Schedule 1: Reconciliation of Adjusted EBITDA and constant currency revenues Reconciliation of Non-GAAP Financial Measures to GAAP Measures Non-GAAP constant currency revenue reconciliation Three Months ended September 30, ($ in thousands) 2024 2023 Revenues, as reported (GAAP) 35,400 37,496Foreign currency exchange impact (1) (688) Revenues, at constant currency (Non-GAAP) 34,712 37,496 Reconciliation of Adjusted EBITDA from Continuing Operations Three Months ended September 30, ($ in thousands) 2024 2023 Net loss from Continuing Operations (GAAP) (1,226) (1,219)Income tax expense 1,664 1,046Interest expense including related party interest expense, net1,843 1,251Depreciation and amortization 804 745EBITDA from Continuing Operations (Non-GAAP) 3,085 1,823 Restructuring and related expenses (2) 316 309Employment litigation matter (3) 57 64Related party management fee and royalties - 334Foreign exchange losses, net 668 (530)Non-cash equity compensation (4) 725 -Changes in fair value of warrant liability (5) -Transaction Fees (5) - 244Adjusted EBITDA from Continuing Operations (Non-GAAP) (6) 4,846 2,244 Reconciliation of Adjusted EBITDA from Discontinuing Operations Three Months ended September 30, ($ in thousands) 2024 2023 Net loss from Discontinuing Operations, Net of Income Taxes (GAAP) (1,543) (1,668)Income tax expense 72 -Interest expense, net3 19Depreciation and amortization 135 350EBITDA from Discontinuing Operations (Non-GAAP) (1,333) (1,299) Restructuring and related expenses (7) - -Related party service fees and royalties - -Impairment of goodwill 87 -Foreign exchange losses, net 2 1Adjusted EBITDA from Discontinuing Operations (Non-GAAP) (6) (1,244) (1,298) (1) Constant currency excludes the impact of foreign currency fluctuations and is computed by applying the average exchange rates for the quarter ended September 30, 2023, to the revenues during the corresponding period in 2024.(2) Adjustment represents costs associated with restructuring, including employee severance and vendor and lease termination costs.(3) Represents the litigation settlement and associated expenses incurred in connection with the Company subsidiary litigation.(4) Represents the non-cash charges related to restricted stock units and options.(5) Represents transaction costs incurred as part of the Business Combination.(6) Supplemental financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States ("GAAP”).
Condensed Consolidated Statements of Cash FlowsFor the nine months ended September 30, 2024 and 2023(in thousands of United States dollars)(Unaudited) Nine months ended September 30, 2024 2023Cash flows from operating activities Net loss $(9,700) $(5,951)Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation 2,265 2,662Amortization of intangible assets 554 289Impairment of goodwill 87 —Credit loss expense 249 271Changes in fair value of warrant liability (45) —Stock-based compensation expense 885 —Unrealized foreign currency losses 1,976 215Change in deferred income taxes (761) (357) Change in operating assets and liabilities Accounts receivable 5,741 2,874Inventories 163 326Prepaid expense and other assets (855) 1,125Accounts payable (2,555) (2,599)Related parties payable (8,350) (2,246)Accrued expenses and other liabilities (1,428) 4,758Deferred revenue 280 790Customer deposits 340 (414)Net cash provided by (used in) operating activities (11,154) 1,743 Cash flows from investing activities Purchase of property, plant and equipment (1,124) (2,254)Additions to internally developed software (317) —Net cash used in investing activities (1,441) (2,254) Cash flows from financing activities Borrowings under secured borrowing facility — 87,769Principal repayment on borrowings under secured borrowing facility (79) (90,357)Borrowings under 2024 Term Loan A Facility 3,830 —Borrowings under 2024 Term Loan B Facility 11,413 —Borrowings under 2024 Revolving Credit Facility 15,425 —Cash paid for debt issuance costs (734) —Principal payments on 2024 Term Loan A Facility (192) —Principal payments on 2024 Term Loan B Facility (571) —Principal payments on long-term obligations (15,256) (690)Proceeds from Secured Credit Facility 679 —Principal payments on finance leases (282) (660)Net cash provided by (used in) financing activities 14,233 (3,938)Effect of exchange rates on cash and cash equivalents (583) (205)Net increase (decrease) in cash and cash equivalents 1,055 (4,654) Cash and equivalents, beginning of period, including cash from discontinued operations 6,905 7,473Cash and equivalents, end of period, including cash from discontinued operations $ 7,960 $ 2,819 Supplemental cash flow data: Income tax payments, net of refunds received 424 1,112Interest paid 1,869 1,309 XBP Europe Holdings, Inc.
All forward-looking statements are based upon estimates, forecasts and assumptions that, while considered reasonable by XBP Europe and its management, as the case may be, are inherently uncertain and many factors may cause the actual results to differ materially from current expectations which include, but are not limited to: (1) the outcome of any legal proceedings that may be instituted against XBP Europe or others and any definitive agreements with respect thereto; (2) the inability to meet the continued listing standards of Nasdaq or another securities exchange; (3) the risk that the business combination disrupts current plans and operations of XBP Europe and its subsidiaries; (4) the inability to recognize the anticipated benefits of the business combination, which may be affected by, among other things, competition, the ability of XBP Europe and its subsidiaries to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; (5) costs related to the business combination; (6) changes in applicable laws or regulations; (7) the possibility that XBP Europe or any of its subsidiaries may be adversely affected by other economic, business and/or competitive factors; (8) risks related to XBP Europe’s potential inability to achieve or maintain profitability and generate cash; (9) the impact of the COVID-19 pandemic, including any mutations or variants thereof, and its effect on business and financial conditions; (10) volatility in the markets caused by geopolitical and economic factors; (11) the ability of XBP Europe to retain existing clients; (12) the potential inability of XBP Europe to manage growth effectively; (13) the ability to recruit, train and retain qualified personnel, and (14) other risks and uncertainties set forth in the sections entitled "Risk Factors” and "Cautionary Note Regarding Forward-Looking Statements” in the Annual Reports on Form 10-K filed on April 1, 2024 and, our subsequent quarterly reports on Form 10-Q and our current reports on Form 8-K as filed with the Securities and Exchange Commission (the "SEC”).
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