LEHI, Utah, May 17, 2021 /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 first quarter ended March 31, 2021.
First Quarter Financial Summary (Comparisons versus First
Quarter 2020)1
- Net revenue increased 52.3% to $186.4
million, compared to $122.4
million.
-
- Direct-to-Consumer (DTC) revenue increased 54.8%; Wholesale
revenue increased 47.6%.
- Gross margin improved to 46.9% compared to 43.5%.
- Operating expenses as a percent of net revenue were 37.9%
compared to 37.3%.
- Operating income increased 125.3% to $16.9 million compared to operating income of
$7.5 million.
- Net income was $20.9 million as
compared to a net income of $28.0
million. Adjusted net income was $12.0 million, or $0.17 per diluted share as compared to
$4.6 million, or $0.08 per diluted share.
- EBITDA was $27.8 million compared
to $30.8 million. Adjusted EBITDA
increased 115.1% to $22.8 million
compared to $10.6 million.
- Cash and cash equivalents were $103.8
million at March 31,
2021.
"Our first quarter results meaningfully exceeded expectations
and represent a great start to 2021," said Joe Megibow, Chief Executive Officer. "We
experienced strong demand early in the year, particularly in our
digital channel, followed by a sharp acceleration in our wholesale
business as the first quarter progressed. The product and marketing
strategies we are executing, which showcase the premium nature of
our brand and differentiated comfort technologies, continue to set
Purple apart from the competition and fuel important market share
gains. Importantly, our recent capacity expansion has us well
positioned to take advantage of the strong wholesale momentum we
are experiencing as brick-and-mortar traffic further approaches
pre-pandemic levels and current consumer spending benefits from
recent government stimulus."
Megibow continued, "Looking ahead, our plans are firmly around
providing customers with innovative comfort solutions through our
omni-channel retail strategy. This includes upgrading our
digital capabilities in order to better integrate our multiple
product categories and enhance the online shopping experience,
accelerating the rollout of Purple showrooms, and strengthening our
wholesale relationships. We've built a great foundation and we
are very excited to leverage the many strengths of our organization
to capitalize on the tremendous opportunities that exist for our
business."
First Quarter 2021 Review
First quarter 2021 net revenue increased 52.3% to $186.4 million, compared to $122.4 million in the first quarter of 2020. The
increase in net revenue was driven by strong growth for all product
lines in both the direct-to-consumer and wholesale channels. For
the first quarter of 2021, DTC revenue increased 54.8% and
wholesale revenue increased 47.6%.
Gross margin for the first quarter 2021 improved to 46.9%
compared to 43.5% in the year ago period. The 340-basis point
increase in gross margin year-over-year was primarily attributable
to the higher proportion of DTC channel revenue, which carries
higher gross margins than the wholesale channel and fixed cost
leverage on higher revenue. DTC revenues comprised approximately
67% of net revenue for the quarter, compared with approximately 66%
in the same quarter last year.
Operating expenses were 37.9% of net revenue for the first
quarter of 2021 compared to 37.3% in the year ago period. The
increase in operating expenses as a percent of net revenue was
driven primarily by additional administrative costs to support
continued accelerated growth, partially offset by efficiencies in
marketing and selling costs. For the first quarter 2021,
marketing and sales expense as a percent of net revenue decreased
to 29.2% compared with 30.0% last year due to leverage on higher
net revenue and more efficient marketing spend, partially offset by
additional marketing spend to increase brand awareness and the
addition of company-owned showrooms.
Operating income increased 125.3% to $16.9 million for the first quarter 2021 compared
to operating income of $7.5 million
in the prior year period.
Net income was $20.9 million for
the first quarter 2021 compared to a net income of $28.0 million in the year ago period. As
previously disclosed, the Company recently determined that its
outstanding warrants should be accounted for as liabilities and
recorded at fair value on the date of the transaction and
subsequently re-measured to fair value at each reporting date. For
the three months ended March 31, 2021
and 2020, the Company recognized non-cash gains of $9.1 million and $21.6
million, respectively, associated with the change in fair
value of warrant liabilities.
Adjusted net income, which excludes adjustments for certain
non-cash items and other items the Company does not consider in the
evaluation of ongoing operational performance, including gains
associated with the change in fair value of warrant liabilities,
was $12.0 million, or $0.17 per diluted share, compared to $4.6 million, or $0.08 per diluted share in the prior year period.
Adjusted net income has also been adjusted to reflect an estimated
effective income tax rate of 26.4% for the current year period and
25.4% for the comparable prior year period.
EBITDA for the first quarter 2021 was $27.8 million compared to $30.8 million in the first quarter 2020. Adjusted
EBITDA, which excludes the adjustment for non-cash gain associated
with the change in fair value of warrant liabilities, Tax
Receivable Agreement expense, new production facility start-up
costs, non-cash stock-based compensation, legal fees, executive
search costs, severance, showroom opening costs, product reserve
and COVID-19 related expenses, was $22.8
million, an increase of 115% compared to Adjusted EBITDA of
$10.6 million in the prior year
period.
Balance Sheet
As of March 31, 2021, the Company
had cash and cash equivalents of $103.8
million compared to $123.0
million as of December 31,
2020. The decrease was driven by capital expenditures of
$12.3 million primarily related to
manufacturing capacity expansion and showroom expansion and cash
used in operations of $9.4 million
due mainly to an increase in accounts receivable and a reduction in
accounts payable. Inventories as of March
31, 2021 totaled $63.3 million
compared with $65.7 million as of
December 31, 2020.
2021 Outlook
Based on first quarter results, the Company is raising its 2021
outlook. It now expects full year 2021 net revenue to be between
$860 million and $900 million, up from its previous range of
$840 million to $880 million. The new range represents an
increase of 33% to 39% over 2020 results. Considering the
first quarter results and recent trends indicating an even greater
channel mix shift toward wholesale in the second quarter, adjusted
EBITDA is now expected to be between $95
million and $105 million, up
from its previous range of $90
million to $100 million.
The Company continues to expect capital expenditures for 2021 to
be in the range of $45 to
$50 million consisting primarily of
approximately $20 million for the
continued buildout of the Georgia
manufacturing facility and $19
million related to the acceleration of showroom expansion,
as well as expansion of wholesale displays and additional equipment
for production and innovation facilities in Utah.
For the second quarter of 2021, the Company expects net revenue
to be between $200 million to
$210 million and adjusted EBITDA
between $21 million and $25 million.
Conference Call and Webcast Information
Purple Innovation, Inc. will host a live conference call to
discuss financial results today, May 17,
2021 at 8:30 a.m. Eastern
Time. To access the call dial (877) 425-9470
(domestic) or (201) 389-0878 (international) and provide the
Conference ID: 13719816. 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 is a digitally-native vertical brand with a mission
to help people feel and live better through innovative comfort
solutions. We design and manufacture a variety of innovative,
premium, branded comfort products, including mattresses, pillows,
cushions, frames, sheets and more. Our products are the result of
over 30 years of innovation and investment in proprietary and
patented comfort technologies and the development of our own
manufacturing processes. Our proprietary gel technology,
Hyper-Elastic Polymer®, underpins many of our comfort
products and provides a range of benefits that differentiate our
offerings from other competitors' products. We market and sell our
products through our direct-to-consumer online channels,
traditional retail partners, third-party online retailers and our
owned retail showrooms. For more information on Purple, visit
purple.com.
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; expected future growth of revenue and
earnings and anticipated growth rates; changes to our digital
capabilities and related impacts on our business; demand for our
products; expectations regarding consumer behavior; our ability to
expand our wholesale operations; expectations regarding channel
mix; the impact of our new manufacturing facility and related
capacity expansion on our business; and expected financial and
operating results for the second quarter and full year 2021.
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: uncertainties regarding the extent and
duration of the impact of the COVID-19 pandemic on many aspects of
our business, operations and financial performance; disruptions to
our manufacturing processes; changes in economic, financial and
end-market conditions in the markets in which we operate;
fluctuations in raw material prices; the financial condition of our
customers and suppliers; competitive pressures, including the need
for technology improvement, successful new product development and
introduction; 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
11, 2021, as amended by our Annual Report on Form 10-K/A
filed with the SEC on May 10, 2021.
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
second quarter and full year 2021, 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.
Misty Bond
Director of Purple Communications
misty.b@purple.com
385-498-1851
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.
PURPLE INNOVATION,
INC. Consolidated Balance Sheets (In thousands,
except par value) (unaudited)
|
|
|
|
|
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
103,815
|
|
|
$
|
122,955
|
|
Accounts receivable,
net
|
|
|
41,618
|
|
|
|
29,111
|
|
Inventories,
net
|
|
|
63,282
|
|
|
|
65,726
|
|
Prepaid
inventory
|
|
|
1,337
|
|
|
|
826
|
|
Other current
assets
|
|
|
7,772
|
|
|
|
10,453
|
|
Total current
assets
|
|
|
217,824
|
|
|
|
229,071
|
|
Property and
equipment, net
|
|
|
73,831
|
|
|
|
61,486
|
|
Operating lease
right-of-use assets
|
|
|
52,972
|
|
|
|
41,408
|
|
Intangible assets,
net
|
|
|
10,251
|
|
|
|
9,945
|
|
Deferred income
taxes
|
|
|
210,380
|
|
|
|
211,244
|
|
Other long-term
assets
|
|
|
1,510
|
|
|
|
1,578
|
|
Total
assets
|
|
$
|
566,768
|
|
|
$
|
554,732
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
60,269
|
|
|
$
|
69,594
|
|
Accrued sales
returns
|
|
|
8,280
|
|
|
|
8,428
|
|
Accrued
compensation
|
|
|
9,774
|
|
|
|
14,209
|
|
Customer
prepayments
|
|
|
7,901
|
|
|
|
6,253
|
|
Accrued sales
tax
|
|
|
3,930
|
|
|
|
6,015
|
|
Accrued rebates and
allowances
|
|
|
5,564
|
|
|
|
10,891
|
|
Operating lease
obligations – current portion
|
|
|
3,632
|
|
|
|
3,235
|
|
Other current
liabilities
|
|
|
15,318
|
|
|
|
13,583
|
|
Total current
liabilities
|
|
|
114,668
|
|
|
|
132,208
|
|
Debt, net of current
portion
|
|
|
40,906
|
|
|
|
41,410
|
|
Operating lease
obligations, net of current portion
|
|
|
60,948
|
|
|
|
48,936
|
|
Warrant
liabilities
|
|
|
19,415
|
|
|
|
92,708
|
|
Tax receivable
agreement liability, net of current portion
|
|
|
166,029
|
|
|
|
165,426
|
|
Other long-term
liabilities, net of current portion
|
|
|
7,261
|
|
|
|
6,503
|
|
Total
liabilities
|
|
|
409,227
|
|
|
|
487,191
|
|
Commitments and
contingencies (Note 13)
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Class A common stock;
$0.0001 par value, 210,000 shares authorized; 66,303 issued and
outstanding at March 31, 2021 and 63,914 issued and outstanding at
December 31, 2020
|
|
|
7
|
|
|
|
6
|
|
Class B common stock;
$0.0001 par value, 90,000 shares authorized; 448 issued and
outstanding at March 31, 2021 and 536 issued and outstanding at
December 31, 2020
|
|
|
—
|
|
|
|
—
|
|
Additional paid-in
capital
|
|
|
401,842
|
|
|
|
333,047
|
|
Accumulated
deficit
|
|
|
(245,032)
|
|
|
|
(265,856)
|
|
Total stockholders'
equity
|
|
|
156,817
|
|
|
|
67,197
|
|
Noncontrolling
interest
|
|
|
724
|
|
|
|
344
|
|
Total stockholders'
equity
|
|
|
157,541
|
|
|
|
67,541
|
|
Total liabilities and
stockholders' equity
|
|
$
|
566,768
|
|
|
$
|
554,732
|
|
PURPLE INNOVATION,
INC. Consolidated Statements of Income (In
thousands, except per share
amounts) (unaudited)
|
|
|
Three Months
Ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
Revenues,
net
|
|
$
|
186,429
|
|
|
$
|
122,375
|
|
Cost of
revenues
|
|
|
98,905
|
|
|
|
69,193
|
|
Gross
profit
|
|
|
87,524
|
|
|
|
53,182
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Marketing and
sales
|
|
|
54,368
|
|
|
|
36,684
|
|
General and
administrative
|
|
|
14,526
|
|
|
|
7,548
|
|
Research and
development
|
|
|
1,723
|
|
|
|
1,445
|
|
Total operating
expenses
|
|
|
70,617
|
|
|
|
45,677
|
|
Operating
income
|
|
|
16,907
|
|
|
|
7,505
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(570)
|
|
|
|
(1,389)
|
|
Other income
(expense), net
|
|
|
(68)
|
|
|
|
90
|
|
Tax receivable
agreement income (expense)
|
|
|
174
|
|
|
|
(122)
|
|
Change in fair value
– warrant liabilities
|
|
|
9,147
|
|
|
|
21,633
|
|
Total other income,
net
|
|
|
8,683
|
|
|
|
20,212
|
|
Net income before
income taxes
|
|
|
25,590
|
|
|
|
27,717
|
|
Income tax benefit
(expense)
|
|
|
(4,651)
|
|
|
|
284
|
|
Net income
|
|
|
20,939
|
|
|
|
28,001
|
|
Net income
attributable to noncontrolling interest
|
|
|
115
|
|
|
|
11,166
|
|
Net income
attributable to Purple Innovation, Inc.
|
|
$
|
20,824
|
|
|
$
|
16,835
|
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.32
|
|
|
$
|
0.74
|
|
Diluted
|
|
$
|
0.17
|
|
|
$
|
0.43
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
64,592
|
|
|
|
22,675
|
|
Diluted
|
|
|
68,372
|
|
|
|
25,327
|
|
PURPLE INNOVATION,
INC. Consolidated Statements of Cash Flows (In
thousands) (unaudited)
|
|
|
Three Months
Ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
20,939
|
|
|
$
|
28,001
|
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
1,549
|
|
|
|
1,778
|
|
Non-cash
interest
|
|
|
129
|
|
|
|
1,375
|
|
Change in fair value
– warrant liabilities
|
|
|
(9,147)
|
|
|
|
(21,633)
|
|
Tax receivable
agreement (income) expense
|
|
|
(174)
|
|
|
|
122
|
|
Stock-based
compensation
|
|
|
479
|
|
|
|
250
|
|
Non-cash lease
expense
|
|
|
953
|
|
|
|
682
|
|
Deferred income
taxes
|
|
|
1,835
|
|
|
|
—
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(12,507)
|
|
|
|
5,422
|
|
Inventories
|
|
|
2,444
|
|
|
|
5,516
|
|
Prepaid inventory and
other assets
|
|
|
2,109
|
|
|
|
(2,399)
|
|
Accounts
payable
|
|
|
(10,408)
|
|
|
|
(13,217)
|
|
Accrued sales
returns
|
|
|
(148)
|
|
|
|
(534)
|
|
Accrued
compensation
|
|
|
(4,435)
|
|
|
|
(801)
|
|
Customer
prepayments
|
|
|
1,648
|
|
|
|
(2,720)
|
|
Accrued rebates and
allowances
|
|
|
(5,327)
|
|
|
|
(2,172)
|
|
Operating lease
obligations
|
|
|
(809)
|
|
|
|
(423)
|
|
Other accrued
liabilities
|
|
|
1,479
|
|
|
|
489
|
|
Net cash used in
operating activities
|
|
|
(9,391)
|
|
|
|
(264)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(12,285)
|
|
|
|
(4,520)
|
|
Investment in
intangible assets
|
|
|
(69)
|
|
|
|
(2,328)
|
|
Net cash used in
investing activities
|
|
|
(12,354)
|
|
|
|
(6,848)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Payments on term
loan
|
|
|
(563)
|
|
|
|
—
|
|
Proceeds from
InnoHold indemnification payment
|
|
|
4,142
|
|
|
|
—
|
|
Tax receivable
agreement payment
|
|
|
(628)
|
|
|
|
—
|
|
Distributions to
members
|
|
|
(545)
|
|
|
|
—
|
|
Proceeds from
exercise of warrants
|
|
|
116
|
|
|
|
12
|
|
Proceeds from
exercise of stock options
|
|
|
83
|
|
|
|
—
|
|
Net cash provided by
financing activities
|
|
|
2,605
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
Net decrease in
cash
|
|
|
(19,140)
|
|
|
|
(7,100)
|
|
Cash and cash
equivalents, beginning of the year
|
|
|
122,955
|
|
|
|
33,478
|
|
Cash and cash
equivalents, end of the period
|
|
$
|
103,815
|
|
|
$
|
26,378
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid during the
year for interest
|
|
$
|
430
|
|
|
$
|
14
|
|
Cash paid during the
year for income taxes
|
|
$
|
519
|
|
|
$
|
63
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule
of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Property and
equipment included in accounts payable
|
|
$
|
4,168
|
|
|
$
|
883
|
|
Non-cash leasehold
improvements
|
|
$
|
701
|
|
|
$
|
615
|
|
Accrued
distributions
|
|
$
|
99
|
|
|
$
|
196
|
|
Tax receivable
agreement liability
|
|
$
|
777
|
|
|
$
|
221
|
|
Deferred income
taxes
|
|
$
|
971
|
|
|
$
|
—
|
|
Exercise of liability
warrants
|
|
$
|
64,146
|
|
|
$
|
5
|
|
|
|
PURPLE INNOVATION,
INC.
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES
(In thousands)
(unaudited)
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 income, and adjusted net income 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 Income (Loss) to Non-GAAP EBITDA
and Adjusted EBITDA
A reconciliation of GAAP net income
(loss) to the non-GAAP measures of EBITDA and adjusted EBITDA is
provided below. EBITDA represents net income (loss) before interest
expense, net other income and depreciation and amortization.
Adjusted EBITDA represents EBITDA excluding certain non-cash and
non-recurring costs incurred.
|
|
|
|
|
|
|
|
|
Three Months
Ended
March
31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
GAAP net
income
|
|
$
|
20,939
|
|
|
|
28,001
|
|
Interest
expense
|
|
|
570
|
|
|
|
1,389
|
|
Income tax (benefit)
expense
|
|
|
4,651
|
|
|
|
(284)
|
|
Other (income)
expense, net
|
|
|
68
|
|
|
|
(90)
|
|
Depreciation and
amortization
|
|
|
1,549
|
|
|
|
1,778
|
|
EBITDA
|
|
|
27,777
|
|
|
|
30,794
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Warrant
liability
|
|
|
(9,147)
|
|
|
|
(21,633)
|
|
Stock-based
compensation expense
|
|
|
479
|
|
|
|
250
|
|
Product
reserve
|
|
|
—
|
|
|
|
808
|
|
Tax Receivable
Agreement expense
|
|
|
(174)
|
|
|
|
122
|
|
Legal fees
|
|
|
1,112
|
|
|
|
231
|
|
Executive search
costs
|
|
|
360
|
|
|
|
—
|
|
Severance
costs
|
|
|
193
|
|
|
|
43
|
|
Showroom opening
costs
|
|
|
80
|
|
|
|
—
|
|
New production
facility start-up costs
|
|
|
2,062
|
|
|
|
—
|
|
COVID-19 related
expenses
|
|
|
38
|
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
22,780
|
|
|
$
|
10,615
|
|
Reconciliation of GAAP Net Income to non-GAAP Adjusted Net
Income and Adjusted Net Income per Diluted Share
Our presentation of adjusted net income assumes that all net
income is attributable to Purple Innovation, Inc. (i.e. there is no
allocation of net income or 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 income per share, diluted, is calculated by dividing
adjusted net income 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 income and adjusted net
income per diluted share, are supplemental measures of operating
performance that do not represent, and should not be considered,
alternatives to net income and earnings per share, as calculated in
accordance with GAAP. We believe adjusted net income and adjusted
net income per diluted share, supplement GAAP measures and enable
us to more effectively evaluate our performance period-over-period.
A reconciliation of net income (loss), the most directly comparable
GAAP measure, to adjusted net income and the computation of
adjusted net income per diluted share, are set forth below:
|
|
|
|
|
|
|
(in thousands, except
per share amounts)
|
|
Three Months
Ended
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
Net income
|
|
$
|
20,939
|
|
|
$
|
28,001
|
|
Income tax (benefit)
expense, as reported
|
|
|
4,651
|
|
|
|
(284)
|
|
Tax receivable
agreement (benefit) expense
|
|
|
(174)
|
|
|
|
122
|
|
Change in fair value
– warrant liabilities
|
|
|
(9,147)
|
|
|
|
(21,633)
|
|
Adjusted net income
before income taxes
|
|
|
16,269
|
|
|
|
6,206
|
|
Adjusted income
taxes(1)
|
|
|
(4,295)
|
|
|
|
(1,576)
|
|
Adjusted net
income
|
|
$
|
11,974
|
|
|
$
|
4,630
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
per share, diluted
|
|
$
|
0.17
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
Adjusted
weighted-average shares outstanding,
diluted(2)
|
|
|
68,642
|
|
|
|
58,269
|
|
(1) Represents the
estimated effective tax rate of 26.4% and 25.4% for the three
months ended March 31, 2021 and 2020, 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.
(2) Assumes dilutive
warrants, options and restricted stock 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, 2020 and 2019:
|
|
|
For the Three
Months Ended
|
|
|
|
March 31,
2021
|
|
|
March 31,
2020
|
|
|
|
Net
Income
|
|
|
Weighted
Average
Shares,
Diluted
|
|
|
Net Income per
Share, Diluted
|
|
|
Net
Income
|
|
|
Weighted Average
Shares, Diluted
|
|
|
Net Income per
Share, Diluted
|
|
Net income
attributable to Purple Innovation Inc.(1)
|
|
$
|
20,824
|
|
|
|
68,372
|
|
|
$
|
0.17
|
|
|
$
|
16,835
|
|
|
|
25,327
|
|
|
$
|
0.43
|
|
Assumed exchange of
shares(2)
|
|
|
115
|
|
|
|
470
|
|
|
|
|
|
|
|
11,166
|
|
|
|
30,329
|
|
|
|
|
|
Net income
(loss)
|
|
|
20,939
|
|
|
|
|
|
|
|
|
|
|
|
28,001
|
|
|
|
|
|
|
|
|
|
Adjustments to arrive
at adjusted income before taxes(3)
|
|
|
(4,670)
|
|
|
|
|
|
|
|
|
|
|
|
(21,795)
|
|
|
|
2,613
|
|
|
|
|
|
Adjusted income
before taxes
|
|
|
16,269
|
|
|
|
|
|
|
|
|
|
|
|
6,206
|
|
|
|
|
|
|
|
|
|
Adjusted income
taxes(4)
|
|
|
(4,295)
|
|
|
|
|
|
|
|
|
|
|
|
(1,576)
|
|
|
|
|
|
|
|
|
|
Adjusted net
income
|
|
$
|
11,974
|
|
|
|
68,842
|
|
|
$
|
0.17
|
|
|
$
|
4,630
|
|
|
|
58,269
|
|
|
$
|
0.08
|
|
(1) Represents net
income attributable to Purple Innovation, Inc. and the associated
weighted average diluted shares, of Class A common stock
outstanding. Net income per share, diluted includes the effect of
an adjustment to net income attributable to Purple Innovation, Inc.
to consider the dilutive impact of the change in fair value of
warrant liabilities.
(2) Assumes the full
exchange of all outstanding Paired Securities for shares of Class A
common stock as of the beginning of the period. 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 26.4% and 25.4% for the three
months and year ended December 31, 2020 and 2019, 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.