjusted Net
Income |
$ |
14,344 |
|
|
$ |
16,500 |
|
|
$ |
17,710 |
|
|
$ |
27,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) 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.
(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 IT infrastructure.
(c) 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.
(d) Represents expense, net of forfeitures,
related to payments to certain pre-IPO owners in lieu of their
participation in the Tax Receivable Agreement (“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.
(e) Severance cost associated with various
restructuring actions such as warehouse relocation, departmental
reorganization and focused reduction in workforce.
(f) Represents provision for credit losses on
notes receivable related to the Company’s unsecured loan to
Clare.
(g) 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.
(h) Represents an adjustment related to the
fair value of deferred revenue related to the Control4
acquisition.
(i) Represents professional service fees
associated with the preparation for Sarbanes-Oxley (“SOX”)
compliance, 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 Subsidiaries |
Contribution
Margin |
(unaudited,
in thousands) |
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
July 1, |
|
June 30, |
|
July 1, |
2023 |
|
2022 |
|
2023 |
|
2022 |
Net sales |
$ |
274,407 |
|
|
$ |
296,905 |
|
|
$ |
526,447 |
|
|
$ |
574,339 |
|
Cost of
sales, exclusive of depreciation and amortization(a) |
|
157,217 |
|
|
|
180,395 |
|
|
|
303,030 |
|
|
|
352,727 |
|
Net sales
less cost of sales, exclusive of depreciation and amortization |
$ |
117,190 |
|
|
$ |
116,510 |
|
|
$ |
223,417 |
|
|
$ |
221,612 |
|
Contribution Margin |
|
42.7 |
% |
|
|
39.2 |
% |
|
|
42.4 |
% |
|
|
38.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Cost of sales for the three months ended
June 30, 2023 and July 1, 2022 excludes depreciation and
amortization of $15,394 and $14,966, respectively. Cost of sales
for the six months ended June 30, 2023 and July 1, 2022 excludes
depreciation and amortization of $30,596 and $29,855,
respectively.
|
Snap One
Holdings Corp. and Subsidiaries |
Free Cash
Flow |
(unaudited,
in thousands) |
|
|
Six Months Ended |
|
June 30, |
|
July 1, |
2023 |
2022 |
Net cash provided by (used in) operating activities |
$ |
25,417 |
|
|
$ |
(19,553 |
) |
Purchases of
property and equipment |
|
(15,685 |
) |
|
|
(6,414 |
) |
Free Cash Flow |
$ |
9,732 |
|
|
$ |
(25,967 |
) |
|
|
|
|
|
|
|
|
Snap One
Holdings Corp. and Subsidiaries |
Revenue by
Geography |
(unaudited,
in thousands) |
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
July 1, |
|
June 30, |
|
July 1, |
2023 |
2022 |
|
2023 |
2022 |
Domestic integrators(a) |
$ |
230,809 |
|
$ |
238,675 |
|
$ |
440,286 |
|
$ |
464,081 |
Domestic
other(b) |
|
11,185 |
|
|
17,814 |
|
|
20,427 |
|
|
31,167 |
International(c) |
|
32,413 |
|
|
40,416 |
|
|
65,734 |
|
|
79,091 |
Total |
$ |
274,407 |
|
$ |
296,905 |
|
$ |
526,447 |
|
$ |
574,339 |
|
|
|
|
|
|
|
|
|
|
|
|
(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 Subsidiaries |
Revenue by
Product Type |
(unaudited,
in thousands) |
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
July 1, |
|
June 30, |
|
July 1, |
2023 |
2022 |
|
2023 |
2022 |
Proprietary products(a) |
$ |
183,825 |
|
$ |
208,196 |
|
$ |
355,200 |
|
$ |
395,993 |
Third-party
products(b) |
|
90,582 |
|
|
88,709 |
|
|
171,247 |
|
|
178,346 |
Total |
$ |
274,407 |
|
$ |
296,905 |
|
$ |
526,447 |
|
$ |
574,339 |
|
|
|
|
|
|
|
|
|
|
|
|
(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 associated product brand.
Snap One (NASDAQ:SNPO)
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De Abr 2024 a May 2024
Snap One (NASDAQ:SNPO)
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De May 2023 a May 2024