This Report contains forward-looking statements that involve risks and
uncertainties. The statements contained in this Report that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including but not limited to our statements about the anticipated growth
and development of our businesses and financial results; the persistence of
higher costs and supply chain disruptions and the expected impacts of those
costs and disruptions on our business; our planned cost reductions and the
expected effects of the cost reductions; the expected impacts of our mass
customization platform; our competitive advantages; the expected effects of mid-
and upper-funnel advertising in Vista; sufficiency of our liquidity position;
legal proceedings; and sufficiency of our tax reserves. Without limiting the
foregoing, the words "may," "should," "could," "expect," "plan," "intend,"
"anticipate," "believe," "estimate," "predict," "designed," "potential,"
"continue," "target," "seek" and similar expressions are intended to identify
forward-looking statements. All forward-looking statements included in this
Report are based on information available to us up to, and including the date of
this document, and we disclaim any obligation to update any such forward-looking
statements. Our actual results could differ materially from those anticipated in
these forward-looking statements as a result of various important factors,
including but not limited to flaws in the assumptions and judgments upon which
our forecasts and estimates are based; the development, severity, and duration
of supply chain constraints, inflation, and the lingering effects of the
COVID-19 pandemic; our inability to mitigate increases in our costs by
increasing our prices and taking other measures; our inability to make the cost
reductions that we plan to make or the failure of the cost reductions to affect
our financial results as expected; our inability to make the investments that we
plan to make or the failure of those investments to achieve the results we
expect; our failure to execute on the transformation of the Vista business; loss
of key personnel or our inability to recruit talented personnel to drive
performance of our businesses; the failure of businesses we acquire or invest in
to perform as expected; our failure to develop and deploy our mass customization
platform or the failure of the platform to drive the efficiencies and
competitive advantages we expect; unanticipated changes in our markets,
customers, or businesses; changes in the laws and regulations, or in the
interpretation of laws and regulations, that affect our businesses; our failure
to manage the growth and complexity of our business and expand our operations;
our failure to maintain compliance with the covenants in our debt documents or
to pay our debts when due; competitive pressures; general economic conditions,
including the possibility of an economic downturn in some or all of our markets;
and other factors described in this Report and the documents that we
periodically file with the
Executive Overview
As of
Financial Summary
The primary financial metric by which we set quarterly and annual budgets both
for individual businesses and
26
--------------------------------------------------------------------------------
Second Quarter Fiscal Year 2023
•Revenue was flat at
•Constant-currency revenue increased by 6% and by 5% when excluding the revenue of acquired companies for the first twelve months after acquisition (both non-GAAP financial measures).
•Operating income decreased by
•Adjusted EBITDA (a non-GAAP financial measure) decreased by
•Diluted net (loss) income per share attributable to
Year to Date Fiscal Year 2023
•Revenue increased by 3% to
•Constant-currency revenue increased by 10% and by 9% when excluding the revenue of acquired companies for the first twelve months after acquisition (both non-GAAP financial measures).
•Operating income decreased by
•Adjusted EBITDA (a non-GAAP financial measure) decreased by
•Diluted net (loss) income per share attributable to
•Cash provided by operating activities decreased by
•Adjusted free cash flow (a non-GAAP financial measure) decreased by
For the three months ended
For the three months ended
Adjusted EBITDA decreased year over year, primarily for the same reasons
operating income decreased. Adjusted EBITDA excludes restructuring charges,
share-based compensation expense, certain impairments, and non-cash gains on the
sale of assets, and includes the realized gains or losses on our currency
derivatives intended to hedge adjusted EBITDA. The net year-over-year impact of
currency on consolidated adjusted EBITDA was a benefit of approximately
Diluted net loss per share attributable to
As described above, the impact of cost inflation, net of price increases, continues to weigh on year-over-year profitability, and, in the Vista business, unfavorable product mix shift also was a significant contributor to a year-over-year reduction in gross profit. Each of our reportable segments has seen material increases in the cost of product substrates like paper, production materials like aluminum plates, freight and shipping charges, energy and
27
--------------------------------------------------------------------------------
higher compensation costs due to inflationary pressures and a more competitive labor market. We believe our scale-based shared strategic capabilities and supplier relationships provide competitive advantages for our businesses to weather these challenges. However, during the second quarter of the current fiscal year, we put in place further operating cost containment measures that helped offset some of these impacts. Over the remainder of the fiscal year, we plan to take further steps to significantly reduce our cost base in support of expanding profitability as we exit the fiscal year.
During the six months ended
Adjusted free cash flow decreased year over year by
Consolidated Results of Operations
Consolidated Revenue
Our businesses generate revenue primarily from the sale and shipment of customized products. We also generate revenue, to a much lesser extent (and primarily in our Vista business), from digital services, graphic design services, website design and hosting, and email marketing services, as well as a small percentage of revenue from order referral fees and other third-party offerings. For additional discussion relating to segment revenue results, refer to the "Reportable Segment Results" section included below.
Total revenue and revenue growth by reportable segment for the three and six
months ended
© Edgar Online, source