MOSCOW, June 01, 2020 (GLOBE NEWSWIRE) — HeadHunter Group PLC (Nasdaq: HHR) announced today its financial results for the quarter ended March 31, 2020. As used below, references to “we,” “our,” “us” or the “Company” or similar terms shall mean HeadHunter Group PLC.
First Quarter 2020 Financial and Operational Highlights“RUB” or “₽” denote Russian Rouble throughout this release.“USD” or “$” denote U.S. Dollar throughout this release.Percentage movements and certain other figures in this release may not recalculate exactly due to rounding. This is because percentages and/or figures contained herein are calculated based on actual numbers and not the rounded numbers presented.Dollar translations are included solely for the convenience of the reader and were calculated at the exchange rate quoted by the Central Bank of Russia as of March 31, 2020 (RUB 77.7325 to USD 1).Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin are non-IFRS measures. See “Use of Non-IFRS Financial Measures” elsewhere in this release for a description of these measures and a reconciliation to the nearest IFRS measure.

   º  Revenue is up 18.6% primarily due to the increase in revenue in our Russia segment. The Russia segment revenue is up 18.2%, driven by an increase in prices which resulted in the increase in average revenue per customer (“ARPC”) across all customer segments, an increase of 10% in the number of paying customers in our Small and Medium Accounts segment and an increase of 12% in the number of paying customers in our Key Accounts in Other Regions of Russia segment.

   º  Net Income is up to ₽412 million from ₽239 million, mainly driven by an increase in revenue.

   º  Adjusted EBITDA is up 35.1% primarily due to an increase in revenue, and Adjusted EBITDA Margin is up to 52.5% from 46.1%, or by 6.4 ppts, of which 5.1 ppts due to an increase in net foreign exchange gain.

   º  Adjusted Net Income is up 64.2% primarily due to an increase in revenue, and Adjusted Net Income Margin is up to 30.8% from 22.2%, or by 8.6 ppts, of which 5.1 ppts due to an increase in net foreign exchange gain.

Net Working Capital, Net Debt, and Net Debt to Adjusted EBITDA Ratio are non-IFRS financial measures. See “Use of Non-IFRS Financial Measures” elsewhere in this release for a description of these measures and a reconciliation to the nearest IFRS measure.  For the purposes of calculation of this ratio as of March 31, 2020, Adjusted EBITDA is calculated on the last twelve months basis.
 
    º  Net Working Capital as of March 31, 2020 decreased by ₽136 million, or 4.5%, primarily due to an increase in contract liabilities over the three months ended March 31, 2020 by 9.2%. The growth in contract liabilities in the first quarter 2020 was positively affected by our decision not to offer customers an opportunity to renew a contract for the same price if they paid us before January 1, 2020, the effective date of our new price list. This resulted in a substantial amount of advance payments shifting from the fourth quarter of 2019 to the first quarter of 2020.

    º  Net Debt decreased by ₽907 million, or 29.8%, primarily due to cash generated from operating activities (see “Cash Flows”).

    º  Net Debt to Adjusted EBITDA Ratio decreased from 0.8x to 0.5x, mainly due to a decrease in Net Debt.

“Despite the current global slowdown in business activity, one of the most significant in modern history, I am very proud of how rapidly and efficiently HeadHunter has adapted to the evolving situation to continue providing consistent service to our customers,” said Mikhail Zhukov, Chief Executive Officer of HeadHunter Group PLC.“In late March, we started observing a significant drop in recruitment activity from both candidates and employers, which became even more evident after the institution of Russia’s country-wide lockdown on March 25, 2020. Nevertheless, since mid-April we have seen positive dynamics gain a foothold and activity recovering strongly into late May. Various industries are gradually resuming operations and employees returning to work all over the country. We expect business sentiment to be muted until there is more visibility on the consequences for the whole economy of the pandemic and so the outlook for the labor market remains uncertain. However, the trends that we are seeing give us confidence that as business activity returns towards normal, HeadHunter will continue leveraging its strengths to retain and increase market share.In addition, we believe that the current crisis will give a strong push towards further digitalization across a broader number of business needs and life patterns, including recruitment. We are confident in our 100% online business model, supported by ample financial resources and strong market position, which we believe will enable us to capture exciting opportunities in the future.”Impact of COVID-19 on Our Operations and Financial ConditionOur first quarter 2020 financial results are affected by the decrease in employer and candidate activity on our platform due to COVID-19 spread and associated government measures from the mid-March 2020, resulting in decrease in revenues, partly offset by our cost-cutting initiatives. We see no specific immediate impact of COVID-19 on our financial condition as of March 31, 2020. We remain fully operational during this pandemic, as nearly all of our employees are successfully working from home.Operating SegmentsFor management purposes, we are organized into operating segments based on the geography of our operations. Our operating segments include “Russia,” “Belarus,” “Kazakhstan” and other countries. As each segment, other than Russia, individually comprises less than 10% of our revenue, for reporting purposes we combine all segments other than Russia into the “Other segments” category.CustomersWe sell our services predominantly to businesses that are looking for job seekers to fill vacancies inside their organizations. We refer to such businesses as “customers.” In Russia, we divide our customers into (i) Key Accounts and (ii) Small and Medium Accounts, based on their annual revenue and employee headcount. We define “Key Accounts” as customers who, according to the Spark-Interfax database, have an annual revenue of ₽2 billion or more or a headcount of 250 or more employees and have not marked themselves as recruiting agencies on their page on our website, and we define “Small and Medium Accounts” as customers who, according to the Spark-Interfax database, have both an annual revenue of less than ₽2 billion and a headcount of less than 250 employees and have not marked themselves as recruiting agencies on their page on our website. Our website allows several legal entities and/or natural persons to be registered, each with a unique identification number, under a single account page (e.g., a group of companies). Each legal entity registered under a single account is defined as a separate customer and is included in the number of paying customers metric. Natural persons registered under a single account are assumed to be employees of the legal entities of that account and thus, are not considered separate customers and are not included in the number of paying customers metric. However, in a specific reporting period, if only natural persons used our services under such account, they are collectively included in the number of paying customers as one customer.SeasonalityRevenueWe generally do not experience seasonal fluctuations in demand for our services and our revenue remains relatively stable throughout each quarter. However, our customers are predominately businesses and, therefore, use our services mostly on business days. As a result, our quarterly revenue is affected by the number of business days in a quarter, with the exception of our services that represent “stand-ready” performance obligations, such as subscriptions to access our curriculum vitae (“CV”) database, which are satisfied over the period of subscription, including weekends and holidays.Public holidays in Russia predominantly fall during the first quarter of each year, which results in lower business activity in that quarter. Accordingly, our first quarter revenue is typically slightly lower than in the other quarters. For example, our first quarter revenue in our Russia segment in 2018 and 2019 was 20.9% and 21.6%, respectively.The number of business days in a quarter may also be affected by calendar layout in a specific year. In addition, the Government of Russia decides on an annual basis how public holidays that occur on weekends will be reallocated to business days throughout the year as a requirement of the Labor Code of Russia. As a result, the number of business days in a quarter may be different in each year (while the total number of business days in a year usually remains the same). Therefore, the comparability of our quarterly results, including with respect to our revenue growth rate, may be affected by this variance. In addition, when a calendar layout in a specific year provides for several consecutive holidays or a small number of business days between holidays or holidays adjacent to weekends, HR managers of our customers may take short vacations, further contributing to the decrease in business activities in these periods.The following table illustrates the number of business days by quarter for the years 2018 to 2020. In 2020 there is 1 business day more in the second quarter and in the total year and the same number of business days in the first, third and fourth quarters, meaning that the calendar layout in 2020 is substantially the same as in 2019, allowing for good comparability of our quarterly results:On March 25, 2020, in response to the COVID-19 pandemic, the period from March 30, 2020 to May 11, 2020 was declared a ‘period of non-working days’ in Russia. As a result, two and twenty-two working days formally became non-working in the first and second quarter of 2020, respectively. However, at least some level of business activity was retained during this period, as remote work was encouraged and some sectors such as banking were functioning with limited capacity. Therefore, these days were different from usual weekends or holidays, and therefore the number of business days included in the table above does not account for them.Operating costs and expenses (exclusive of depreciation and amortization)Personnel and marketing expenses, in total, accounted for 76.3% and 77.4% of our total operating costs and expenses (exclusive of depreciation and amortization) for the years ended December 31, 2019 and December 31, 2018, respectively. Most of our marketing and personnel expenses are fixed and not directly tied to our revenue.Marketing expenses are more volatile in terms of allocation to quarters and are affected by our decisions on how we realize our strategy in a particular year, which can differ from year to year. Therefore, total marketing expenses as a percentage of revenue for a particular quarter may not be fully representative of the whole year. Personnel expenses are relatively stable over the year; however, they are also affected by other dynamics, such as our hiring decisions. Some costs and expenses, such as share-based compensation or foreign exchange gains or losses, can be significantly concentrated in a particular quarter.First quarter segment external expenses in our Russia segment in 2018 and 2019 were 25.5% and 23.6%, respectively, of total Russia segment external expenses for the year.Net income and Adjusted EBITDAEven though our revenue remains relatively stable throughout each quarter, seasonal revenue fluctuations, as described above, affect our net income. As a result of revenue seasonality, our profitability in the first quarter is usually lower than in other quarters and for the full year, because our expenses as a percentage of revenue are usually higher in the first quarter due to lower revenue. For example, our Adjusted EBITDA Margin was 46.1% for the first quarter of 2019, compared to 50.5% for the full year 2019. Our profitability is also affected by our decisions on timing of expenses, again as described above.Contract liabilitiesOur contract liabilities are affected by the annual subscriptions’ renewal cycle in our Key Accounts customer segment. A substantial number of our Key Accounts renew their subscriptions in the first quarter and prepay us in the fourth quarter of a previous year, as per our normal payment terms. As a result, we receive substantial advance payments from our customers in the fourth quarter which causes consequential increase in our contract liabilities at the end of that quarter. For example, our contract liabilities as of March 31, June 30, September 30, and December 31, 2019 were ₽2,107 million, ₽2,041 million, ₽1,971 million, and ₽2,367 million, respectively.Net cash generated from operating activitiesOur net cash generated from operating activities is affected by seasonal fluctuations of business activity as explained in “Revenue” and by substantial advance payments from our customers (see “Contract liabilities”), as well as by our decisions in regard to timing of expenses (see “Operating expenses (exclusive of depreciation and amortization)”), and to a lesser extent by payment terms provided to us by our largest suppliers, such as TV advertising agencies and others.Net working capitalOur net working capital is primarily affected by changes in our contract liabilities as discussed above. As our contract liabilities were usually highest in the fourth quarter, our net working capital was usually lowest in the fourth quarter. For example, our net working capital of March 31, June 30, September 30, and December 31, 2019 was ₽(2,672) million, ₽(2,697) million, ₽(2,588) million, and ₽(2,994) million, respectively.First Quarter 2020 ResultsOur revenue was ₽1,990 million for the three months ended March 31, 2020 compared to ₽1,678 million for the three months ended March 31, 2019. Revenue for the three months ended March 31, 2020 increased by ₽312 million, or 18.6%, compared to the three months ended March 31, 2019, primarily due to an increase in revenue in our Russia segment. Revenue in our Russia segment was ₽1,838 million for the three months ended March 31, 2020 compared to ₽1,556 million for the three months ended March 31, 2019. Revenue in our Russia segment increased by ₽283 million, or 18.2%. This was primarily due to an increase in prices which resulted in the increase in ARPC across all customer segments, an increase of 10% in the number of paying customers in our Small and Medium Accounts segment and an increase of 12% in the number of paying customers in our Key Accounts in Other Regions of Russia segment.The following table breaks down revenue by product:The following table sets forth the revenue broken down by type of customer and region:The following table sets forth the number of paying customers and ARPC for the periods indicated:Our customer base in Moscow and St. Petersburg was relatively flat, while the number of our Regional paying customers continued to grow. We have increased APRC in every segment, driven by an increase in prices effective January 1, 2020, increase in service usage in our Key Accounts in Other regions of Russia, and reduced pressure from new clients with lower initial APRC on blended ARPC in our Small and Medium Accounts segment..In our Key Accounts, number of paying customers has remained flat in Moscow and St. Petersburg and increased by 11.7% in Other regions of Russia. ARPC in this segment has increased by 13.2% in Moscow and St. Petersburg, driven by the increase in prices and cancellation of discounts, and by 29.1% in Other regions of Russia, driven by the increase in prices and the increase in average usage of our services per paying customer.In our Small and Medium Accounts, the number of paying customers has increased by 4.6% in Moscow and St. Petersburg and by 10.7% in Other regions of Russia. ARPC in this segment has increased by 5.8% in Moscow and St. Petersburg and by 10.7% in Other regions of Russia, driven by the increase in prices, while average usage of services per paying customer has slightly decreased.Operating Costs and Expenses (exclusive of depreciation and amortization)Operating costs and expenses (exclusive of depreciation and amortization) were ₽1,139 million for the three months ended March 31, 2020 compared to P934 million for the three months ended March 31, 2019, representing an increase of ₽205 million, or 22.0%.Our operating expenses were relatively flat as a percentage of revenue, except for the insurance costs:Personnel expensesPersonnel expenses increased by ₽101 million, or 21.1%, for the three months ended March 31, 2020 compared to the three months ended March 31, 2019. The main factors that contributed to the increase in personnel expenses are: (i) an increase in share-based compensation by ₽51 million, primarily due to the grant of new options under the 2016 Unit Option Plan and 2018 Unit Option Plan in the second quarter of 2019; (ii) hiring 77 people during the second, third and fourth quarters of 2019 and the first quarter of 2020, primarily in the development, sales and production teams in our Russia segment, thus increasing headcount in the Russia segment to 729 people as of March 31, 2020; and (iii) the indexation of wages effective from the first quarter of 2020. The increase was partly offset by a decrease of performance-based and discretionary bonuses in the first quarter of 2020 as a part of our cost-cutting initiatives in response to COVID-19.Our personnel expenses increased as a percentage of revenue to 29.2% for the three months ended March 31, 2020 from 28.6% for the three months ended March 31, 2019. Excluding share-based compensation expense, our personnel expenses decreased as a percentage of revenue to 26.6% for the three months ended March 31, 2020 from 28.3% for the three months ended March 31, 2019.Marketing expensesMarketing expenses increased by ₽60 million, or 23.3%, for the three months ended March 31, 2020 compared to the three months ended March 31, 2019, primarily due to an increase in online marketing expenses and TV marketing expenses.Our marketing expenses were 16.0% as a percentage of revenue for the three months ended March 31, 2020, relatively flat compared to 15.4% as a percentage of revenue for the three months ended March 31, 2019.Other general and administrative expensesOur other general and administrative expenses consist primarily of professional services, insurance costs and office rent and maintenance costs. Our general and administrative expenses comprised 12.0% and 11.7% as a percentage of revenue for the three months ended March 31, 2020 and March 31, 2019, respectively.Our insurance costs have increased as a percentage of revenue due to purchase of D&O insurance cover in May 2019 in relation to our IPO.Net foreign exchange gainNet foreign exchange gain was ₽75 million for the three months ended March 31, 2020, compared to a ₽23 million loss for the three months ended March 31, 2019. The net foreign exchange gain for the three months ended March 31, 2020 reflects mostly the foreign exchange gain on USD-denominated cash balances, partly offset by the foreign exchange loss on USD-denominated dividends payable.Depreciation and amortizationDepreciation and amortization were P184 million for the three months ended March 31, 2020, compared to ₽165 million for the three months ended March 31, 2019. Depreciation and amortization increased by ₽19 million, or 11.7%, primarily due to additional depreciation charge related to leasehold improvements recognized in the second, third and fourth quarters of 2019 due to redesign of our office in Moscow and Yaroslavl.Finance income and costsFinance income was ₽19 million for the three months ended March 31, 2020 compared to ₽26 million for the three months ended March 31, 2019, primarily due to a decrease in available cash balances that were deposited.Finance costs were ₽119 million for the three months ended March 31, 2020, compared to ₽168 million for the three months ended March 31, 2019. Finance costs decreased by ₽49 million, primarily due to a decrease of Central Bank of Russia Key Rate from 7.75% to 6% through the period from March 31, 2019 to March 31, 2020 as well as a decrease in the loans and borrowings balance by ₽688 million from March 31, 2019 to March 31, 2020.Income tax expenseIncome tax expense was P231 million for the three months ended March 31, 2020 compared to ₽177 million for the three months ended March 31, 2019. The effective tax rate was 35.9% for the three months ended March 31, 2020 and 42.5% for the three months ended March 31, 2019.The effective tax rate for the three months ended March 31, 2020 was affected by the non-deductible forex loss on dividends payable occurred in our Cyprus holding company. Without this effect, the effective tax rate for the three months ended March 31, 2020 would have been 29.4%. The effective tax rate for the three months ended March 31, 2019 was affected by withholding tax expense associated with our tax restructuring. Without this effect, the effective tax rate for the three months ended March 31, 2019 would have been 32.6%.Net incomeNet income was ₽412 million for the three months ended March 31, 2020 compared to ₽239 million for the three months ended March 31, 2019. Net income increased by ₽173 million compared to the three months ended March 31, 2019, primarily due to the reasons described above.Adjusted EBITDAAdjusted EBITDA was ₽1,045 million for the three months ended March 31, 2020 compared to ₽774 million for the three months ended March 31, 2019, and it increased by ₽272 million, primarily due to the reasons described above.Adjusted Net IncomeAdjusted Net Income was ₽613 million for the three months ended March 31, 2020 compared to ₽373 million for the three months ended March 31, 2019. Adjusted Net Income increased by ₽240 million compared with the three months ended March 31, 2019, primarily due to the reasons described above.Cash FlowsThe following table sets forth the summary cash flow statements for the periods indicated:Net cash generated from operating activitiesFor the three months ended March 31, 2020, net cash generated from operating activities was ₽942 million compared to ₽375 million for the three months ended March 31, 2019. The change between the periods of ₽568 million was primarily driven by: (i) an increase in sales, which resulted in an increase in net income (adjusted for non-cash items and items not affecting cash flow from operating activities), (ii) a decrease of interest paid and income tax paid due to the shift of payments from the first quarter 2020 to later dates due to non-working days period due to COVID-19 pandemic; (iii) an increase in the movement of contract liabilities for the three months ended March 31, 2020 due to timing of customer advances in this year; (iv) a decrease in trade and other payables mainly due to settlement of payables to employees, including annual bonuses for 2019.Net cash used in investing activitiesFor the three months ended March 31, 2020, net cash used in investing activities was P101 million compared to ₽290 million for the three months ended March 31, 2019. The change between the periods of ₽189 million was primarily due to the acquisition of a 25.01% ownership interest in LLC “Skilaz” for ₽232 million in the first quarter 2019, partly offset by an increase in capital expenditures in the first quarter 2020.Net cash used in financing activitiesFor the three months ended March 31, 2020, net cash used in financing activities was ₽59 million compared to ₽574 million for the three months ended March 31, 2019. The change between the periods was primarily due to timing of a VTB loan repayment, which was paid in the second quarter 2020 as the due date of March 30, 2020 was designated as a non-working day due to COVID-19 pandemic, as well as a loan repayment of ₽270 million to the associate of a non-controlling shareholder in the three months ended March 31, 2019.Capital ExpendituresOur additions to property and equipment and intangible assets in the three months ended March 31, 2020 were ₽102 million, an increase of ₽17 million compared to ₽85 million for the three months ended March 31, 2019, primarily due to an increase in office renovation costs during the three months ended March 31, 2020, as we have redesigned part of our office in Moscow.DividendOn March 13, 2020, we announced an interim dividend of $0.50 per share, or US$25 million, representing approximately 75% of our Adjusted Net Income for the year ended December 31, 2019. On April 15, 2020 we announced the deferral of the dividend payment until further notice due to uncertainty over the impact of the COVID-19 pandemic on our business.We can clearly see an upward trend in the recruitment market in recent weeks, as well as a gradual easing of restrictions and reduction in the speed of COVID-19 spread. However, the pandemic is not yet over, and there is an uncertainty as to how successful the easing of the restrictions will be in terms of containing the spread of the virus. Out of prudence, we will continue reserving this cash on our balance sheet, and plan to provide a new update on our next quarterly call or earlier.First Quarter 2020 Financial Results Conference CallConference Call InformationWe will host a conference call and webcast to discuss its results at 9:00 a.m. U.S. Eastern Time (4:00 p.m. Moscow time, 2:00 p.m. London time) on June 1, 2020.We recommend to use the dial-in option only if you would like to ask questions. In this case please dial in at least 15 minutes prior to the call start time and clearly state the requested information. For listen only mode, please use the webcast link.To participate in the conference call, please use the following details:Webcast:https://edge.media-server.com/mmc/p/5nzn4BUYAbout HeadHunter Group PLCHeadHunter is the leading online recruitment platform in Russia and the Commonwealth of Independent States focused on providing comprehensive talent acquisition services, such as access to extensive CV database, job postings (jobs classifieds platform) and a portfolio of value-added services.USE OF NON-IFRS FINANCIAL MEASURESTo supplement our consolidated financial statements, which is prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the International Accounting Standards Board (“IASB”), we present the following non-IFRS¹ financial measures: Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with IFRS. For more information on these non-IFRS financial measures, please see the tables captioned “Reconciliations of non-IFRS financial measures to the nearest comparable IFRS measures”, included following the accompanying financial tables. We define the various non-IFRS financial measures we use as follows:“Adjusted EBITDA” as net income (loss) plus: (1) income tax expense; (2) net interest expense/(income); (3) depreciation and amortization; (4) transaction costs related to business combinations; (5) (gain)/loss on the disposal of subsidiary; (6) transaction costs related to disposal of subsidiary; (7) expenses related to equity-settled awards, including related social taxes; (8) IPO-related costs and other financing and transactional costs; (9) insurance expenses related to the IPO; (10) (income) from the depositary; (11) one-off litigation settlement and related legal costs; and (12) share of (profit)/loss of equity-accounted investees.“Adjusted Net Income” as net income (loss) plus: (1) transaction costs related to business combinations; (2) (gain)/loss on the disposal of subsidiary; (3) transaction costs related to the disposal of subsidiary; (4) expenses related to equity-settled awards, including related social taxes; (5) IPO-related costs and other financing and transactional costs; (6) insurance expenses related to IPO; (7) (income) from the depositary; (8) one-off litigation settlement and related legal costs; (9) share of (profit)/loss of equity-accounted investees; (10) amortization of intangible assets recognized upon the acquisition by HeadHunter Group PLC of the outstanding equity interests of HeadHunter FSU Limited from Mail.Ru Group Limited; (11) the tax effect of the adjustment described in (10); (12) (gain)/loss related to the remeasurement and expiration of a tax indemnification asset;“Adjusted EBITDA Margin” as Adjusted EBITDA divided by revenue.“Adjusted Net Income Margin” as Adjusted Net Income divided by revenue.Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are used by our management to monitor the underlying performance of the business and its operations. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin as reported by us to Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin as reported by other companies. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are unaudited and have not been prepared in accordance with IFRS or any other generally accepted accounting principles.Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are not measurements of performance under IFRS or any other generally accepted accounting principles, and you should not consider Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin or Adjusted Net Income Margin as alternatives to net income, operating profit or other financial measures determined in accordance with IFRS or other generally accepted accounting principles. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin have limitations as analytical tools, and you should not consider them in isolation. Some of these limitations are:Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments,Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin do not reflect changes in, or cash requirements for, our working capital needs, andthe fact that other companies in our industry may calculate Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin differently than we do, which limits their usefulness as comparative measures.The tables at the end of this release provide detailed reconciliations of each non-IFRS financial measure we use to the most directly comparable IFRS financial measure.We provide earnings guidance on a non-IFRS basis and do not provide earnings guidance on an IFRS basis. A reconciliation of our Adjusted EBITDA Margin guidance to the most directly comparable IFRS financial measure cannot be provided without unreasonable efforts and is not provided herein because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including depreciation and amortization, expenses related to equity-settled awards and the other adjustments reflected in our reconciliation of historical non-IFRS financial measures, the amounts of which, could be material.Net Working CapitalNet Working Capital is a financial measure not defined under IFRS. We believe that Net Working Capital is a useful metric to assess our ability to service debt, fund new investment opportunities, distribute dividends to our shareholders and assess our working capital requirements. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. See the tables at the end of this release providing the calculation of Net Working Capital.Net Debt and Net Debt to Adjusted EBITDA RatioNet Debt and Net Debt to Adjusted EBITDA Ratio are financial measure not defined under IFRS. We believe that Net Debt and Net Debt to Adjusted EBITDA Ratio are important measures that indicate our ability to repay outstanding debt. These measures should not be considered in isolation or as a substitute for any standardized measure under IFRS. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. See the tables at the end of this release providing the calculation of Net Debt and discussion of Net Debt to Adjusted EBITDA Ratio.FORWARD-LOOKING STATEMENTS
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