a.k.a. Brands Holding Corp.

A Brands Holding Corp fourth quarter and fiscal 2021 earnings conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Emily, thank you, and over to you.

Good afternoon. Thank you for joining AKA Brands' fourth quarter and full year 2021 conference call to discuss the results we released this afternoon, which can be found on our website at ir.aka-brands.com. With me on the call are Jill Ramsey, Chief Executive Officer, and Kiran Long, Chief Financial Officer. Before we get started, I'd like to remind you of the company's Safe Harbor language. Management may make forward-looking statements which refer to expectations, projections, or other characterizations of future events, including guidance and underlying assumptions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially than those expressed. For a further discussion of the risks related to our business, please see our filings with the SEC. Please note we assume no obligation to update any such forward-looking statements. This call will contain non-GAAP financial measures such as adjusted EBITDA and adjusted EBITDA margin. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the earnings released, furnished with the SEC, and available on our website. The call will also contain certain numbers presented on a pro forma basis, which includes the impact of Culture Kings as if we had owned it in all periods and comparable periods described. Now I'll turn the call over to Jill.

Thanks, Emily. Good afternoon, everyone, and thanks for joining our call today. 2021 was a monumental year for AKA Brands, capped off by fourth quarter results that exceeded our expectations. I am incredibly proud of our team's accomplishments this year. For the full year, we grew net sales 160% to $562 million, or 59% pro forma. Our largest market, the U.S., led our growth at an outstanding 101% pro forma. We also delivered incredible profitability and grew adjusted EBITDA by 106% at a double-digit EBITDA margin of 11%. Our brands continue to gain global awareness. Active customers grew 61% to more than 3.7 million, and our social media following grew to over 8.7 million followers. We further enhanced our portfolio by acquiring two world-class brands, which diversified us into men's and streetwear, and we completed our IPO in September. Our strong performance demonstrates the power of our platform as we continue to grow our brands through next-generation merchandising and marketing. I want to thank our teams for these impressive achievements and their agility navigating complex supply chain and COVID-19 challenges. I am confident that we have a long runway of continued growth in 2022 and beyond. In the fourth quarter, we delivered strong growth and profitability. Total net sales grew 158% to $182 million, or 43% pro forma. And we delivered adjusted EBITDA of $16 million. We grew across all brands and all regions with particular strengths in the U.S., where we grew 74% pro forma. Sales growth in Australia accelerated from the third quarter to the fourth quarter. However, the region has since turned negative in Q1 of 2022, as we have seen the Omicron variant disrupt this market. Kieran will comment further on Australia when he takes you through our financial details and outlook. But before turning it to him, I'd like to share some highlights from our brands. We continue to see robust momentum at Princess Polly, the first brand we acquired and the largest in our portfolio. The brand gained share and grew in popularity in the U.S., where they were a key driver of our overall growth this quarter. We saw strength in dresses and party wear as customers returned to going out and attending holiday parties, and we were well-positioned to capitalize on this demand due to our flexible buying model and agile team. In the fourth quarter, Princess Polly launched their first extended size collection called Curve, Inspired by feedback and demand from customers and a clear market opportunity, Curve offers the same high-quality on-trend fashion as the rest of Princess Polly in up to size 20. They've released over 240 Curve styles since the launch in December, and the demand for the collection is already significant. This is an underserved segment in the industry, particularly for on-trend fashion, and we're excited to see new customers come to the brand through the collection. We believe this to be a meaningful growth opportunity in 2022 and beyond as we continue to expand and refine the assortment. Responsible fashion is core to Princess Polly's brand and an important value of their Gen Z and millennial customers. As discussed on our last call, Princess Polly introduced their Earth Club collection in the back half of 2021. Made from recyclable and sustainable materials, the collection was an important growth driver in the fourth quarter and exceeded expectations. Notably, Princess Polly achieved their goal of converting 20% of their assortment to sustainable fabrics by the end of 2021, and they plan to convert 40% of the assortment by the end of this year. This is an impressive achievement, and we're excited to leverage Princess Polly's knowledge and the best practices in sustainability across our brands. Masters at NextGen Marketing, Princess Polly engages customers with great content, which they amplify and through a network of micro-influencers. In the fourth quarter, they grew their social media following and leaned in deeper on TikTok, which is now their fastest growing marketing channel. They also launched a successful college ambassador program in November, complementing their highly efficient micro-influencer strategy. College is a strategic and important audience for Princess Polly, since 75% of their customers are high school and college students. The program is off to a great start, and the hashtag Polly on Campus surpassed 2 million views on TikTok in November alone. This is driving awareness and engagement at colleges and universities across the U.S. and will be instrumental in Princess Polly's continued growth. Turning to Culture Kings, which we acquired in March of last year, the U.S. led Culture Kings growth in the fourth quarter as we ramped up our brand building efforts. followed by New Zealand, where Culture Kings continues to outperform expectations following the successful launch of the Auckland store in August, which has fueled both in-store sales and a corresponding halo effect of online sales. Culture Kings excels in print-on-demand graphic tees and hoodies, which enables them to instantly jump on the latest streetwear and culture trends. To accelerate this growth, we bought a print facility in the U.S. in the fourth quarter, The print facility gives Culture Kings a meaningful advantage as it significantly increases their capacity to produce graphic apparel in record time. For example, through a licensing deal with Netflix and Squid Games, Culture Kings was able to design and launch Squid Games branded merchandise within hours, generating viral hype and newness. We now have robust graphic print capabilities in both the US and Australia to capitalize on the growing demand across two hemispheres. Print on Demand is the fastest growing part of the Culture Kings business and an important part of their growth strategy. Notably, Culture Kings is our only brand with stores, seven in Australia and one in New Zealand. These highly experiential stores are like none other with a nightclub vibe, live DJs, in-store basketball, interactive games, and celebrity events that serve as powerful marketing vehicles. and we're thrilled to share that we signed a lease for the first U.S. flagship store in Las Vegas, which will open at the end of this year. The Culture King store in Vegas will leverage the best features from their other stores, as well as offer new one-of-a-kind elements. In-store events and content will create buzz and viral hype on social media to build awareness and traffic both in-store and online. The store product offering will be a unique curation of leading third-party brands combined with their own highly sought-after world-exclusive streetwear brands. We already see strong demand for Culture King's in-house brands in the U.S., and they are a key component of our U.S. expansion strategy. We are confident that the form shops at Caesars Las Vegas will be the perfect location to introduce this brand to the U.S., given the heavy tourist traffic of 18- to 35-year-olds and robust traffic that has already rebounded from pandemic lows. This first flagship store is key to our U.S. growth and I'm excited to share more details as we get closer to the opening. Petal & Pop was our second brand acquisition and has experienced incredible growth and acceleration since joining the platform in 2019. Now led by a new brand president and leadership team, they've adopted best practices like test and repeat merchandising and micro-influencer marketing, which led to significant growth in 2021 and in the fourth quarter. In the back half of the year, they leaned deeper into test and repeat buying, which fueled sales growth and a meaningful increase in full-price sales growth. In 2021, they nearly tripled their micro-influencer collaborations and diversified their advertising spend across paid performance and social media channels. This led to a significant increase in brand awareness and new customer acquisition in the fourth quarter. Importantly, they increased their repeat purchase rate by over 40% versus last year and saw customers who they acquired in the second and third quarters come back to shop over the holidays. Last year, Petal & Pop more than doubled in size in the U.S., which is their largest market, while also continuing to grow in Australia. Petal & Pop is now following the same successful growth curve as Princess Polly, And notably, Petal & Pup was our fastest growing brand in the AKA portfolio in 2021. Our most recent acquisition, Minimal, is a popular men's streetwear brand with great potential for global growth and synergies with Culture Kings. We closed on the transaction in October and have been incredibly pleased with their growth, the talent of this team, and the synergies with our other brands. They have hit the ground running, benefiting from the AKA platform immediately. Ahead of the peak season and holiday, we worked with Minimal to deepen inventory positions and improve lead times to customers, both of which contributed to robust growth in the quarter. Equally exciting is how Minimal has already provided immediate value in both merchandising and marketing to our other brands. The team at Minimal are expert merchants and closely monitor trends to stay ahead of the fashion curve. For example, they were early to spot and test men's flare denim, which has been very successful. Denim is Minimal's core category, and they are well-positioned to capitalize on the current denim cycle happening as the consumer shifts to new denim styles. We continue to see meaningful synergies between Minimal and Culture Kings, and Minimal will be launching on the Culture Kings website in Australia in the second quarter with a broader rollout to follow. We believe minimal has great potential and significant headroom in the U.S. and globally. And finally, Red Dolls accelerated significantly from the third quarter to the fourth and delivered robust growth fueled by great holiday and winter merchandising and the fantastic inspirational content they excel at. I will now turn it over to Kiran to go deeper into the financials.