August 11, 2022 16:05 ET | Source: Snap One, LLC Snap One, LLC
Charlotte, North Carolina, UNITED STATES
CHARLOTTE, N.C., Aug. 11, 2022 (GLOBE NEWSWIRE) -- 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 July 1, 2022.
Management Commentary “We built on our strong start to the year with solid execution in the second quarter, driven by sustained demand for smart living solutions across our business,” said Snap One CEO John Heyman. “During the period, we made several major enhancements to our platform and product suite, including the launch of the CORE Series of Control4 Controllers. As we continue to modernize the smart living experience, we expect this launch will enable us to deliver exciting future product enhancements on our platform. We remain committed to our ‘Only Here’ strategy to be the one partner trusted by integrators to support and grow their businesses.
“Operationally, our team has continued its strong execution in a dynamic market backdrop. This execution positioned us to serve sustained integrator demand and deliver $296.9 million in net sales in the second quarter, representing 17.2% year-over-year growth on an as-reported basis, with a net loss of $1.3 million and adjusted EBITDA of $31.7 million. While the macroeconomic environment remains uncertain, we believe we have an opportunity to continue to build on our established market leadership position, and we remain focused on driving sustainable and profitable long-term growth for Snap One.”
Fiscal Second Quarter 2022 Financial Results Results compare 2022 fiscal second quarter end (July 1, 2022) to 2021 fiscal second quarter end (June 25, 2021) unless otherwise indicated. The Company’s fiscal second quarter in both years reflects a 13-week period.
Stock Repurchase Program On 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. 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 strategies such as accelerated share repurchases. Snap One expects to fund the repurchase with its existing cash balance and cash generated from operations.
As of July 1, 2022, the Company had repurchased 94,227 shares of its common stock at an aggregate principal value of $1.0 million.
Fiscal 2022 Financial Outlook “Looking ahead, we expect to see sustained demand for our products and services,” Heyman continued. “While we continue to monitor the uncertain market environment, we’re encouraged by the diversified nature of our business model and the resiliency of our integrators. Our fiscal 2022 guidance considers our strong fiscal first half performance, our price adjustments through June, our acquisition of Clare which we expect to have a modest dilutive impact on consolidated results in the short term, continued FX headwinds, and our anticipation of continued market uncertainty. Considering these factors, we are reaffirming our full-year guidance ranges communicated in May in conjunction with our fiscal Q1 2022 earnings, and expect net sales in the fiscal year ending December 30, 2022 to range between $1.16 billion and $1.18 billion, which would represent an increase of 15% to 17% compared to the prior fiscal year on an as-reported basis, and 17% to 19% after adjusting fiscal 2021 to remove the impact of a 53rd week.
“For fiscal 2022, we continue to expect adjusted EBITDA to range between $116 million and $121 million, which would represent an increase of 5% to 9% compared to the prior fiscal year on an as-reported basis. While our business continues to perform well, we are evaluating the current macroeconomic dynamic with conservatism as we look out over the remainder of 2022. As such, we are taking proactive steps to manage our expense structure to position us to deliver against our EBITDA goals even if sales trend towards the lower end of our guidance range.”
“Overall, we are committed to revolutionizing smart living and helping lead overall industry progress. We remain focused on delivering strong growth and margin expansion over the long-term and reinvesting in the success of Snap One.”
Supplemental Earnings Presentation The Company has posted a supplemental earnings presentation accompanying its fiscal second quarter 2022 results to the Events & Presentations section of its Investor Relations website, which can be found at investors.snapone.com.
Conference Call Snap One management will hold a conference call today, August 11, 2022 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 One As 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 Measures In 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, net, income tax benefit, depreciation, and amortization, further adjusted to exclude equity-based compensation, acquisition- and integration-related costs and certain other non-recurring, non-core, infrequent or unusual charges as described below.
Adjusted net income, which is defined as net loss plus amortization further adjusted to exclude equity-based compensation, acquisition- and integration-related costs and certain non-recurring, non-core, infrequent or unusual charges, including the estimated tax impacts of these adjustments.
Free cash flow, which is defined as net cash provided by (used in) 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.
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.
Cautionary Statements Concerning Forward-Looking Statements Certain 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 2022. 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 impact of COVID-19, 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 Annual Report on Form 10-K for the annual period ended December 31, 2021 filed with the SEC on March 23, 2022, as amended by the Form 10-K/A filed with the SEC on April 25, 2022, 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.
Media: Abigail Hanlon Director, Marketing Events & Public Relations Abigail.Hanlon@SnapOne.com
Investors: Tom Colton and Matt Glover Gateway Investor Relations 949-574-3860 IR@SnapOne.com
Snap One Holdings Corp. and Subsidiaries Condensed Consolidated Statements of Operations (in thousands, except per share amounts) (Unaudited)
Snap One Holdings Corp. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands, except par value) (Unaudited)
Snap One Holdings Corp. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in thousands) (Unaudited)
Snap One Holdings Corp. Reconciliation of Net Loss to Adjusted EBITDA (in thousands) (Unaudited)
Snap One Holdings Corp. Reconciliation of Net Loss to Adjusted Net Income (in thousands) (Unaudited)
(a) Represents provision for credit losses on notes receivable related to the Company’s unsecured loan to Clare. (b) 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 in August 2017 and are based on estimates of expected cash payments to the prior sellers based on specified targets for the return on the original capital investment. (c) Represents expenses incurred related to deferred payments to employees associated with our Control4 acquisition and other 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 non-recurring expense related to payments to certain pre-IPO owners in lieu of their participation in the 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) 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 the acquisitions. (f) Represents an adjustment related to the fair value of deferred revenue related to the Control4 acquisition. (g) Represents expenses related to professional fees in connection with preparation for our IPO. (h) Represents professional service fees associated with the preparation for Sarbanes-Oxley compliance, the implementation of new accounting standards and accounting for non-recurring transactions. (i) Represents non-recurring expenses related to consulting, restructuring, and other expenses which management believes are not representative of our operating performance. (j) 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. Contribution Margin (in thousands) (Unaudited)
(a) Cost of sales for the three months ended July 1, 2022 and June 25, 2021, excludes depreciation and amortization of $14,966 and $14,198, respectively. Cost of sales for the six months ended July 1, 2022 and June 25, 2021, excludes depreciation and amortization of $29,855 and $27,910, respectively.
Snap One Holdings Corp. Free Cash Flow (in thousands) (Unaudited)
Snap One Holdings Corp. Revenue by Geography (in thousands) (Unaudited)
(a) United States integrators is defined as professional “do-it-for-me” integrator customers who transact with Snap One through a traditional integrator channel and excludes the impact of recently acquired businesses domestically. (b) United States other is defined as recently acquired entities 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. Revenue by Product Type (in thousands) (Unaudited)
(a) Proprietary products consist of product and services internally developed by Snap One and sold under one of Snap One’s proprietary brands. (b) Third-party products consist of product that Snap One distributes but to which Snap One does not own the intellectual property.