PLBY Group, Inc. (NASDAQ: PLBY) (“PLBY Group” or the “Company”), a
leading pleasure and leisure lifestyle company and owner of
Playboy, one of the most recognizable and iconic brands in the
world, today provided financial results for the third quarter ended
September 30, 2023.
Comments from Ben Kohn, Chief Executive
Officer of PLBY Group
“We continue to make significant progress toward
restructuring our operations as we move to a capital light model.
We completed the sale of our Lovers business on November 3rd. We
also signed two contracts with auction houses to sell our art and
memorabilia collection. The first, with Bonhams, is planned to sell
10 pieces in November. The second, with Julien’s Auctions, is a
much larger auction expected to take place in March 2024. Julien’s
intends to sell a wide variety of furniture from the Playboy
Mansion, memorabilia from Playboy’s 70-year history and fine art
from the Playboy collection. Julien’s will host exhibitions touring
Hong Kong, Shanghai and locations in the U.S. promoting it as a
luxury and lifestyle auction. Now that we have closed Lovers, we
will increase focus on exploring strategic alternatives for Honey
Birdette. As we are not currently convinced about selling 100% of
that business in today’s market, we are looking at ways to maximize
the potential growth of Honey Birdette without burdening our
balance sheet.
Honey Birdette continued to make progress on
improving its gross margins by decreasing the number of days its
products were on sale year-over-year. We reduced Honey Birdette’s
total days-on-sale during the third quarter, from 66 days to just
10 days. During the quarter, Honey Birdette’s sales were down 19%
as a result of the significantly lower promotional environment;
however, Honey Birdette’s gross profit margin increased by three
percentage points. Going into the holiday shopping season, we will
continue to limit Honey Birdette’s days-on-sale in order to
maintain the integrity of the brand as a premium offering rather
than a brand that chases sales through perpetual promotions. In
October, a month in which we did not run a sale this year or last,
our sales were up over 16% year-over-year. We are also very focused
on profitability. To that end, we have made the decision to
increase prices by 10%, which will take place gradually from the
4th quarter of 2023 through the 2nd quarter of 2024, to combat
rising inflation. We have also eliminated free expedited shipping
and raised the threshold for free standard shipping. We have not
seen any impact on consumer spending from these changes at this
point. We will closely monitor the overall financial impact of all
of these changes when taken as a whole and make refinements as
needed.
As we discussed previously, our licensing
business in China continues to face significant challenges. During
the quarter, we conducted extensive audits, from both accounting
and legal perspectives, of our top Chinese licensees. We determined
that certain licensees had committed incurable, material breaches
of their license agreements, including the non-payment of required
royalties. In addition, we found extensive contractual violations
related to complex sub-licensing agreements our licensees entered
into that deprived us of significant additional royalties. In
conjunction with our China joint venture partner, we made the
decision to terminate certain of our major licensees in order to
properly rebuild the business. We have already received interest
from a number of the sub-licensees that were already manufacturing
and selling our products, as well as from new licensees, all of
which want to enter into new agreements to license the Playboy
brand. Our goal is to better position the China licensing business
for the long term, including potentially owning Chinese e-commerce
storefronts, while finding the right licensees to build and operate
the stores. Long term, this would give us increased control, so
that if a strategic partner violates our agreements, we would own
the storefront through which they sell and could quickly replace
strategic partners. In addition, we have received an unsolicited
offer to buy our China trademarks from a Chinese private equity
firm and are in the process of negotiating terms.
In the third quarter, we signed two new
strategic licensing deals in North America for lingerie and
intimates, with Handcraft and Roma, which will contribute to our
long-term revenue growth. We also completed the outsourcing of our
e-commerce Playboy Shop to MC Web Services, Inc. and our spirits
joint venture launched a ready-to-drink, vodka seltzer line called
Play Hard. Our existing top global licensees across a variety of
categories and geographies, including but not limited to Playboy
Pleasures, lighters, retail collaborations, costumes, and gaming
partially offset the double-digit decline in wholesale sales of our
two largest U.S. apparel licensees.
During the third quarter, we spent a
considerable amount of time laying the groundwork to integrate all
of our digital properties into a cohesive ecosystem with the goal
of cross selling amongst our various customer bases as well as
clearly differentiating our product versus other creator platforms
by leveraging the Playboy brand. We expect consumers to better see
the shift in digital strategy in the coming weeks. Moving forward,
our creator platform will be renamed the Playboy Club. The name
change reflects our focus on the consumer and to clearly
communicate that the Playboy Club is the place to interact with the
world’s most beautiful and interesting women. We anticipate the
Playboy Club will allow us to drive considerably higher margins
than our standalone creator platform. The Playboy Club is planned
to initially have two types of customers, those that are just
visiting and those that are members. The visiting guests will enjoy
the same experience they get today, interacting with creators
through direct messaging, exclusive content and live streaming. The
new members will receive additional benefits, including
the chance to attend meet-and-greets with creators and former
Playmates, discounts on Playboy merchandise, exclusive
behind-the-scenes content, as well as Bunny Money, our new platform
payment option. Members will also be able to bundle their
membership with access to Playboy galleries, TV channels and
archives at reduced prices. We are planning for the launch of
membership by the end of 2023.
From a product perspective, we rolled out a new
creator tiering and education home screen, setting the stage for
select creators to participate in content shoots and other perks.
We launched a desktop mode, a new live duet format, and other
enhancements to live streaming, including tip goals and tip menus
and the ability for creators to have one-on-one live video and
audio calls through the platform. In the coming weeks, we expect to
roll out a new website, a new membership tab replacing the current
magazine tab, new creator profiles taking inspiration from our old
Playmate Centerfold and data sheets, Bunny Money and a new user
home screen and feed.
Our creators will sit at the center of the
Playboy Club. In addition to the ways creators make money today, we
believe the Playboy Club will give them additional ways to make
money including selling memberships, participating in meet and
greets and hosting Playboy parties. Select creators will get the
opportunity to appear in Playboy photo shoots and other content
opportunities. We produced content during the past quarter with
certain creators and saw a meaningful uplift in those creators’
earnings.
The Playboy Club over time is intended to do
three things: first, integrate the customers we currently have
across our various digital properties into one combined offering;
second, give creators more opportunities to earn money, including
from content shoots and lifestyle experiences; and three, drive
superior margin versus just a creator platform, by combining a
membership program with the creator platform.”
Third Quarter 2023 Financial
Highlights
- Total revenue from
continuing operations in the third quarter was $33.3
million versus $45.7 million in the prior year period, reflecting a
year-over-year decrease of 27%. Of the $12.4 million decline in
revenue, $4.0 million was attributable to licensing,
$8.9 million was attributable to direct-to-consumer products,
partially offset by a $0.5 million increase attributable to the
Company’s digital and other segments.
- Net loss
from continuing operations was $16.4 million,
including $7.7 million of license agreement impairments. The
adjusted EBITDA gain from continuing operations was $0.1
million.
Direct-to-consumer revenue from
continuing operations declined 34% year-over-year to $17.1 million.
During the third quarter, revenue from Honey Birdette declined by
$4.1 million, or 19% year-over-year, to $17.0 million from
$21.1 million. During the quarter, the Company reduced the
days on sale by 85% in an effort to protect brand integrity and
combat rising production and distribution costs. In addition,
revenues from playboy.com e-commerce declined by $4.9 million
as the Company completed the transition from an owned-and-operated
model to a licensing model.
Licensing revenue declined 27%
year-over-year to $10.9 million from $14.9 million a year
ago. The decline is largely attributable to the poor financial
performance of our China licensees and the resulting non-payment of
minimum guarantees.
Digital subscriptions and content
revenue was up over 11% compared to a year ago, to
$5.2 million from $4.7 million. Revenue growth from the
Company’s creator platform more than offset a decrease in the
Company’s legacy digital business revenue.
Net loss in Q3’23 declined to
$15.1 million, from a net loss of $264.7 million in Q3’22. The
lower loss was largely driven by $277.2 million of non-cash asset
impairments related to the write-down of goodwill, trademarks and
other assets recorded in Q3’22, while there was only $7.7 million
of impairments in Q3’23.
Adjusted EBITDA from continuing
operations declined from $0.9 million to $0.1 million,
year-over-year. This reflects an overall decline in revenue,
partially offset by the reduction of expenses as a result of cost
cutting initiatives implemented over the last 12 months.
The Company ended the third quarter with approximately $22.0
million in restricted and unrestricted cash.
Webcast DetailsThe Company will
host a question and answer session for analysts today at 5:00 p.m.
Eastern Time. Listeners may access the live and replay webcast of
the session on the events section of the PLBY Group, Inc. Investor
Relations website at
https://www.plbygroup.com/investors/events-and-presentations.
About PLBY Group, Inc.PLBY
Group, Inc. is a global pleasure and leisure company connecting
consumers with products, content, and experiences that help them
lead more fulfilling lives. PLBY Group’s flagship consumer brand,
Playboy, is one of the most recognizable brands in the world, with
products and content available in approximately 180 countries. PLBY
Group’s mission — to create a culture where all people can pursue
pleasure — builds upon seven decades of creating groundbreaking
media and hospitality experiences and fighting for cultural
progress rooted in the core values of equality, freedom of
expression and the idea that pleasure is a fundamental human right.
Learn more at http://www.plbygroup.com.
Forward-Looking StatementsThis
press release includes “forward-looking statements” within the
meaning of the “safe harbor” provisions of the United States
Private Securities Litigation Reform Act of 1995. The Company’s
actual results may differ from their expectations, estimates, and
projections and, consequently, you should not rely on these
forward-looking statements as predictions of future events. Words
such as “expect,” “estimate,” “project,” “budget,” “forecast,”
“anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,”
“believes,” “predicts,” “potential,” “continue,” and similar
expressions (or the negative versions of such words or expressions)
are intended to identify such forward-looking statements. These
forward-looking statements include, without limitation, the
Company’s expectations with respect to future performance, growth
plans and anticipated financial impacts of its strategic
opportunities and corporate transactions.
These forward-looking statements involve
significant risks and uncertainties that could cause the actual
results to differ materially from those discussed in the
forward-looking statements. Factors that may cause such differences
include, but are not limited to: (1) the inability to maintain the
listing of the Company’s shares of common stock on Nasdaq; (2) the
risk that the Company’s completed or proposed transactions disrupt
the Company’s current plans and/or operations, including the risk
that the Company does not complete any such proposed transactions
or achieve the expected benefits from any transactions; (3) the
ability to recognize the anticipated benefits of corporate
transactions, commercial collaborations, commercialization of
digital assets, cost reduction initiatives and proposed
transactions, which may be affected by, among other things,
competition, the ability of the Company to grow and manage growth
profitably, and the Company's ability to retain its key employees;
(4) costs related to being a public company, corporate
transactions, commercial collaborations and proposed transactions;
(5) changes in applicable laws or regulations; (6) the possibility
that the Company may be adversely affected by global hostilities,
supply chain delays, inflation, interest rates, foreign currency
exchange rates or other economic, business, and/or competitive
factors; (7) risks relating to the uncertainty of the projected
financial information of the Company, including changes in our
estimates of cash flows and the fair value of certain of the
Company’s intangible assets, including goodwill; (8) risks related
to the organic and inorganic growth of the Company’s businesses,
and the timing of expected business milestones; (9) changing demand
or shopping patterns for the Company’s products and services; (10)
failure of licensees, suppliers or other third-parties to fulfill
their obligations to the Company; (11) the Company’s ability to
comply with the terms of its indebtedness and other obligations;
(12) changes in financing markets or the inability of the Company
to obtain financing on attractive terms; and (13) other risks and
uncertainties indicated from time to time in the Company’s annual
report on Form 10-K, including those under “Risk Factors” therein,
and in the Company’s other filings with the Securities and Exchange
Commission. The Company cautions that the foregoing list of factors
is not exclusive, and readers should not place undue reliance upon
any forward-looking statements, which speak only as of the date
which they were made. The Company does not undertake any obligation
to update or revise any forward-looking statements to reflect any
change in its expectations or any change in events, conditions, or
circumstances on which any such statement is based.
Contact:
Investors: investors@plbygroup.comMedia:
press@plbygroup.com
PLBY Group,
Inc.Condensed Consolidated Statements of
Operations(Unaudited)(in
thousands, except share and per share amounts)
|
Three Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
Net revenues |
$ |
33,282 |
|
|
$ |
45,706 |
|
Costs and expenses: |
|
|
|
Cost of sales |
|
(10,909 |
) |
|
|
(25,302 |
) |
Selling and administrative expenses |
|
(25,514 |
) |
|
|
(34,988 |
) |
Contingent consideration fair value remeasurement gain |
|
219 |
|
|
|
1,371 |
|
Impairments |
|
(7,674 |
) |
|
|
(277,197 |
) |
Gain on sale of the aircraft |
|
— |
|
|
|
5,802 |
|
Other operating expense, net |
|
(740 |
) |
|
|
— |
|
Total operating expense |
|
(44,618 |
) |
|
|
(330,314 |
) |
Operating loss |
|
(11,336 |
) |
|
|
(284,608 |
) |
Nonoperating (expense)
income: |
|
|
|
Interest expense |
|
(6,620 |
) |
|
|
(4,306 |
) |
Loss on extinguishment of debt |
|
— |
|
|
|
(220 |
) |
Fair value remeasurement gain |
|
— |
|
|
|
9,149 |
|
Other income (expense), net |
|
121 |
|
|
|
(551 |
) |
Total nonoperating (expense) income |
|
(6,499 |
) |
|
|
4,072 |
|
Loss from continuing
operations before income taxes |
|
(17,835 |
) |
|
|
(280,536 |
) |
Benefit from income taxes |
|
1,442 |
|
|
|
43,653 |
|
Net loss from continuing
operations |
|
(16,393 |
) |
|
|
(236,883 |
) |
Income (loss) from
discontinued operations, net of tax |
|
1,319 |
|
|
|
(27,814 |
) |
Net loss |
|
(15,074 |
) |
|
|
(264,697 |
) |
Net loss attributable to PLBY
Group, Inc. |
$ |
(15,074 |
) |
|
$ |
(264,697 |
) |
Net loss per share from
continuing operations, basic and diluted |
$ |
(0.22 |
) |
|
$ |
(5.05 |
) |
Net income (loss) per share
from discontinued operations, basic and diluted |
|
0.02 |
|
|
|
(0.60 |
) |
Net loss per share, basic and
diluted |
$ |
(0.20 |
) |
|
$ |
(5.65 |
) |
Weighted-average shares
outstanding, basic and diluted |
|
73,891,105 |
|
|
|
46,889,983 |
|
Non-GAAP Reconciliation
This release presents the financial measure
earnings before interest, taxes, depreciation and amortization, or
“EBITDA,” and “Adjusted EBITDA” which are not financial measures
under the accounting principles generally accepted in the United
States of America (“GAAP”). “EBITDA” is defined as net income or
loss before interest, income tax expense or benefit, and
depreciation and amortization. “Adjusted EBITDA” is defined as
EBITDA adjusted for stock-based compensation and other special
items determined by Company management. Adjusted EBITDA is intended
as a supplemental measure of the Company’s performance that is
neither required by, nor presented in accordance with, GAAP. The
Company believes that the use of EBITDA and Adjusted EBITDA
provides an additional tool for investors to use in evaluating
ongoing operating results and trends and in comparing its financial
measures with those of comparable companies, which may present
similar non-GAAP financial measures to investors. However,
investors should be aware that when evaluating EBITDA and Adjusted
EBITDA, the Company may incur future expenses similar to those
excluded when calculating these measures. In addition, the
Company’s presentation of these measures should not be construed as
an inference that the Company’s future results will be unaffected
by unusual or nonrecurring items. The Company’s computation of
Adjusted EBITDA may not be comparable to other similarly titled
measures computed by other companies, because all companies may not
calculate Adjusted EBITDA in the same fashion.
In addition to adjusting for non-cash
stock-based compensation, non-cash charges for the fair value
remeasurements of certain liabilities and non-recurring non-cash
impairments, asset write-downs and inventory reserve charges, the
Company typically adjusts for nonoperating expenses and income,
such as non-recurring special projects including the implementation
of internal controls, expenses associated with financing
activities, reorganization and severance resulting in the
elimination or rightsizing of specific business activities or
operations and non-recurring gains (losses) on the sale of business
units.
Because of these limitations, EBITDA and
Adjusted EBITDA should not be considered in isolation or as a
substitute for performance measures calculated in accordance with
GAAP. The Company compensates for these limitations by relying
primarily on the Company’s GAAP results and using EBITDA and
Adjusted EBITDA on a supplemental basis. Investors should review
the reconciliation of net loss to EBITDA and Adjusted EBITDA below
and not rely on any single financial measure to evaluate the
Company’s business.
The following table reconciles the Company’s net
loss from continued operations to EBITDA and Adjusted EBITDA (in
thousands):
GAAP Net Loss to Adjusted EBITDA
Reconciliation(in thousands)
|
Three Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
Net loss from continuing
operations |
$ |
(16,393 |
) |
|
$ |
(236,883 |
) |
Adjusted
for: |
|
|
|
Interest expense |
|
6,620 |
|
|
|
4,306 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
220 |
|
Benefit from income taxes |
|
(1,442 |
) |
|
|
(43,653 |
) |
Depreciation and amortization |
|
1,795 |
|
|
|
5,388 |
|
EBITDA |
|
(9,420 |
) |
|
|
(270,622 |
) |
Adjusted
for: |
|
|
|
Stock-based compensation |
|
540 |
|
|
|
4,543 |
|
Adjustments |
|
1,531 |
|
|
|
6,145 |
|
Gain on sale of the aircraft |
|
— |
|
|
|
(5,802 |
) |
Contingent consideration fair value remeasurement |
|
(219 |
) |
|
|
(1,371 |
) |
Mandatorily redeemable preferred stock fair value
remeasurement |
|
— |
|
|
|
(9,149 |
) |
Impairments |
|
7,674 |
|
|
|
277,197 |
|
Adjusted
EBITDA |
$ |
106 |
|
|
$ |
941 |
|
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