GameStop Reports Financial Results for Q3 2021
Grapvine, TX — GameStop Corp. released financial results for the third quarter ended October 30, 2021. The Company’s condensed and consolidated financial statements, including GAAP and non-GAAP results, are below. The Company’s Form 10-Q and supplemental information can be found at http://investor.GameStop.com.
THIRD QUARTER OVERVIEW
- Net sales were $1.297 billion for the quarter, compared to $1.005 billion in the prior year’s third quarter.
- Sales attributable to new and expanded brand relationships, such as Samsung, LG, Razer, Vizio and others, contributed to the Company’s growth in the quarter.
- Inventory was $1.141 billion at the close of the quarter, compared to $861 million at the close of the prior year’s third quarter, reflecting the Company’s focus on front-loading investments in inventory to meet increased customer demand and mitigate supply chain issues.
- Ended the period with cash and cash equivalents of $1.413 billion as well as no debt other than a $46.2 million low-interest, unsecured term loan associated with the French government’s response to COVID-19.
- Established new offices in Seattle, Washington and Boston, Massachusetts, which are technology hubs with established talent markets.
- Secured a new $500 million ABL facility, which closed in November just after the end of the third quarter, with improved liquidity and terms, including reduced borrowing costs, lighter covenants and additional flexibility.
| GameStop Corp. Consolidated Statements of Operations (in millions, except per share data) (unaudited) |
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| 13 Weeks Ended October 30, 2021 |
13 Weeks Ended October 31, 2020 |
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| Net sales | $ | 1,296.6 | $ | 1,004.7 | ||
| Cost of sales | 978.0 | 728.4 | ||||
| Gross profit | 318.6 | 276.3 | ||||
| Selling, general and administrative expenses | 421.5 | 360.4 | ||||
| Gain on sale of assets | — | (21.1) | ||||
| Operating loss | (102.9) | (63.0) | ||||
| Interest expense, net | 0.8 | 9.7 | ||||
| Loss from continuing operations before income taxes | (103.7) | (72.7) | ||||
| Income tax expense (benefit) | 1.7 | (53.9) | ||||
| Net loss | $ | (105.4) | $ | (18.8) | ||
| Loss per share: | ||||||
| Basic loss per share | $ | (1.39) | $ | (0.29) | ||
| Diluted loss per share | $ | (1.39) | $ | (0.29) | ||
| Weighted-average common shares outstanding: | ||||||
| Basic | 75.9 | 65.2 | ||||
| Diluted | 75.9 | 65.2 | ||||
| Percentage of Net Sales: | ||||||
| Net sales | 100.0% | 100.0% | ||||
| Cost of sales | 75.4 | 72.5 | ||||
| Gross profit | 24.6 | 27.5 | ||||
| Selling, general and administrative expenses | 32.5 | 35.9 | ||||
| Gain on sale of assets | — | (2.1) | ||||
| Operating loss | (7.9) | (6.3) | ||||
| Interest expense, net | 0.1 | 0.9 | ||||
| Loss from continuing operations before income taxes | (8.0) | (7.2) | ||||
| Income tax expense (benefit) | 0.1 | (5.4) | ||||
| Net loss | (8.1)% | (1.8)% | ||||
| GameStop Corp. Consolidated Statements of Operations (in millions, except per share data) (unaudited) |
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| 39 Weeks Ended October 30, 2021 |
39 Weeks Ended October 31, 2020 |
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| Net sales | $ | 3,756.8 | $ | 2,967.7 | ||
| Cost of sales | 2,787.2 | 2,156.8 | ||||
| Gross profit | 969.6 | 810.9 | ||||
| Selling, general and administrative expenses | 1,170.7 | 1,095.1 | ||||
| Asset impairments | 0.6 | 4.8 | ||||
| Gain on sale of assets | — | (32.4) | ||||
| Operating loss | (201.7) | (256.6) | ||||
| Interest expense, net | 26.0 | 23.9 | ||||
| Loss from continuing operations before income taxes | (227.7) | (280.5) | ||||
| Income tax expense | 6.1 | 14.4 | ||||
| Net loss from continuing operations | (233.8) | (294.9) | ||||
| Loss from discontinued operations, net of tax | — | (0.9) | ||||
| Net loss | $ | (233.8) | $ | (295.8) | ||
| Basic loss per share: | ||||||
| Continuing operations | $ | (3.27) | $ | (4.54) | ||
| Discontinued operations | — | (0.01) | ||||
| Basic loss per share | $ | (3.27) | $ | (4.56) | ||
| Diluted loss per share: | ||||||
| Continuing operations | $ | (3.27) | $ | (4.54) | ||
| Discontinued operations | — | (0.01) | ||||
| Diluted loss per share | $ | (3.27) | $ | (4.56) | ||
| Weighted-average common shares outstanding: | ||||||
| Basic | 71.5 | 64.9 | ||||
| Diluted | 71.5 | 64.9 | ||||
| Percentage of Net Sales: | ||||||
| Net sales | 100.0% | 100.0% | ||||
| Cost of sales | 74.2 | 72.7 | ||||
| Gross profit | 25.8 | 27.3 | ||||
| Selling, general and administrative expenses | 31.2 | 36.9 | ||||
| Asset impairments | — | 0.2 | ||||
| Gain on sale of assets | — | (1.1) | ||||
| Operating loss | (5.4) | (8.7) | ||||
| Interest expense, net | 0.7 | 0.8 | ||||
| Loss from continuing operations before income taxes | (6.1) | (9.5) | ||||
| Income tax expense | 0.2 | 0.5 | ||||
| Net loss from continuing operations | (6.3) | (10.0) | ||||
| Loss from discontinued operations, net of tax | — | — | ||||
| Net loss | (6.3)% | (10.0)% | ||||
| GameStop Corp. Consolidated Balance Sheets (in millions) (unaudited) |
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| October 30, 2021 | October 31, 2020 | |||||
| ASSETS: | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 1,413.0 | $ | 445.9 | ||
| Restricted cash | 39.5 | 140.7 | ||||
| Receivables, net | 83.4 | 77.6 | ||||
| Merchandise inventories | 1,140.9 | 861.0 | ||||
| Prepaid expenses and other current assets | 236.3 | 126.7 | ||||
| Total current assets | 2,913.1 | 1,651.9 | ||||
| Property and equipment, net of accumulated depreciation of $1,122.0, $1,175.3 and $1,117.7, respectively | 179.6 | 193.0 | ||||
| Operating lease right-of-use assets | 615.8 | 666.7 | ||||
| Deferred income taxes | — | 29.2 | ||||
| Long-term restricted cash | 15.6 | 16.0 | ||||
| Other noncurrent assets | 37.9 | 44.6 | ||||
| Total assets | $ | 3,762.0 | $ | 2,601.4 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 711.5 | $ | 440.2 | ||
| Accrued liabilities and other current liabilities | 608.5 | 654.1 | ||||
| Current portion of operating lease liabilities | 211.9 | 212.9 | ||||
| Short-term debt, including current portion of long-term debt, net | 1.4 | 244.5 | ||||
| Borrowings under revolving line of credit | — | 25.0 | ||||
| Total current liabilities | 1,533.3 | 1,576.7 | ||||
| Long-term debt, net | 44.8 | 216.0 | ||||
| Operating lease liabilities | 409.7 | 456.7 | ||||
| Other long-term liabilities | 19.3 | 19.8 | ||||
| Total liabilities | 2,007.1 | 2,269.2 | ||||
| Total stockholders’ equity | 1,754.9 | 332.2 | ||||
| Total liabilities and stockholders’ equity | $ | 3,762.0 | $ | 2,601.4 | ||
| GameStop Corp. Consolidated Statements of Cash Flows (in millions) (unaudited) |
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| 13 Weeks Ended October 30, 2021 |
13 Weeks Ended October 31, 2020 |
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| Cash flows from operating activities: | ||||||
| Net loss | $ | (105.4) | $ | (18.8) | ||
| Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||
| Depreciation and amortization (including amounts in cost of sales) | 16.9 | 19.4 | ||||
| Stock-based compensation expense | 6.2 | 2.2 | ||||
| Loss (gain) on disposal of property and equipment, net | 1.4 | (21.0) | ||||
| Other | (0.8) | 2.8 | ||||
| Changes in operating assets and liabilities: | ||||||
| Receivables, net | (15.2) | 5.3 | ||||
| Merchandise inventories | (546.4) | (382.6) | ||||
| Prepaid expenses and other current assets | (1.1) | (4.6) | ||||
| Prepaid income taxes and income taxes payable | 0.9 | (58.1) | ||||
| Accounts payable and accrued liabilities | 351.7 | 272.6 | ||||
| Operating lease right-of-use assets and liabilities | (2.0) | (1.7) | ||||
| Changes in other long-term liabilities | 0.1 | (0.1) | ||||
| Net cash flows used in operating activities | (293.7) | (184.6) | ||||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (12.5) | (15.1) | ||||
| Proceeds from sale of property and equipment | — | 43.7 | ||||
| Other | (0.3) | (1.3) | ||||
| Net cash flows (used in) provided by investing activities | (12.8) | 27.3 | ||||
| Cash flows from financing activities: | ||||||
| Proceeds from French term loans | — | 23.5 | ||||
| Repayments of revolver borrowings | — | (10.0) | ||||
| Net cash flows provided by financing activities | — | 13.5 | ||||
| Exchange rate effect on cash, cash equivalents and restricted cash | (1.0) | (12.2) | ||||
| Decrease in cash, cash equivalents and restricted cash | (307.5) | (156.0) | ||||
| Cash, cash equivalents and restricted cash at beginning of period | 1,775.6 | 758.6 | ||||
| Cash, cash equivalents and restricted cash at end of period | $ | 1,468.1 | $ | 602.6 | ||
| GameStop Corp. Consolidated Statements of Cash Flows (in millions) (unaudited) |
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| 39 Weeks Ended October 30, 2021 |
39 Weeks Ended October 31, 2020 |
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| Cash flows from operating activities: | ||||||
| Net loss | $ | (233.8) | $ | (295.8) | ||
| Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||
| Depreciation and amortization | 53.2 | 61.1 | ||||
| Loss (gain) on retirement of debt | 18.2 | (1.5) | ||||
| Asset impairments | 0.6 | 4.8 | ||||
| Stock-based compensation expense | 20.7 | 6.1 | ||||
| Deferred income taxes | — | 45.4 | ||||
| Loss (gain) on disposal of property and equipment, net | 1.9 | (30.6) | ||||
| Other, net | (1.4) | 4.1 | ||||
| Changes in operating assets and liabilities: | ||||||
| Receivables, net | 21.0 | 65.8 | ||||
| Merchandise inventories | (545.2) | 11.6 | ||||
| Prepaid expenses and other current assets | (5.1) | (2.9) | ||||
| Prepaid income taxes and income taxes payable | (12.9) | 11.7 | ||||
| Accounts payable and accrued liabilities | 376.9 | 78.9 | ||||
| Operating lease right-of-use assets and liabilities | (18.1) | 1.1 | ||||
| Changes in other long-term liabilities | — | (0.9) | ||||
| Net cash flows used in operating activities | (324.0) | (41.1) | ||||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (40.7) | (32.6) | ||||
| Proceeds from sale of property and equipment | — | 95.5 | ||||
| Other | (0.4) | 0.4 | ||||
| Net cash flows (used in) provided by investing activities | (41.1) | 63.3 | ||||
| Cash flows from financing activities: | ||||||
| Proceeds from issuance of common stock, net of costs | 1,672.8 | — | ||||
| Proceeds from French term loans | — | 47.1 | ||||
| Borrowings from the revolver | — | 150.0 | ||||
| Repayments of revolver borrowings | (25.0) | (125.0) | ||||
| Payments of senior notes | (307.4) | (5.3) | ||||
| Settlement of stock-based awards | (136.6) | (1.0) | ||||
| Other | (0.1) | (0.3) | ||||
| Net cash flows provided by financing activities | 1,203.7 | 65.5 | ||||
| Exchange rate effect on cash, cash equivalents and restricted cash | (5.5) | 1.4 | ||||
| Increase in cash, cash equivalents and restricted cash | 833.1 | 89.1 | ||||
| Cash, cash equivalents and restricted cash at beginning of period | 635.0 | 513.5 | ||||
| Cash, cash equivalents and restricted cash at end of period | $ | 1,468.1 | $ | 602.6 | ||
| Schedule I Sales Mix (in millions) (unaudited) |
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| 13 Weeks Ended October 30, 2021 | 13 Weeks Ended October 31, 2020 | |||||||||
| Net Sales: | Sales | of Total | Sales | of Total | ||||||
| Hardware and accessories (1) | $ | 669.9 | 51.7% | $ | 413.4 | 41.2% | ||||
| Software (2) | 434.5 | 33.5 | 444.4 | 44.2 | ||||||
| Collectibles | 192.2 | 14.8 | 146.9 | 14.6 | ||||||
| Total | $ | 1,296.6 | 100.0% | $ | 1,004.7 | 100.0% | ||||
| 39 Weeks Ended October 30, 2021 | 39 Weeks Ended October 31, 2020 | |||||||||
| Net | Percent | Net | Percent | |||||||
| Net Sales (in millions): | Sales | of Total | Sales | of Total | ||||||
| Hardware and accessories (1) | $ | 1,983.0 | 52.8% | $ | 1,368.1 | 46.1% | ||||
| Software (2) | 1,229.0 | 32.7 | 1,247.9 | 42.0 | ||||||
| Collectibles | 544.8 | 14.5 | 351.7 | 11.9 | ||||||
| Total | $ | 3,756.8 | 100.0% | $ | 2,967.7 | 100.0% | ||||
| (1) Includes sales of new and pre-owned hardware, accessories, hardware bundles in which hardware and digital or physical software are sold together in a single SKU, interactive game figures, strategy guides, mobile and consumer electronics. (2) Includes sales of new and pre-owned video game software, digital software and PC entertainment software. |
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| GameStop Corp. Schedule II (in millions, except per share data) (unaudited) |
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| Non-GAAP results
The following tables reconcile the Company’s selling, general and administrative expenses (“SG&A”), operating loss, net loss and loss per share as presented in its unaudited consolidated statements of operations and prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) to its adjusted SG&A, adjusted operating loss, adjusted net loss, adjusted EBITDA and adjusted loss per share. The diluted weighted-average shares outstanding used to calculated adjusted earnings per share may differ from GAAP weighted-average shares outstanding. Under GAAP, basic and diluted weighted-average shares outstanding are the same in periods where there is a net loss. The reconciliations below are from continuing operations only. |
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| 13 Weeks Ended | 13 Weeks Ended | 39 Weeks Ended | 39 Weeks Ended | |||||||||
| October 30, 2021 | October 31, 2020 | October 30, 2021 | October 31, 2020 | |||||||||
| Adjusted SG&A | ||||||||||||
| SG&A | $ | 421.5 | $ | 360.4 | $ | 1,170.7 | $ | 1,095.1 | ||||
| Transformation costs | — | (0.7) | (6.5) | (2.0) | ||||||||
| Significant transactions(1) | — | — | (0.4) | (7.5) | ||||||||
| Severance, divestitures and other(2) | — | — | (18.3) | (7.8) | ||||||||
| Adjusted SG&A | $ | 421.5 | $ | 359.7 | $ | 1,145.5 | $ | 1,077.8 | ||||
| (1) Includes transaction costs associated with the sale of an aggregate of 8,500,000 shares of our common stock under our at-the market equity offering program during the 39 weeks ended October 30, 2021 (the “ATM Transactions”). Prior year includes transaction costs associated with our debt exchange. (2) Severance includes cash and stock based compensation for key personnel that have separated from the Company. |
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| Adjusted Operating Loss | ||||||||||||
| Operating loss | $ | (102.9) | $ | (63.0) | $ | (201.7) | $ | (256.6) | ||||
| Transformation costs | — | 0.7 | 6.5 | 2.0 | ||||||||
| Asset impairments | — | — | 0.6 | 4.8 | ||||||||
| Significant transactions(1) | — | (21.1) | 0.4 | (24.9) | ||||||||
| Severance, divestitures and other(2) | — | — | 18.3 | 7.8 | ||||||||
| Adjusted operating loss | $ | (102.9) | $ | (83.4) | $ | (175.9) | $ | (266.9) | ||||
| (1) Includes transaction costs associated with our ATM Transactions paid in the 39 weeks ended October 30, 2021. Prior year includes the gain on sale of assets relating to sale-leaseback transactions and transaction costs associated with our debt exchange. (2) Severance includes cash and stock based compensation for key personnel that have separated from the Company. |
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| Adjusted Net Loss | ||||||||||||
| Net loss | $ | (105.4) | $ | (18.8) | $ | (233.8) | $ | (295.8) | ||||
| Loss from discontinued operations, net of tax | — | — | — | 0.9 | ||||||||
| Net loss from continuing operations | $ | (105.4) | $ | (18.8) | $ | (233.8) | $ | (294.9) | ||||
| Transformation costs | — | 0.7 | 6.5 | 2.0 | ||||||||
| Asset impairments | — | — | 0.6 | 4.8 | ||||||||
| Significant transactions(1) | — | (21.1) | 18.6 | (26.4) | ||||||||
| Severance, divestitures and other(2) | — | — | 18.3 | 7.8 | ||||||||
| Tax effect of non-GAAP adjustments | — | 4.8 | — | 22.7 | ||||||||
| Adjusted net loss | $ | (105.4) | $ | (34.4) | $ | (189.8) | $ | (284.0) | ||||
| Adjusted loss per share | ||||||||||||
| Basic | $ | (1.39) | $ | (0.53) | $ | (2.65) | $ | (4.38) | ||||
| Diluted | $ | (1.39) | $ | (0.53) | $ | (2.65) | $ | (4.38) | ||||
| Number of shares used in adjusted calculation | ||||||||||||
| Basic | 75.9 | 65.2 | 71.5 | 64.9 | ||||||||
| Diluted | 75.9 | 65.2 | 71.5 | 64.9 | ||||||||
| (1) Includes transaction costs associated with our ATM Transactions and first quarter make-whole premium and accelerated amortization of the deferred financing costs associated with the voluntary early redemption of the 2023 Senior Notes paid in the 39 weeks ended October 30, 2021. Prior year includes the gain on sale of assets relating to sale-leaseback transactions for the 13 weeks ended October 30, 2020, as well as a discount of open market purchases of the 2021 Senior Notes, and gain on the early retirement of debt, as well as the gain on retirement of debt for the 39 weeks ended October 31, 2020. (2) Severance includes cash and stock based compensation for key personnel that have separated from the Company. |
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| 13 Weeks Ended | 13 Weeks Ended | 39 Weeks Ended | 39 Weeks Ended | |||||||||
| October 30, 2021 | October 31, 2020 | October 30, 2021 | October 31, 2020 | |||||||||
| Reconciliation of Net Loss to Adjusted EBITDA | ||||||||||||
| Net loss | $ | (105.4) | $ | (18.8) | $ | (233.8) | $ | (295.8) | ||||
| Loss from discontinued operations, net of tax | — | — | — | 0.9 | ||||||||
| Loss from continuing operations | $ | (105.4) | $ | (18.8) | $ | (233.8) | $ | (294.9) | ||||
| Interest expense, net | 0.8 | 9.7 | 26.0 | 23.9 | ||||||||
| Depreciation and amortization | 16.9 | 19.4 | 53.2 | 61.1 | ||||||||
| Income tax expense (benefit) | 1.7 | (53.9) | 6.1 | 14.4 | ||||||||
| EBITDA | $ | (86.0) | $ | (43.6) | $ | (148.5) | $ | (195.5) | ||||
| Stock-based compensation | 6.2 | 2.2 | 12.7 | 6.1 | ||||||||
| Transformation costs | — | 0.7 | 6.5 | 2.0 | ||||||||
| Asset impairments | — | — | 0.6 | 4.8 | ||||||||
| Significant transactions(1) | — | (21.1) | 0.4 | (24.9) | ||||||||
| Severance, divestitures and other(2) | — | — | 18.3 | 7.8 | ||||||||
| Adjusted EBITDA | $ | (79.8) | $ | (61.8) | $ | (110.0) | $ | (199.7) | ||||
| (1) Includes transaction costs associated with the ATM Transactions paid in the 39 weeks ended October 30, 2021. Prior year includes the gain on sale of assets relating to sale-leaseback transactions and transaction costs associated with our debt exchange. (2) Severance includes cash and stock-based compensation for key personnel that have separated from the Company. |
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| GameStop Corp. Schedule III (in millions) (unaudited) |
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| Non-GAAP results
The following table reconciles the Company’s cash flows provided by operating activities as presented in its unaudited Consolidated Statements of Cash Flows and prepared in accordance with GAAP to its free cash flow. Free cash flow is considered a non-GAAP financial measure. Management believes, however, that free cash flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use by investors in evaluating the company’s financial performance. |
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| 13 Weeks Ended | 13 Weeks Ended | 39 Weeks Ended | 39 Weeks Ended | ||||||||
| October 30, 2021 | October 31, 2020 | October 30, 2021 | October 31, 2020 | ||||||||
| Net cash flows used in operating activities | $ | (293.7) | $ | (184.6) | $ | (324.0) | $ | (41.1) | |||
| Capital expenditures | (12.5) | (15.1) | (40.7) | (32.6) | |||||||
| Free cash flow | $ | (306.2) | $ | (199.7) | $ | (364.7) | $ | (73.7) | |||
Non-GAAP Measures and Other Metrics
Adjusted EBITDA is a supplemental financial measure of the Company’s performance that is not required by, or presented in accordance with, GAAP. We believe that the presentation of this non-GAAP financial measure provides useful information to investors in assessing our financial condition and results of operations. We define Adjusted EBITDA as net income (loss) before income taxes, plus interest expense, net and depreciation and amortization, excluding stock-based compensation, transformation costs, business divestitures, asset impairments, severance and other non-cash charges. Net income (loss) is the GAAP financial measure most directly comparable to Adjusted EBITDA. Our non-GAAP financial measures should not be considered as an alternative to the most directly comparable GAAP financial measure. Furthermore, non-GAAP financial measures have limitations as an analytical tool because they exclude some but not all items that affect the most directly comparable GAAP financial measures. Some of these limitations include:
- certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure;
- Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
- Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
- our computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.
We compensate for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable GAAP financial measure, understanding the differences between the GAAP and non-GAAP financial measures and incorporating these data points into our decision-making process. Adjusted EBITDA is provided in addition to, and not as an alternative to, the Company’s financial results prepared in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined and determined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
View source version on businesswire.com: https://www.businesswire.com/news/home/20211208005598/en/
GameStop Investor Relations
817-424-2001
ir@gamestop.com
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