Company Projecting Mid to High Single Digit
Percentage Revenue Growth in 2024 with Positive Adjusted EBITDA in
the Second Half of the Year
LEHI,
Utah, March 12, 2024 /PRNewswire/ -- Purple
Innovation, Inc. (NASDAQ: PRPL) ("Purple"), a comfort innovation
company known for creating the "World's First No Pressure ™
Mattress," today announced results for the fourth quarter and year
ended December 31, 2023.
Fourth Quarter Financial Summary (Comparisons versus Fourth
Quarter 2022 and Third Quarter 2023)1
- Net revenue was $145.9 million,
an increase of 1.1% compared to 4Q22 and an increase of 4.2%
compared to 3Q23.
- Direct-to-Consumer (DTC) revenue increased 4.3% compared to
4Q22 and increased 2.4% compared to 3Q23.
- Wholesale revenue decreased 2.7% compared to 4Q22 and increased
6.7% compared to 3Q23.
- Gross margin was 33.2% compared to 34.6% in 4Q22 and 33.8% in
3Q23.
- Adjusted gross margin, which excludes discounts and
transitional costs associated with the new product transition, was
36.7% in 4Q23 compared to 37.1% in 3Q23.
- Operating expenses were $64.7
million, or 44.3% of revenue compared to $61.9 million, or 42.9% of revenue in 4Q22 and
$79.9 million, or 57.1% in 3Q23.
- Operating loss was $(16.2)
million compared to an operating loss of $(11.9) million in 4Q22 and an operating loss of
$(32.6) million in 3Q23.
- Net loss was $(18.3) million as
compared to a net loss of $(71.7)
million in 4Q22 and a net loss of $(36.0) million in 3Q23.
- Adjusted net loss was $(15.8)
million, or $(0.15) per
diluted share as compared to adjusted net loss of $(8.1) million, or $(0.09) per diluted share in 4Q22 and an adjusted
net loss of $(19.4) million or
$(0.18) per diluted share in
3Q23.
- EBITDA was $(10.1) million
compared to $155.4 million in 4Q22
and $(29.7) million in 3Q23.
- Adjusted EBITDA was $(9.8)
million compared to $(0.8)
million in 4Q22 and $(16.3)
million in 3Q23.
Full Year 2023 Financial Summary (Comparisons versus Full
Year 2022)2
- Net revenue was $510.5 million, a
decrease of 10.9% compared to 2022.
- Direct-to-Consumer (DTC) revenue decreased 10.2% compared to
2022.
- Wholesale revenue decreased 11.9% compared to 2022.
- Gross margin was 33.7% compared to 36.3% in 2022.
- Adjusted gross margin, which excludes discounts and
transitional costs associated with the new product transition, was
37.2% in 2023.
- Operating expenses were $285.5
million, or 55.9% of revenue compared to $250.8 million, or 43.8% of revenue in 2022.
- Showroom expenses increased 32.1% to $50.2 million, compared to $38.0 million last year.
- Operating expenses included $11.4
million for Special Committee costs and $6.9 million for Goodwill Impairments in
2023.
- Operating loss was $(113.7)
million compared to an operating loss of $(42.8) million in 2022.
- Net loss was $(120.8) million as
compared to a net loss of $(92.5)
million in 2022.
- Adjusted net loss was $(73.0)
million, or $(0.70) per
diluted share as compared to adjusted net loss of $(31.4) million, or $(0.38) per diluted share in 2022.
- EBITDA was $(92.9) million
compared to $142.5 million in 2022.
- Adjusted EBITDA was $(54.7)
million compared to $(0.2)
million in 2022.
- Inventories decreased 8.6% to $66.9
million compared to end of 2022.
________________________________
|
1 Reconciliations for
non-GAAP financial measures to the most directly comparable GAAP
financial measures are included in the "RECONCILIATION OF GAAP TO
NON-GAAP MEASURES" tables at the end of this press
release.
|
|
2 Reconciliations for
non-GAAP financial measures to the most directly comparable GAAP
financial measures are included in the "RECONCILIATION OF GAAP TO
NON-GAAP MEASURES" tables at the end of this press
release.
|
|
"The fourth quarter represented an encouraging finish to 2023 as
sales finished within our guidance range and increased
year-over-year for the first time in eight quarters," said Chief
Executive Officer Rob DeMartini.
"Throughout last year we made meaningful progress capturing market
share and repositioning Purple as a premium brand despite ongoing
industry headwinds. The launch of our innovative new mattresses and
new marketing campaign fueled improved sales trends across all
channels in the second half. Backed by marketing efficiencies,
fourth quarter profitability was in-line with expectations
highlighted by positive operating income in the month of
December."
DeMartini continued, "Looking ahead, we will continue to
implement the strategic initiatives that are clearly resulting in
operating and financial improvements. Specifically, our focus is on
further share gains and enhancing earnings by driving productivity,
efficiency and innovation across the business. This includes
improving showroom and wholesale door velocity through new revenue
initiatives and cost controls. Increasing conversion rates on our
ecommerce site is also a priority through ongoing testing and
optimization. At the same time, earnings expansion should come from
price increases, product mix shifts and manufacturing improvements
combined with more efficient ad spending focused on existing
mattress shoppers. While near-term industry challenges persist, the
foundation is now in place for long-term, profitable growth."
Fourth Quarter 2023 Review
Fourth quarter 2023 net revenue increased 1.1% to $145.9 million, compared to $144.3 million in the fourth quarter of 2022.
This increase was driven by the positive response to the Company's
new product lineup, along with increased advertising spend to
support the new product launch and enhanced brand positioning,
partially offset by soft industry-wide demand for home-related
products in the current operating environment. By channel, DTC net
revenues increased 4.3% driven by slightly higher e-commerce
revenue, in addition to growth in Purple showroom revenue from the
addition of five net new showrooms over the previous 12 months and
improvements in stores open greater than 12 months. Wholesale
revenue for the fourth quarter was down 2.7%, which was ahead of
industry trends driven by growing consumer adoption of the new
product line.
Gross margin for the fourth quarter 2023 decreased to 33.2%
compared to 34.6% in the year ago period. Adjusted gross margin,
which excludes discounts and one-time costs associated with the
product transition, was 36.7% in the fourth quarter. These
discounts and costs included industry standard price reductions on
the sell-in of new mattress floor models to wholesale partners
associated with the transition to the new premium and luxury
product lineups and inventory reserves for legacy products. In
addition, the Company experienced increased labor and airfreight
costs associated with the new product launch. Net of these
transitional items, gross margins were positively impacted by
manufacturing efficiencies from higher production volumes in 2023
and increased average selling prices of the company's expanded
product line.
Operating expenses were $64.7
million in the fourth quarter of 2023 compared to
$61.9 million in the fourth quarter
of 2022. This increase in operating expenses was largely driven by
a $4.0 million increase in
advertising expenses to support the product launch including a
brand campaign that highlights Purple's premium positioning and
showcases the benefits of its proprietary sleep technology.
Operating loss was $(16.2) million
for the fourth quarter 2023 compared to an operating loss of
$(11.9) million in the prior year
period.
Net loss was $(18.3) million for
the fourth quarter 2023 compared to a net loss of $(71.7) million in the year ago period. Adjusted
net loss which excludes adjustments for certain non-cash items and
other items the Company does not consider in the evaluation of
ongoing operational performance, including losses associated with
the extinguishment of debt, was $(15.8)
million, or $(0.15) per
adjusted diluted share, compared to $(8.1)
million, or $(0.09) per
adjusted diluted share in the prior year period. Adjusted net
income and adjusted net loss has also been adjusted to reflect an
estimated effective income tax rate of 25.9% for the current year
period and 25.1% for the comparable prior year period.
EBITDA for the fourth quarter 2023 was $(10.1) million compared to $155.4 million in the fourth quarter 2022.
Adjusted EBITDA was $(9.8) million
compared to adjusted EBITDA of $(0.8)
million in the prior year period.
Full Year 2023 Review
Full year 2023 net revenue decreased 10.9% to $510.5 million, compared to $573.2 million in 2022. This decrease was
primarily due to a continuation of the soft demand environment for
home-related goods, partially offset by the positive response to
the launch in May 2023 of the
Company's new Premium and Luxe products. By channel, versus prior
year, direct to consumer net revenues declined 10.2%. Within DTC,
ecommerce declined 16.4%, driven primarily by the ongoing impact of
softening demand. Showroom net revenue increased 15.8% driven
largely by the opening of five net new showrooms in 2023 and the
annualization impact of adding 27 net new showrooms in 2022
combined with the positive response to the Company's new
higher-priced Luxe product, improving average selling price within
the showroom channel. Wholesale net revenues decreased 11.9%
year-over-year driven primarily by the soft demand environment
along with the impact related to the new product launch in
May 2023, including the
industry-standard practice the sell-in of new floor models to
wholesale partners at reduced pricing. These factors were partially
offset by the growth in net new wholesale partners slots in 2023
resulting from the positive response to the new product
collection.
Gross margin for 2023 was 33.7% compared to 36.3% in the year
ago period. This decrease was largely due to the impact of the new
product launch including the industry-standard practice of new
floor models being sold to wholesale partners at reduced pricing,
higher labor and freight cost, decreased manufacturing efficiency,
inventory reserves for legacy products and increased discounting of
discontinued product through the Company's DTC sales channels.
Adjusted gross margin, which excludes discounts and one-time costs
associated with the product transition, was 37.2% in 2023.
Operating expenses increased $34.7
million to $285.5 million
compared to $250.8 million in 2022.
This increase was driven primarily by an increase in marketing and
sales expense of $16.9 million, or
10.2%, to $182.3 million, largely
attributable to showroom expansion, coupled with costs incurred as
part of the launch of the Company's new product lineup. These
incurred costs include the increase in advertising expenses to
support the new product launch and increased wholesale marketing
and sales costs due to the transition of partner product
inventories to the Company's new product lineup. In addition, the
Company incurred $11.4 million of
Special Committee costs and a $6.9
million goodwill impairment charge in 2023.
Operating loss for 2023 was $(113.7)
million compared to an operating loss of $(42.8) million in the prior year.
Net loss was $(120.8) million for
2023 compared to a net loss of $(92.5)
million in 2022. Adjusted net loss which excludes
adjustments for certain non-cash items and other items the Company
does not consider in the evaluation of ongoing operational
performance, including charges in 2022 to provide for a full
valuation allowance for income taxes and to fully reserve for the
tax receivable agreement, Special Committee fees, goodwill
impairment and losses associated with the extinguishment of debt,
was $(73.0) million, or $(0.70) per adjusted diluted share, compared to
$(31.4) million, or $(0.38) per adjusted diluted share in the prior
year period. Adjusted net income and adjusted net loss has also
been adjusted to reflect an estimated effective income tax rate of
25.9% for the current year period and 23.7% for the comparable
prior year period.
EBITDA for 2023 was $(92.9)
million compared to $142.5
million in 2022. Adjusted EBITDA was $(54.7) million compared to adjusted EBITDA of
$(0.2) million in the prior year.
Balance Sheet
As of December 31, 2023, the
Company had cash and cash equivalents, including restricted cash,
of $26.9 million compared to
$41.8 million as of December 31, 2022. As released previously, in
January 2024 we amended and restated
our two primary debt facilities into a new $61 million term loan which increased the
company's liquidity by $22 million,
resulting in $48 million cash and
cash equivalents subsequent to closing the transaction.
Inventories at December 31, 2023
were $66.9 million, a decrease of
8.6% compared with $73.2 million at
December 31, 2022, and a decrease of
7.2% compared with inventories of $72.1
million at September 30,
2023.
2024 Outlook
For 2024, the Company currently expects full year revenue to be
in the range of $540 to $560 million, representing an increase in the mid
to high-single digit range over 2023 levels, and adjusted EBITDA
between $(20) million and
$(10) million. The Company expects
its quarterly revenue and adjusted EBITDA performance to improve
sequentially as it progresses through the year with adjusted EBITDA
projected to be positive for the second half of 2024.
Conference Call and Webcast Information
Purple Innovation, Inc. will host a live conference call to
discuss financial results on March 12,
2024 at 4:30 p.m. Eastern
Time. To access the call dial (844) 825-9789 (domestic)
or (412) 317-5180 (international). The call is also being
webcast and can be accessed on the investor relations section of
the Company's website, investors.purple.com. After the conference
call, a webcast replay will remain available on the investor
relations section of the Company's website for 30 days.
About Purple
Purple, the leading premium mattress company with the #1 Gel
Grid technology in the world, the GelFlex® Grid,
thoughtfully engineers products that make restorative sleep
effortless for every kind of sleeper. The result of over 30 years
of innovation and in comfort technologies, Purple's GelFlex Grid is
the most significant advancement in mattresses in decades and is
proven to reduce aches and pains. It instantly adapts as you move,
balances temperature, relieves pressure and offers support in all
the right places. Purple products, including mattresses, pillows,
cushions, frames, sheets, and more, can be found online
at Purple.com, in 60 Purple stores and over 3,000 retailers
nationwide. Sleep Better. Live Purple.
Forward Looking Statements
Certain statements made in this release that are not historical
facts are "forward looking statements" within the meaning of the
"safe harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. Such forward-looking statements
include but are not limited to statements relating to our expected
continuing expansion of market share from investment in capacity,
innovation and showrooms; our ability to achieve profitability;
expected improvements in performance quarter-over-quarter; expected
improvement in margin rates; our ability to successfully execute on
improvement strategies; expected improvements in our operating
performance; our ability to improve brand recognition; demand for
our products; expectations regarding consumer behavior; our ability
to develop and expand our distribution channels; our ability to
accelerate product innovation and develop a path to premium
products; the adequacy of our cash other capital resources; the
impact of the Intellibed acquisition on our operating results and
ability to enter new categories; the impact of expected advertising
expense rates and discounting for Black Friday and Cyber Monday
promotions; and expected financial and operating results for 2024,
including net revenue and Adjusted EBITDA. Statements based on
historical data are not intended and should not be understood to
indicate the Company's expectations regarding future events.
Forward-looking statements provide current expectations or
forecasts of future events or determinations. These forward-looking
statements are not guarantees of future performance, conditions or
results, and involve a number of known and unknown risks,
uncertainties, assumptions and other important factors, many of
which are outside the Company's control, that could cause actual
results or outcomes to differ materially from those discussed in
the forward-looking statements. Factors that could influence the
realization of forward-looking statements include, among others:
changes in economic, financial and end-market conditions in the
markets in which we operate; fluctuations in raw material prices
and cost of labor; the financial condition of our customers and
suppliers; competitive pressures, including the need for technology
improvement, successful new product development and introduction;
changes in consumer demand, including pullbacks in consumer
spending; disruptions to our manufacturing processes; and the risk
factors outlined in the "Risk Factors" section of our Annual Report
on Form 10-K filed with the Securities and Exchange Commission (the
"SEC") on March 22, 2023 as amended
on Form 10-K/A filed with the SEC on May 1,
2023, and in our other filings made with the SEC. The
Company does not undertake any obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
Non-GAAP Financial Measures
EBITDA, adjusted EBITDA, adjusted net income, and adjusted net
income per diluted share are non-GAAP financial measures that
remove the impact of certain non-cash and non-recurring costs.
Management believes that the use of such non-GAAP financial
measures provides investors with additional useful information with
respect to the impact of various adjustments, which we view as a
better measure of our operating performance. Refer to the attached
table for the reconciliation of such non-GAAP financial measures to
the most comparable GAAP financial measure.
With respect to the Company's Adjusted EBITDA outlook for the
full year 2024, a quantitative reconciliation to the corresponding
GAAP information cannot be provided without unreasonable effort
because of the inherent difficulty of accurately forecasting the
occurrence and financial impact of the various adjusting items
necessary for such reconciliation that have not yet occurred, are
out of our control, or cannot be reasonably predicted, including
but not limited to warrant liabilities and stock based
compensation. For the same reasons, the Company is unable to assess
the probable significance of the unavailable information, which
could have a material impact on its future GAAP financial
results.
Investor Contact:
Brendon
Frey, ICR
brendon.frey@icrinc.com
203-682-8200
PURPLE INNOVATION,
INC.
Condensed
Consolidated Balance Sheets
(unaudited - in
thousands, except par value)
|
|
|
|
December 31,
2023
|
|
|
December 31,
2022
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash, cash equivalents
and restricted cash
|
|
$
|
26,857
|
|
|
$
|
41,754
|
|
Accounts receivable,
net
|
|
|
37,802
|
|
|
|
34,566
|
|
Inventories
|
|
|
66,878
|
|
|
|
73,197
|
|
Prepaid
expenses
|
|
|
8,536
|
|
|
|
7,821
|
|
Other current
assets
|
|
|
1,737
|
|
|
|
4,117
|
|
Total current
assets
|
|
|
141,810
|
|
|
|
161,455
|
|
Property and equipment,
net
|
|
|
128,661
|
|
|
|
136,673
|
|
Operating lease
right-of-use assets
|
|
|
95,767
|
|
|
|
102,541
|
|
Goodwill
|
|
|
—
|
|
|
|
4,897
|
|
Intangible assets,
net
|
|
|
22,196
|
|
|
|
26,221
|
|
Other long-term
assets
|
|
|
2,191
|
|
|
|
1,546
|
|
Total assets
|
|
$
|
390,625
|
|
|
$
|
433,333
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
49,831
|
|
|
$
|
46,441
|
|
Customer
prepayments
|
|
|
5,718
|
|
|
|
4,452
|
|
Accrued rebates and
allowances
|
|
|
13,243
|
|
|
|
9,804
|
|
Accrued warranty
liabilities – current portion
|
|
|
9,793
|
|
|
|
5,803
|
|
Operating lease
obligations – current portion
|
|
|
14,843
|
|
|
|
13,708
|
|
Other current
liabilities
|
|
|
17,554
|
|
|
|
17,921
|
|
Total current
liabilities
|
|
|
110,982
|
|
|
|
98,129
|
|
Debt, net of current
portion
|
|
|
26,909
|
|
|
|
23,657
|
|
Accrued warranty
liabilities, net of current portion
|
|
|
25,798
|
|
|
|
18,660
|
|
Operating lease
obligations, net of current portion
|
|
|
109,094
|
|
|
|
115,599
|
|
Asset retirement
obligations
|
|
|
2,235
|
|
|
|
2,117
|
|
Total
liabilities
|
|
|
275,018
|
|
|
|
258,162
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Class A common stock;
$0.0001 par value, 210,000 shares authorized; 105,507 issued and
outstanding at
December 31, 2023 and 91,380 issued and outstanding at December 31,
2022
|
|
|
11
|
|
|
|
9
|
|
Class B common stock;
$0.0001 par value, 90,000 shares authorized; 205 issued and
outstanding at
December 31, 2023 and 448 issued and outstanding at December 31,
2022
|
|
|
—
|
|
|
|
—
|
|
Additional paid-in
capital
|
|
|
591,380
|
|
|
|
529,466
|
|
Accumulated
deficit
|
|
|
(475,969)
|
|
|
|
(355,212)
|
|
Total stockholders'
equity attributable to Purple Innovation, Inc.
|
|
|
115,422
|
|
|
|
174,263
|
|
Noncontrolling
interest
|
|
|
185
|
|
|
|
908
|
|
Total stockholders'
equity
|
|
|
115,607
|
|
|
|
175,171
|
|
Total liabilities and
stockholders' equity
|
|
$
|
390,625
|
|
|
$
|
433,333
|
|
PURPLE INNOVATION,
INC.
Condensed
Consolidated Statements of Income
(unaudited - in
thousands, except per share amounts)
|
|
|
|
Three Months
Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues,
net
|
|
$
|
145,936
|
|
|
$
|
144,305
|
|
|
$
|
510,541
|
|
|
$
|
573,201
|
|
Cost of
revenues
|
|
|
97,472
|
|
|
|
94,393
|
|
|
|
338,716
|
|
|
|
365,110
|
|
Gross profit
|
|
|
48,464
|
|
|
|
49,912
|
|
|
|
171,825
|
|
|
|
208,091
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing and
sales
|
|
|
44,945
|
|
|
|
38,049
|
|
|
|
182,313
|
|
|
|
165,388
|
|
General and
administrative
|
|
|
16,818
|
|
|
|
20,869
|
|
|
|
84,446
|
|
|
|
76,702
|
|
Research and
development
|
|
|
2,897
|
|
|
|
2,937
|
|
|
|
11,898
|
|
|
|
8,755
|
|
Loss on impairment of
goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
6,879
|
|
|
|
—
|
|
Total operating
expenses
|
|
|
64,660
|
|
|
|
61,855
|
|
|
|
285,536
|
|
|
|
250,845
|
|
Operating
loss
|
|
|
(16,196)
|
|
|
|
(11,943)
|
|
|
|
(113,711)
|
|
|
|
(42,754)
|
|
Other (expense)
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(819)
|
|
|
|
(1,089)
|
|
|
|
(1,967)
|
|
|
|
(3,536)
|
|
Other (expense) income,
net
|
|
|
(1,513)
|
|
|
|
(565)
|
|
|
|
(1,198)
|
|
|
|
423
|
|
Loss on extinguishment
of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,331)
|
|
|
|
—
|
|
Change in fair value –
warrant liabilities
|
|
|
—
|
|
|
|
122
|
|
|
|
—
|
|
|
|
4,343
|
|
Tax receivable
agreement income
|
|
|
—
|
|
|
|
161,970
|
|
|
|
—
|
|
|
|
161,970
|
|
Total other (expense)
income, net
|
|
|
(2,332)
|
|
|
|
160,438
|
|
|
|
(7,496)
|
|
|
|
163,200
|
|
Net (loss) income
before income taxes
|
|
|
(18,528)
|
|
|
|
148,495
|
|
|
|
(121,207)
|
|
|
|
120,446
|
|
Income tax (expense)
benefit
|
|
|
154
|
|
|
|
(220,205)
|
|
|
|
(8)
|
|
|
|
(213,169)
|
|
Net loss
|
|
|
(18,374)
|
|
|
|
(71,710)
|
|
|
|
(121,215)
|
|
|
|
(92,723)
|
|
Net loss attributable
to noncontrolling interest
|
|
|
(41)
|
|
|
|
(49)
|
|
|
|
(458)
|
|
|
|
(253)
|
|
Net loss attributable
to Purple Innovation, Inc.
|
|
$
|
(18,333)
|
|
|
$
|
(71,661)
|
|
|
$
|
(120,757)
|
|
|
$
|
(92,470)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.17)
|
|
|
$
|
(0.78)
|
|
|
$
|
(1.17)
|
|
|
$
|
(1.13)
|
|
Diluted
|
|
$
|
(0.17)
|
|
|
$
|
(0.78)
|
|
|
$
|
(1.17)
|
|
|
$
|
(1.13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
105,503
|
|
|
|
91,380
|
|
|
|
103,602
|
|
|
|
81,779
|
|
Diluted
|
|
|
105,737
|
|
|
|
91,380
|
|
|
|
103,936
|
|
|
|
81,779
|
|
PURPLE INNOVATION,
INC.
Condensed
Consolidated Statements of Cash Flows
(unaudited - in
thousands)
|
|
|
|
Three Months
Ended
December 31,
|
|
|
Year
Ended
December
31,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(18,374)
|
|
|
$
|
(71,710)
|
|
|
$
|
(121,215)
|
|
|
$
|
(92,723)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
6,143
|
|
|
|
5,282
|
|
|
|
25,106
|
|
|
|
17,487
|
|
Non-cash
interest
|
|
|
317
|
|
|
|
189
|
|
|
|
1,237
|
|
|
|
1,072
|
|
Loss on impairment of
goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
6,879
|
|
|
|
—
|
|
Loss on extinguishment
of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
4,331
|
|
|
|
—
|
|
Loss on disposal of
property and equipment
|
|
|
1,680
|
|
|
|
620
|
|
|
|
1,680
|
|
|
|
620
|
|
Change in fair value -
warrant liabilities
|
|
|
—
|
|
|
|
(122)
|
|
|
|
—
|
|
|
|
(4,343)
|
|
Tax receivable
agreement income
|
|
|
—
|
|
|
|
(161,970)
|
|
|
|
—
|
|
|
|
(161,970)
|
|
Stock-based
compensation
|
|
|
1,083
|
|
|
|
754
|
|
|
|
4,875
|
|
|
|
3,366
|
|
Gain from effective
settlement of preexisting relationship
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,421)
|
|
Deferred income
taxes
|
|
|
—
|
|
|
|
220,398
|
|
|
|
—
|
|
|
|
213,548
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(5,116)
|
|
|
|
(4,571)
|
|
|
|
(3,651)
|
|
|
|
(4,112)
|
|
Inventories
|
|
|
5,207
|
|
|
|
17,477
|
|
|
|
5,903
|
|
|
|
28,956
|
|
Prepaid inventory and
other assets
|
|
|
2,778
|
|
|
|
1,865
|
|
|
|
1,574
|
|
|
|
1,757
|
|
Operating lease,
net
|
|
|
(58)
|
|
|
|
1,304
|
|
|
|
1,404
|
|
|
|
7,709
|
|
Accounts
payable
|
|
|
3,838
|
|
|
|
(6,994)
|
|
|
|
4,382
|
|
|
|
(33,609)
|
|
Customer
prepayments
|
|
|
543
|
|
|
|
666
|
|
|
|
1,266
|
|
|
|
(6,456)
|
|
Accrued rebates and
allowances
|
|
|
4,668
|
|
|
|
1,753
|
|
|
|
3,439
|
|
|
|
(365)
|
|
Accrued warranty
liabilities
|
|
|
11,128
|
|
|
|
6,854
|
|
|
|
11,128
|
|
|
|
6,854
|
|
Other accrued
liabilities
|
|
|
(13,628)
|
|
|
|
(10,320)
|
|
|
|
(3,000)
|
|
|
|
(5,143)
|
|
Net cash provided by
(used in) operating activities
|
|
|
1,146
|
|
|
|
1,701
|
|
|
|
(54,662)
|
|
|
|
(28,773)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents
and restricted cash acquired from acquisition, net of cash
paid
|
|
|
—
|
|
|
|
12
|
|
|
|
—
|
|
|
|
3,660
|
|
Excess restricted cash
returned to acquiree
|
|
|
—
|
|
|
|
—
|
|
|
|
(826)
|
|
|
|
—
|
|
Purchase of property
and equipment
|
|
|
(5,622)
|
|
|
|
(3,954)
|
|
|
|
(14,391)
|
|
|
|
(35,376)
|
|
Investment in
intangible assets
|
|
|
(256)
|
|
|
|
(148)
|
|
|
|
(844)
|
|
|
|
(2,785)
|
|
Net cash used in
investing activities
|
|
|
(5,878)
|
|
|
|
(4,090)
|
|
|
|
(16,061)
|
|
|
|
(34,501)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from term
loan
|
|
|
—
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
—
|
|
Proceeds revolving line
of credit
|
|
|
17,000
|
|
|
|
—
|
|
|
|
17,000
|
|
|
|
—
|
|
Payments on term
loan
|
|
|
—
|
|
|
|
(15,000)
|
|
|
|
(24,656)
|
|
|
|
(17,531)
|
|
Payments on revolving
line of credit
|
|
|
(12,000)
|
|
|
|
—
|
|
|
|
(12,000)
|
|
|
|
(55,000)
|
|
Proceeds from stock
offering
|
|
|
—
|
|
|
|
—
|
|
|
|
60,300
|
|
|
|
98,210
|
|
Payments for stock
offering costs
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,301)
|
|
|
|
(5,344)
|
|
Proceeds from exercise
of stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
166
|
|
Payments for debt
issuance costs
|
|
|
(17)
|
|
|
|
—
|
|
|
|
(6,143)
|
|
|
|
(1,242)
|
|
Proportional
Representation Preferred Linked Stock redemption fee
|
|
|
—
|
|
|
|
—
|
|
|
|
(105)
|
|
|
|
—
|
|
Tax receivable
agreement payments
|
|
|
—
|
|
|
|
—
|
|
|
|
(269)
|
|
|
|
(5,847)
|
|
Net cash provided by
(used in) financing activities
|
|
|
4,983
|
|
|
|
(15,000)
|
|
|
|
55,826
|
|
|
|
13,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase
in cash
|
|
|
251
|
|
|
|
(17,389)
|
|
|
|
(14,897)
|
|
|
|
(49,862)
|
|
Cash, beginning of the
period
|
|
|
26,606
|
|
|
|
59,143
|
|
|
|
41,754
|
|
|
|
91,616
|
|
Cash, end of the
period
|
|
$
|
26,857
|
|
|
$
|
41,754
|
|
|
$
|
26,857
|
|
|
$
|
41,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PURPLE INNOVATION,
INC.
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES
(In thousands)
Management believes that the use of the following non-GAAP
financial measures provides investors with additional useful
information with respect to the impact of various adjustments,
which we view as a better measure of our operating performance.
These non-GAAP financial measures are EBITDA, adjusted EBITDA,
adjusted net loss, and adjusted net loss per diluted share. Other
companies may calculate these non-GAAP measures differently than we
do. These non-GAAP measures have limitations as analytical tools,
and you should not consider them in isolation or as a substitute
for our financial results prepared in accordance with GAAP.
Reconciliation of GAAP Net Loss to Non-GAAP EBITDA and
Adjusted EBITDA
A reconciliation of GAAP net loss to the non-GAAP measures of
EBITDA and adjusted EBITDA is provided below. EBITDA represents net
loss before interest expense, income tax (benefit) expense, other
expense (income), net, and depreciation and amortization. Adjusted
EBITDA represents EBITDA excluding costs incurred due to changes in
the fair value of the warrant liability, debt extinguishment,
stock-based compensation expense, impairment of goodwill, vendor
separation fee, tax receivable agreement, nonrecurring legal fees,
Board special committee costs, executive interim and search costs,
severance costs, showroom opening costs, new production facility
start-up costs and COVID-19 related expenses. We believe
EBITDA and Adjusted EBITDA provide additional useful information
with respect to the impact of various adjustments and provide
meaningful measures of our operating performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December
31,
|
|
|
Year
Ended
December
31,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
|
$
|
(18,374)
|
|
|
|
(71,710)
|
|
|
|
(121,215)
|
|
|
$
|
(92,723)
|
|
Interest
expense
|
|
|
819
|
|
|
|
1,089
|
|
|
|
1,967
|
|
|
|
3,536
|
|
Income tax (benefit)
expense
|
|
|
(154)
|
|
|
|
220,205
|
|
|
|
8
|
|
|
|
213,169
|
|
Other expense (income),
net
|
|
|
1,513
|
|
|
|
565
|
|
|
|
1,198
|
|
|
|
998
|
|
Depreciation and
amortization
|
|
|
6,143
|
|
|
|
5,282
|
|
|
|
25,105
|
|
|
|
17,487
|
|
EBITDA
|
|
|
(10,053)
|
|
|
|
155,431
|
|
|
|
(92,937)
|
|
|
|
142,467
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value -
warrant liability
|
|
|
—
|
|
|
|
(122)
|
|
|
|
—
|
|
|
|
(4,343)
|
|
Loss on extinguishment
of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
4,331
|
|
|
|
—
|
|
Stock-based
compensation expense
|
|
|
1,083
|
|
|
|
754
|
|
|
|
4,875
|
|
|
|
3,366
|
|
Loss on impairment of
goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
6,879
|
|
|
|
—
|
|
Vendor separation
fee
|
|
|
—
|
|
|
|
—
|
|
|
|
1,050
|
|
|
|
3,136
|
|
Tax receivable
agreement
|
|
|
—
|
|
|
|
(161,970)
|
|
|
|
—
|
|
|
|
(161,970)
|
|
Legal fees
|
|
|
177
|
|
|
|
733
|
|
|
|
3,697
|
|
|
|
1,226
|
|
Board special committee
fees
|
|
|
(2,750)
|
|
|
|
2,253
|
|
|
|
11,410
|
|
|
|
2,253
|
|
Acquisition
expenses
|
|
|
—
|
|
|
|
470
|
|
|
|
65
|
|
|
|
3,859
|
|
Gain on effective
settlement in acquisition
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,421)
|
|
Executive interim and
search costs
|
|
|
1,117
|
|
|
|
1,096
|
|
|
|
4,375
|
|
|
|
5,180
|
|
Severance
costs
|
|
|
282
|
|
|
|
317
|
|
|
|
868
|
|
|
|
2,786
|
|
Showroom opening
costs
|
|
|
353
|
|
|
|
230
|
|
|
|
691
|
|
|
|
2,546
|
|
New production facility
start-up costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
348
|
|
COVID-19 related
expenses
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
331
|
|
Adjusted
EBITDA
|
|
$
|
(9,791)
|
|
|
|
(808)
|
|
|
|
(54,696)
|
|
|
|
(236)
|
|
Reconciliation of GAAP Gross Margin to Adjusted Gross
Margin
A reconciliation of GAAP gross margin to the non-GAAP measure of
adjusted gross margin is provided below. Adjusted gross margin
represents adjusted net revenue less adjusted cost of revenues.
Adjusted revenue represents revenue adjusted for revenue deemed
lost through discounts on products during our transition to our new
product line. Adjusted cost of revenues presents cost of revenues
excluding certain incremental costs incurred during our transition
to our new product line. We believe adjusted gross margin
provides additional useful information with respect to the impact
of certain temporary or one-time items and provides a meaningful
measure of our operating performance.
|
|
|
|
(in thousands except
percentages)
|
|
Three
Months
Ended
December 31,
2023
|
|
|
Year Ended
December 31,
2023
|
|
Net revenue
|
|
$
|
145,936
|
|
|
$
|
510,541
|
|
Discounts on new
product transition
|
|
|
2,106
|
|
|
|
14,859
|
|
Adjusted net
revenue
|
|
|
148,042
|
|
|
|
525,400
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
97,472
|
|
|
|
338,716
|
|
Costs of new product
transition
|
|
|
3,807
|
|
|
|
8,822
|
|
Adjusted cost of
revenues
|
|
|
93,665
|
|
|
|
329,894
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross
margin
|
|
$
|
54,377
|
|
|
$
|
195,506
|
|
Adjusted gross margin
%
|
|
|
36.7
|
%
|
|
|
37.2
|
%
|
Reconciliation of GAAP Net Loss to non-GAAP Adjusted Net Loss
and Adjusted Net Loss per Diluted Share
Our presentation of adjusted net loss assumes that all net loss
is attributable to Purple Innovation, Inc. (i.e. there is no
allocation of net loss to noncontrolling interests), which assumes
the full exchange at the beginning of the period of all outstanding
Paired Securities for shares of Class A common stock of Purple
Innovation, Inc., adjusted for certain nonrecurring items that we
do not believe directly reflect our core operations. Adjusted net
loss per share, diluted, is calculated by dividing adjusted net
loss by the total shares of Class A common stock outstanding plus
any dilutive warrants, options and restricted stock as calculated
in accordance with GAAP and assuming the full exchange of all
outstanding Paired Securities as of the beginning of each period
presented. Adjusted net loss and adjusted net loss per diluted
share, are supplemental measures of operating performance that do
not represent, and should not be considered, alternatives to net
loss and loss per share, as calculated in accordance with GAAP. We
believe adjusted net loss and adjusted net loss per diluted share,
supplement GAAP measures and enable us to more effectively evaluate
our performance period-over-period. A reconciliation of net loss,
the most directly comparable GAAP measure, to adjusted net loss and
the computation of adjusted net loss per diluted share, are set
forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except
per share amounts)
|
|
Three Months
Ended
December 31,
|
|
|
Year
Ended
December
31,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(18,374)
|
|
|
$
|
(71,710)
|
|
|
$
|
(121,215)
|
|
|
$
|
(92,723)
|
|
Income tax expense
(benefit), as reported
|
|
|
(154)
|
|
|
|
220,205
|
|
|
|
8
|
|
|
|
213,169
|
|
Change in fair value –
warrant liabilities
|
|
|
—
|
|
|
|
(122)
|
|
|
|
—
|
|
|
|
(4,343)
|
|
Loss on extinguishment
of debt
|
|
|
—
|
|
|
|
—
|
|
|
|
4,331
|
|
|
|
—
|
|
Loss on impairment of
goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
6,879
|
|
|
|
—
|
|
Tax receivable
agreement
|
|
|
—
|
|
|
|
(161,970)
|
|
|
|
—
|
|
|
|
(161,970)
|
|
Board special committee
fees
|
|
|
(2,750)
|
|
|
|
2,253
|
|
|
|
11,410
|
|
|
|
2.253
|
|
Acquisition
expenses
|
|
|
—
|
|
|
|
470
|
|
|
|
65
|
|
|
|
3,859
|
|
Gain on effective
settlement in acquisition
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,421)
|
|
Adjusted net loss
before income taxes
|
|
|
(21,278)
|
|
|
|
(10,874)
|
|
|
|
(98,522)
|
|
|
|
(41,176)
|
|
Adjusted income tax
benefit(1)
|
|
|
5,511
|
|
|
|
2,729
|
|
|
|
25,517
|
|
|
|
9,759
|
|
Adjusted net
loss
|
|
$
|
(15,767)
|
|
|
$
|
(8,145)
|
|
|
$
|
(73,005)
|
|
|
$
|
(31,417)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net loss per
share, diluted
|
|
$
|
(0.15)
|
|
|
$
|
(0.09)
|
|
|
$
|
(0.70)
|
|
|
$
|
(0.38)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
weighted-average shares outstanding,
diluted(2)
|
|
|
105,737
|
|
|
|
91,380
|
|
|
|
103,936
|
|
|
|
81,779
|
|
|
(1) Represents the
estimated effective tax rate of 25.9% for the three months and year
ended December 31, 2023, and 25.1% and 23.7% for the three months
and year ended December 31, 2022, applied to adjusted net income
before income taxes. The estimated effective tax rates are what the
Company would be subject to and consist of the combined federal
statutory tax rate and the Company's blended state tax
rates.
|
|
(2) Assumes options and
restricted stock units calculated in accordance with GAAP and the
full exchange of all outstanding Paired Securities for shares of
Class A common stock as of the beginning of the period.
|
A reconciliation of net income (loss) per share, diluted, to
adjusted net income per diluted share is set forth below for the
three months and year ended December 31,
2023 and 2022:
|
|
For the Three Months
Ended
|
|
|
|
December 31,
2023
|
|
|
December 31,
2022
|
|
|
|
Net
Loss
|
|
|
Weighted
Average
Shares,
Diluted
|
|
|
Net Loss
per Share,
Diluted
|
|
|
Net
Loss
|
|
|
Weighted
Average
Shares,
Diluted
|
|
|
Net Loss
per Share,
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to Purple Innovation Inc.(1)
|
|
$
|
(18,333)
|
|
|
|
105,737
|
|
|
$
|
(0.17)
|
|
|
$
|
(71,661)
|
|
|
|
91,380
|
|
|
$
|
(0.78)
|
|
Assumed exchange of
shares(2)
|
|
|
(41)
|
|
|
|
—
|
|
|
|
|
|
|
|
(49)
|
|
|
|
—
|
|
|
|
|
|
Net loss
|
|
|
(18,374)
|
|
|
|
|
|
|
|
|
|
|
|
(71,710)
|
|
|
|
|
|
|
|
|
|
Adjustments to arrive
at adjusted net loss before taxes(3)
|
|
|
(2,904)
|
|
|
|
|
|
|
|
|
|
|
|
60,836
|
|
|
|
|
|
|
|
|
|
Adjusted net loss
before taxes
|
|
|
(21,278)
|
|
|
|
|
|
|
|
|
|
|
|
(10,874)
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
benefit(4)
|
|
|
5,511
|
|
|
|
|
|
|
|
|
|
|
|
2,279
|
|
|
|
|
|
|
|
|
|
Adjusted net
loss
|
|
$
|
(15,767)
|
|
|
|
105,737
|
|
|
$
|
(0.15)
|
|
|
$
|
(8,145)
|
|
|
|
91,380
|
|
|
$
|
(0.09)
|
|
|
(1) Represents net
income attributable to Purple Innovation, Inc. and the associated
weighted average diluted shares, of Class A common stock
outstanding.
|
|
(2) Assumes the full
exchange of all outstanding Paired Securities for shares of Class A
common stock as of the beginning of the period and added in if not
already included in the weighted average diluted shares. Also
assumes the addition of net income attributable to noncontrolling
interests corresponding with the assumed exchange of the Paired
Securities for shares of Class A common stock.
|
|
(3) Represents the
total impact of all adjustments identified in the adjusted net
income table above to arrive at adjusted income before income
taxes. Also assumes the dilutive warrants, options and restricted
stock as calculated in accordance with GAAP.
|
|
(4) Represents the
estimated effective tax rate of 25.9% and 25.1% for the three
months ended December 31, 2023 and 2022, respectively, applied to
adjusted net income before income taxes. The estimated effective
tax rates are what the Company would be subject to and consist of
the combined federal statutory tax rate and the Company's blended
state tax rates.
|
|
|
For the Year
Ended
|
|
|
|
December 31,
2023
|
|
|
December 31,
2022
|
|
|
|
Net
Loss
|
|
|
Weighted
Average
Shares,
Diluted
|
|
|
Net Loss
per Share,
Diluted
|
|
|
Net
Loss
|
|
|
Weighted
Average
Shares,
Diluted
|
|
|
Net Loss
per Share,
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to Purple Innovation Inc.(1)
|
|
$
|
(120,757)
|
|
|
|
103,936
|
|
|
$
|
(1.17)
|
|
|
$
|
(92,470)
|
|
|
|
81,779
|
|
|
$
|
(1.13)
|
|
Assumed exchange of
shares(2)
|
|
|
(458)
|
|
|
|
—
|
|
|
|
|
|
|
|
(253)
|
|
|
|
—
|
|
|
|
|
|
Net loss
|
|
|
(121,215)
|
|
|
|
|
|
|
|
|
|
|
|
(92,723)
|
|
|
|
|
|
|
|
|
|
Adjustments to arrive
at adjusted net loss before taxes(3)
|
|
|
22,693
|
|
|
|
|
|
|
|
|
|
|
|
51,547
|
|
|
|
|
|
|
|
|
|
Adjusted net loss
before taxes
|
|
|
(98,522)
|
|
|
|
|
|
|
|
|
|
|
|
(41,176)
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
benefit(4)
|
|
|
25,517
|
|
|
|
|
|
|
|
|
|
|
|
9,759
|
|
|
|
|
|
|
|
|
|
Adjusted net
loss
|
|
$
|
(73,005)
|
|
|
|
103,936
|
|
|
$
|
(0.70)
|
|
|
$
|
(31,417)
|
|
|
|
81,779
|
|
|
$
|
(0.38)
|
|
(1) Represents net
income attributable to Purple Innovation, Inc. and the associated
weighted average diluted shares, of Class A common stock
outstanding.
|
|
(2) Assumes the full
exchange of all outstanding Paired Securities for shares of Class A
common stock as of the beginning of the period and added in if not
already included in the weighted average diluted shares. Also
assumes the addition of net income attributable to noncontrolling
interests corresponding with the assumed exchange of the Paired
Securities for shares of Class A common stock.
|
|
(3) Represents the
total impact of all adjustments identified in the adjusted net
income table above to arrive at adjusted income before income
taxes. Also assumes the dilutive warrants, options and restricted
stock as calculated in accordance with GAAP.
|
|
(4) Represents the
estimated effective tax rate of 25.9% and 23.7% for the year ended
December 31, 2023 and 2022, respectively, applied to adjusted net
income before income taxes. The estimated effective tax rates are
what the Company would be subject to and consist of the combined
federal statutory tax rate and the Company's blended state tax
rates.
|
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SOURCE Purple Innovation, Inc.