LEHI, Utah, Aug. 9, 2021 /PRNewswire/ -- Purple Innovation,
Inc. (NASDAQ: PRPL) ("Purple"), a comfort innovation company known
for creating the "World's First No Pressureâ„¢ Mattress," today
announced results for the second quarter ended June 30, 2021.
Second Quarter Financial Summary (Comparisons versus Second
Quarter 2020 and 2019)1
- Net revenue increased 10.6% to $182.6
million, compared to $165.1
million in 2020 and increased 77.3% compared to $103.1 million in 2019.
-
- Wholesale revenue increased 233.2% over 2020 and 68.9% over
2019; Direct-to-Consumer (DTC) revenue decreased 19.9% compared to
2020 and increased 82.4% over 2019.
- Gross margin was 44.7% compared to 49.4% in 2020 and 41.5% in
2019.
- Operating expenses as a percent of net revenue were 46.1%
compared to 30.1% in 2020 and 43.8% in 2019.
- Operating loss was $(2.5) million
compared to operating income of $32.0
million in 2020 and operating loss of ($2.4) million 2019.
- Net income was $2.6 million
compared to a net loss of $(97.1)
million in 2020, reflecting primarily the impact from the
change in fair value of warrant liabilities and net loss of
($11.3) million in 2019. Adjusted net
income was $3.6 million, or
$0.05 per diluted share, as compared
to adjusted net income of $22.7
million, or $0.35 per diluted
share, in 2020 and adjusted net income of $2.3 million, or $0.04 per diluted share, in 2019.
- EBITDA was $3.9 million compared
to $(129.1) million in 2020,
reflecting primarily the impact from the change in fair value of
warrant liabilities, and ($9.1)
million in 2019. Adjusted EBITDA was $11.0 million compared to $35.2 million in 2020 and $6.2 million in 2019.
- Cash and cash equivalents were $110.1
million at June 30, 2021.
The Company views comparison to the 2019 period to be more
meaningful than the comparable 2020 period given the exceptional,
COVID-19-Related consumer demand changes experienced in the same
period in 2020.
"Following a very good start to 2021, demand for the Purple
brand has remained strong especially in our wholesale channel as
consumers are increasingly returning to shopping brick and mortar
retail," said Joe Megibow, Chief
Executive Officer. "Unfortunately, our recent performance was
impacted by isolated manufacturing challenges that limited our
ability to fulfill a meaningful portion of demand during the second
quarter. While this headwind carried into the third quarter,
I am pleased to report that we exited the month of July with
production back at planned levels and more importantly, a safer
operating environment in our manufacturing facilities."
Megibow continued, "We are excited to be moving back into a
position that allows us to fully leverage the power of our
vertically integrated manufacturing platform and capitalize on the
significant growth prospects that exist for our business. Our
proprietary comfort technologies have disrupted the mattress
industry and led to strong share gains in the premium category.
Looking ahead, we see a long runway for growth as we continue to
innovate our mattress and non-mattress product offerings, expand
our distribution through partner and owned retail and enhance our
digital capabilities to improve traffic, conversion and repeat
business. We are confident in delivering a solid finish to 2021 and
progressing towards our long-term targets of $2 billion to $2.5
billion in annual net revenue and mid-teens adjusted EBITDA
margins over the next three to five years."
Second Quarter 2021 Review
Second quarter 2021 net revenue increased 10.6% to $182.6 million, compared to $165.1 million in the second quarter of 2020
driven by higher demand for all product lines, particularly
mattresses. By channel, wholesale revenue increased 233.2% and DTC
revenue decreased 19.9%, reflecting a return to pre-COVID consumer
shopping behavior. Compared with the more normalized second quarter
of 2019, second quarter 2021 net revenue increased 77.3% with
wholesale revenue up 68.9% and DTC revenue up 82.4%. Total
second quarter 2021 net revenues were negatively impacted by the
isolated production issues that occurred during the second quarter
of 2021.
Gross margin for the second quarter 2021 was 44.7% compared to
49.4% in the prior year period and 41.5% in the same period of
2019. The decrease in gross margin over the prior year was
primarily attributable to the higher proportion of wholesale
channel revenue, which carries lower gross margins than the DTC
channel, combined with the impact from the recent manufacturing
issues that occurred during the second quarter of 2021.
Wholesale net revenues comprised approximately 36% of total
net revenue for the quarter, compared with approximately 12% in the
prior year period and 38% in the second quarter of 2019.
Operating expenses were 46.1% of net revenue for the second
quarter of 2021 compared to 30.1% in the prior year period and
43.8% in the second quarter of 2019. The increase in
operating expenses as a percent of net revenue compared with the
prior year period was driven primarily by an increase in
advertising costs due to higher advertising rates in 2021 as rates
were uncharacteristically low in 2020 due the pandemic, an increase
in legal and professional fees, including $7.9 million related to underwriting discounts
and commissions incurred for a secondary offering in May 2021 and the impact on revenue from the
recent manufacturing issues that occurred during the second quarter
of 2021.
Operating loss was $(2.5) million
for the second quarter 2021 compared to operating income of
$32.0 million in the prior year
period and an operating loss of $(2.4)
million in the second quarter of 2019.
Net income was $2.6 million for
the second quarter 2021 compared to a net loss of $(97.1) million in the prior year period and a
net loss of ($11.3) million for the
second quarter 2019. 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 June 30, 2021 and 2020, the Company recognized a
non-cash gain of $4.9 million and a
non-cash loss of $130.3 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 and
losses associated with the change in fair value of warrant
liabilities, loss on debt extinguishment, Tax Receivable Agreement
expense, non-cash stock-based compensation and secondary offering
costs was $3.6 million, or
$0.05 per diluted share, compared to
adjusted net income of $22.7 million,
or $0.35 per diluted share, in the
prior year period and $2.3 million,
or $0.04 per diluted share, for the
second quarter of 2019. Adjusted net income also reflects an
estimated effective income tax rate of 25.4% for the current year
period and 25.6% for the comparable prior year period and second
quarter of 2019.
EBITDA for the second quarter 2021 was $3.9 million compared to $(129.1) million in the second quarter 2020 and
($9.1) in the second quarter 2019.
Adjusted EBITDA, which excludes the adjustment for certain non-cash
gains and losses and other certain items (please see table below
for detail items) was $11.0 million,
compared to $35.2 million in the
prior year period and $6.2 million in
the second quarter of 2019.
Balance Sheet
As of June 30, 2021, the Company
had cash and cash equivalents of $110.1
million compared to $123.0
million as of December 31,
2020. The decrease was driven by capital expenditures of
$26.2 million primarily related to
manufacturing capacity expansion and showroom expansion. This was
partially offset by cash provided by operations of $11.5 million, due mainly to a reduction in
accounts receivable and an increase in customer prepayments,
partially offset by a reduction in accounts payable. Inventories as
of June 30, 2021 totaled $64.8 million compared with $65.7 million as of December 31, 2020.
2021 Outlook
Based on second quarter results combined with the Company's
projected late August timing for exiting the current backlog
position created by the isolated production issues, Purple
currently expects full year 2021 net revenue to be between
$820 million and $850 million. The new range represents an
increase of 26% to 31% over 2020 results and an increase of 81% to
98% over the 2019 results. Due to the inventory constraints that
are expected to last until late August, the Company anticipates a
significant portion of its revenue growth in the second half of the
year will occur in the fourth quarter.
Considering the second quarter results, the impact on third
quarter margins from the isolated production issues, and recent
trends indicating an even greater channel mix shift toward
wholesale over the remainder of the year, adjusted EBITDA is now
expected to be between $78 million
and $88 million.
Conference Call and Webcast Information
Purple Innovation, Inc. will host a live conference call to
discuss financial results today, August 9,
2021 at 4:30 p.m. Eastern
Time. To access the call dial (877) 300-8521
(domestic) or (412) 317-6026 (international) and provide the
Conference ID: 10159168. 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 the timing
and extent of 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
physical presence through partner and owned retail stores;
expectations regarding channel mix; our ability to innovate our
product offerings; our ability to achieve long-term targets of
revenue and adjusted EBITDA over the next three to five year; and
expected financial and operating results for the 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.
|
Condensed
Consolidated Balance Sheets
|
(unaudited - in
thousands, except par value)
|
|
|
|
June 30,
2021
|
|
|
December 31,
2020
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
110,081
|
|
|
$
|
122,955
|
|
Accounts receivable, net
|
|
|
25,104
|
|
|
|
29,111
|
|
Inventories, net
|
|
|
64,795
|
|
|
|
65,726
|
|
Prepaid inventory
|
|
|
1,799
|
|
|
|
826
|
|
Other current
assets
|
|
|
14,972
|
|
|
|
10,453
|
|
Total current
assets
|
|
|
216,751
|
|
|
|
229,071
|
|
Property and
equipment, net
|
|
|
87,496
|
|
|
|
61,486
|
|
Operating lease
right-of-use assets
|
|
|
54,334
|
|
|
|
41,408
|
|
Intangible assets,
net
|
|
|
10,376
|
|
|
|
9,945
|
|
Deferred income
taxes
|
|
|
209,048
|
|
|
|
211,244
|
|
Other long-term
assets
|
|
|
1,458
|
|
|
|
1,578
|
|
Total
assets
|
|
$
|
579,463
|
|
|
$
|
554,732
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
58,419
|
|
|
$
|
69,594
|
|
Accrued sales returns
|
|
|
6,962
|
|
|
|
8,428
|
|
Accrued
compensation
|
|
|
9,207
|
|
|
|
14,209
|
|
Customer
prepayments
|
|
|
17,334
|
|
|
|
6,253
|
|
Accrued sales
tax
|
|
|
3,596
|
|
|
|
6,015
|
|
Accrued rebates and
allowances
|
|
|
6,870
|
|
|
|
10,891
|
|
Operating lease obligations – current portion
|
|
|
4,255
|
|
|
|
3,235
|
|
Other current
liabilities
|
|
|
13,733
|
|
|
|
13,583
|
|
Total current
liabilities
|
|
|
120,376
|
|
|
|
132,208
|
|
Debt, net of current
portion
|
|
|
40,403
|
|
|
|
41,410
|
|
Operating lease
obligations, net of current portion
|
|
|
67,924
|
|
|
|
48,936
|
|
Warrant
liabilities
|
|
|
14,529
|
|
|
|
92,708
|
|
Tax receivable
agreement liability, net of current portion
|
|
|
166,413
|
|
|
|
165,426
|
|
Other long-term
liabilities, net of current portion
|
|
|
8,294
|
|
|
|
6,503
|
|
Total
liabilities
|
|
|
417,939
|
|
|
|
487,191
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies (Note 11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Class A common stock;
$0.0001 par value, 210,000 shares authorized; 66,371 issued
and outstanding at June
30, 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 June 30, 2021
and 536 issued and outstanding at December 31, 2020
|
|
|
—
|
|
|
|
—
|
|
Additional paid-in
capital
|
|
|
403,071
|
|
|
|
333,047
|
|
Accumulated
deficit
|
|
|
(242,454)
|
|
|
|
(265,856)
|
|
Total stockholders'
equity
|
|
|
160,624
|
|
|
|
67,197
|
|
Noncontrolling
interest
|
|
|
900
|
|
|
|
344
|
|
Total stockholders'
equity
|
|
|
161,524
|
|
|
|
67,541
|
|
Total liabilities and
stockholders' equity
|
|
$
|
579,463
|
|
|
$
|
554,732
|
|
PURPLE INNOVATION,
INC.
|
Condensed
Consolidated Statements of Income
|
(unaudited - in
thousands, except per share amounts)
|
|
|
|
Three Months
Ended
June 30,
|
|
|
Six Months
Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Revenues,
net
|
|
$
|
182,586
|
|
|
$
|
165,096
|
|
|
$
|
369,015
|
|
|
$
|
287,471
|
|
Cost of
revenues
|
|
|
100,899
|
|
|
|
83,465
|
|
|
|
199,804
|
|
|
|
152,658
|
|
Gross
profit
|
|
|
81,687
|
|
|
|
81,631
|
|
|
|
169,211
|
|
|
|
134,813
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing and
sales
|
|
|
59,844
|
|
|
|
39,423
|
|
|
|
114,212
|
|
|
|
76,107
|
|
General and
administrative
|
|
|
22,461
|
|
|
|
8,677
|
|
|
|
36,987
|
|
|
|
16,225
|
|
Research and
development
|
|
|
1,923
|
|
|
|
1,580
|
|
|
|
3,646
|
|
|
|
3,025
|
|
Total operating
expenses
|
|
|
84,228
|
|
|
|
49,680
|
|
|
|
154,845
|
|
|
|
95,357
|
|
Operating income
(loss)
|
|
|
(2,541)
|
|
|
|
31,951
|
|
|
|
14,366
|
|
|
|
39,456
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(569)
|
|
|
|
(1,424)
|
|
|
|
(1,139)
|
|
|
|
(2,813)
|
|
Other income (expense), net
|
|
|
26
|
|
|
|
16
|
|
|
|
(42)
|
|
|
|
106
|
|
Change in fair value – warrant liabilities
|
|
|
4,860
|
|
|
|
(130,264)
|
|
|
|
14,007
|
|
|
|
(108,631)
|
|
Tax receivable agreement expense
|
|
|
(381)
|
|
|
|
(32,823)
|
|
|
|
(207)
|
|
|
|
(32,945)
|
|
Total other income
(expense), net
|
|
|
3,936
|
|
|
|
(164,495)
|
|
|
|
12,619
|
|
|
|
(144,283)
|
|
Net income (loss)
before income taxes
|
|
|
1,395
|
|
|
|
(132,544)
|
|
|
|
26,985
|
|
|
|
(104,827)
|
|
Income tax benefit (expense)
|
|
|
1,167
|
|
|
|
35,428
|
|
|
|
(3,484)
|
|
|
|
35,712
|
|
Net income
(loss)
|
|
|
2,562
|
|
|
|
(97,116)
|
|
|
|
23,501
|
|
|
|
(69,115)
|
|
Net income (loss) attributable to noncontrolling
interest
|
|
|
(16)
|
|
|
|
(3,841)
|
|
|
|
99
|
|
|
|
7,325
|
|
Net income (loss)
attributable to Purple Innovation, Inc.
|
|
$
|
2,578
|
|
|
$
|
(93,275)
|
|
|
$
|
23,402
|
|
|
$
|
(76,440)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.04
|
|
|
$
|
(3.19)
|
|
|
$
|
0.36
|
|
|
$
|
(2.94)
|
|
Diluted
|
|
$
|
(0.03)
|
|
|
$
|
(3.19)
|
|
|
$
|
0.14
|
|
|
$
|
(2.94)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
66,277
|
|
|
|
29,277
|
|
|
|
65,439
|
|
|
|
25,976
|
|
Diluted
|
|
|
66,864
|
|
|
|
29,277
|
|
|
|
68,341
|
|
|
|
25,976
|
|
PURPLE INNOVATION,
INC.
|
Condensed
Consolidated Statements of Cash Flows
|
(unaudited - in
thousands)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
|
Six Months
Ended
June
30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
2,562
|
|
|
$
|
(97,116)
|
|
|
$
|
23,501
|
|
|
$
|
(69,115)
|
|
Adjustments to
reconcile net income (loss) to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
1,995
|
|
|
|
2,038
|
|
|
|
3,544
|
|
|
|
3,816
|
|
Non-cash
interest
|
|
|
128
|
|
|
|
1,416
|
|
|
|
257
|
|
|
|
2,791
|
|
Change in fair value
- warrant liabilities
|
|
|
(4,860)
|
|
|
|
130,264
|
|
|
|
(14,007)
|
|
|
|
108,631
|
|
Tax receivable
agreement expense
|
|
|
381
|
|
|
|
32,823
|
|
|
|
207
|
|
|
|
32,945
|
|
Stock-based
compensation
|
|
|
1,113
|
|
|
|
962
|
|
|
|
1,592
|
|
|
|
1,212
|
|
Non-cash lease
expense
|
|
|
1,105
|
|
|
|
718
|
|
|
|
2,058
|
|
|
|
1,400
|
|
Deferred income
taxes
|
|
|
1,335
|
|
|
|
(44,007)
|
|
|
|
3,170
|
|
|
|
(44,007)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
16,514
|
|
|
|
4,241
|
|
|
|
4,007
|
|
|
|
9,663
|
|
Inventories
|
|
|
(1,513)
|
|
|
|
2,291
|
|
|
|
931
|
|
|
|
7,807
|
|
Prepaid inventory and
other assets
|
|
|
(4,372)
|
|
|
|
(650)
|
|
|
|
(2,263)
|
|
|
|
(3,049)
|
|
Accounts
payable
|
|
|
(1,375)
|
|
|
|
14,120
|
|
|
|
(11,783)
|
|
|
|
903
|
|
Accrued sales
returns
|
|
|
(1,318)
|
|
|
|
5,212
|
|
|
|
(1,466)
|
|
|
|
4,678
|
|
Accrued
compensation
|
|
|
(567)
|
|
|
|
3,175
|
|
|
|
(5,002)
|
|
|
|
2,374
|
|
Customer
prepayments
|
|
|
9,433
|
|
|
|
4,800
|
|
|
|
11,081
|
|
|
|
2,080
|
|
Accrued rebates and
allowances
|
|
|
1,306
|
|
|
|
1,281
|
|
|
|
(4,021)
|
|
|
|
(891)
|
|
Operating lease
obligations
|
|
|
(464)
|
|
|
|
(426)
|
|
|
|
(1,273)
|
|
|
|
(849)
|
|
Other accrued
liabilities
|
|
|
(543)
|
|
|
|
11,468
|
|
|
|
936
|
|
|
|
11,957
|
|
Net cash provided by
operating activities
|
|
|
20,860
|
|
|
|
72,610
|
|
|
|
11,469
|
|
|
|
72,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(13,877)
|
|
|
|
(3,490)
|
|
|
|
(26,162)
|
|
|
|
(8,010)
|
|
Investment in
intangible assets
|
|
|
(216)
|
|
|
|
(107)
|
|
|
|
(285)
|
|
|
|
(2,435)
|
|
Net cash used in
investing activities
|
|
|
(14,093)
|
|
|
|
(3,597)
|
|
|
|
(26,447)
|
|
|
|
(10,445)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments on term
loan
|
|
|
(562)
|
|
|
|
—
|
|
|
|
(1,125)
|
|
|
|
—
|
|
Proceeds from
InnoHold indemnification payment
|
|
|
—
|
|
|
|
—
|
|
|
|
4,142
|
|
|
|
—
|
|
Tax receivable
agreement payments
|
|
|
—
|
|
|
|
—
|
|
|
|
(628)
|
|
|
|
—
|
|
Distributions to
members
|
|
|
(308)
|
|
|
|
—
|
|
|
|
(853)
|
|
|
|
—
|
|
Proceeds from
exercise of warrants
|
|
|
—
|
|
|
|
11
|
|
|
|
116
|
|
|
|
23
|
|
Proceeds from
exercise of stock options
|
|
|
369
|
|
|
|
—
|
|
|
|
452
|
|
|
|
—
|
|
Net cash provided by
(used in) financing activities
|
|
|
(501)
|
|
|
|
11
|
|
|
|
2,104
|
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase
(decrease) in cash
|
|
|
6,266
|
|
|
|
69,024
|
|
|
|
(12,874)
|
|
|
|
61,924
|
|
Cash, beginning of
the period
|
|
|
103,815
|
|
|
|
26,378
|
|
|
|
122,955
|
|
|
|
33,478
|
|
Cash, end of the
period
|
|
$
|
110,081
|
|
|
$
|
95,402
|
|
|
$
|
110,081
|
|
|
$
|
95,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
|
$
|
428
|
|
|
$
|
8
|
|
|
$
|
858
|
|
|
$
|
22
|
|
Cash paid during the
period for income taxes
|
|
$
|
3,645
|
|
|
$
|
9
|
|
|
$
|
4,434
|
|
|
$
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule
of non-cash investing and financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and
equipment included in accounts payable
|
|
$
|
3,367
|
|
|
$
|
1,025
|
|
|
$
|
3,367
|
|
|
$
|
1,025
|
|
Non-cash leasehold
improvements
|
|
$
|
2,538
|
|
|
$
|
—
|
|
|
$
|
3,239
|
|
|
$
|
615
|
|
Accrued
distributions
|
|
$
|
99
|
|
|
$
|
4,327
|
|
|
$
|
—
|
|
|
$
|
4,523
|
|
Tax receivable
agreement liability
|
|
$
|
3
|
|
|
$
|
45,045
|
|
|
$
|
780
|
|
|
$
|
45,266
|
|
Deferred income
taxes
|
|
$
|
3
|
|
|
$
|
56,636
|
|
|
$
|
974
|
|
|
$
|
56,636
|
|
Exercise of liability
warrants
|
|
$
|
26
|
|
|
$
|
18
|
|
|
$
|
64,172
|
|
|
$
|
23
|
|
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 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, income tax
(benefit) expense, other (income) expense, net, and depreciation
and amortization. Adjusted EBITDA represents EBITDA excluding costs
incurred due to stock-based compensation expense, debt
extinguishment, changes in the fair value of the warrant liability,
nonrecurring legal fees, executive interim and search costs,
severance costs, showroom opening costs, new production facility
start-up costs, previous period sales tax liability 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
June
30,
|
|
|
Six Months
Ended
June
30,
|
|
|
|
2021
|
|
|
2020(1)
|
|
|
2019(1)
|
|
|
2021
|
|
|
2020(1)
|
|
|
2019(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
|
$
|
2,562
|
|
|
|
(97,116)
|
|
|
|
(11,277)
|
|
|
|
23,501
|
|
|
|
(69,115)
|
|
|
|
(11,904)
|
|
Interest
expense
|
|
|
569
|
|
|
|
1,424
|
|
|
|
1,301
|
|
|
|
1,139
|
|
|
|
2,813
|
|
|
|
2,445
|
|
Income tax (benefit)
expense
|
|
|
(1,167)
|
|
|
|
(35,428)
|
|
|
|
-
|
|
|
|
3,484
|
|
|
|
(35,712)
|
|
|
|
-
|
|
Other income
(expense), net
|
|
|
(26)
|
|
|
|
(16)
|
|
|
|
(6)
|
|
|
|
42
|
|
|
|
(106)
|
|
|
|
(235)
|
|
Depreciation and
amortization
|
|
|
1,995
|
|
|
|
2,038
|
|
|
|
852
|
|
|
|
3,544
|
|
|
|
3,816
|
|
|
|
1,574
|
|
EBITDA
|
|
|
3,933
|
|
|
|
(129,098)
|
|
|
|
(9,130)
|
|
|
|
31,710
|
|
|
|
(98,304)
|
|
|
|
(8,120)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt extinguishment
and change
in fair value - warrant liability
|
|
|
(4,860)
|
|
|
|
130,264
|
|
|
|
7,621
|
|
|
|
(14,007)
|
|
|
|
108,631
|
|
|
|
12,130
|
|
Stock-based
compensation expense
|
|
|
1,113
|
|
|
|
962
|
|
|
|
6,733
|
|
|
|
1,592
|
|
|
|
1,212
|
|
|
|
6,806
|
|
Product
reserve
|
|
|
-
|
|
|
|
(308)
|
|
|
|
-
|
|
|
|
-
|
|
|
|
500
|
|
|
|
-
|
|
Tax receivable
agreement expense
|
|
|
381
|
|
|
|
32,823
|
|
|
|
-
|
|
|
|
207
|
|
|
|
32,945
|
|
|
|
-
|
|
Legal fees
|
|
|
8,547
|
|
|
|
377
|
|
|
|
262
|
|
|
|
9,659
|
|
|
|
608
|
|
|
|
403
|
|
Executive interim and
search costs
|
|
|
785
|
|
|
|
-
|
|
|
|
307
|
|
|
|
1,145
|
|
|
|
-
|
|
|
|
494
|
|
Severance
costs
|
|
|
122
|
|
|
|
62
|
|
|
|
389
|
|
|
|
315
|
|
|
|
105
|
|
|
|
411
|
|
Showroom opening
costs
|
|
|
410
|
|
|
|
-
|
|
|
|
-
|
|
|
|
490
|
|
|
|
-
|
|
|
|
-
|
|
New production
facility start-up costs
|
|
|
504
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,566
|
|
|
|
-
|
|
|
|
-
|
|
Previous period sales
tax liability
|
|
|
85
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85
|
|
|
|
-
|
|
|
|
-
|
|
COVID-19 related
expenses
|
|
|
1
|
|
|
|
117
|
|
|
|
-
|
|
|
|
39
|
|
|
|
117
|
|
|
|
-
|
|
Adjusted
EBITDA
|
|
$
|
11,021
|
|
|
$
|
35,199
|
|
|
|
6,182
|
|
|
$
|
33,801
|
|
|
$
|
45,814
|
|
|
|
12,124
|
|
|
(1) Reflects the
effect of the previously disclosed restatement due to the
outstanding warrants being accounted for as liabilities and
recorded at fair value.
|
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
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020(1)
|
|
|
2019(1)
|
|
|
2021
|
|
|
2020(1)
|
|
|
2019(1)
|
|
Net income
(loss)
|
|
$
|
2,562
|
|
|
$
|
(97,116)
|
|
|
$
|
(11,277)
|
|
|
$
|
23,501
|
|
|
$
|
(69,115)
|
|
|
$
|
(11,904)
|
|
Income tax (benefit)
expense, as reported
|
|
|
(1,167)
|
|
|
|
(35,428)
|
|
|
|
-
|
|
|
|
3,484
|
|
|
|
(35,712)
|
|
|
|
-
|
|
Tax receivable
agreement expense
|
|
|
381
|
|
|
|
32,823
|
|
|
|
-
|
|
|
|
207
|
|
|
|
32,945
|
|
|
|
-
|
|
Change in fair value –
warrant liabilities
|
|
|
(4,860)
|
|
|
|
130,264
|
|
|
|
7,621
|
|
|
|
(14,007)
|
|
|
|
108,631
|
|
|
|
12,130
|
|
Stock-based
compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
6,733
|
|
|
|
|
|
|
|
|
|
|
|
6,806
|
|
Secondary offering
expenses
|
|
|
7,858
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,858
|
|
|
|
-
|
|
|
|
-
|
|
Adjusted net income
before income taxes
|
|
|
4,774
|
|
|
|
30,543
|
|
|
|
3,077
|
|
|
|
21,043
|
|
|
|
36,749
|
|
|
|
7,032
|
|
Adjusted income
taxes(2)
|
|
|
(1,213)
|
|
|
|
(7,820)
|
|
|
|
(788)
|
|
|
|
(5,345)
|
|
|
|
(9,408)
|
|
|
|
(1,802)
|
|
Adjusted net
income
|
|
$
|
3,561
|
|
|
$
|
22,723
|
|
|
|
2,289
|
|
|
$
|
15,698
|
|
|
$
|
27,341
|
|
|
|
5,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
per share, diluted
|
|
$
|
0.05
|
|
|
$
|
0.35
|
|
|
$
|
0.04
|
|
|
$
|
0.23
|
|
|
$
|
0.49
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
weighted-average shares
outstanding, diluted(3)
|
|
|
67,312
|
|
|
|
64,110
|
|
|
|
65,043
|
|
|
|
68,800
|
|
|
|
56,044
|
|
|
|
56,356
|
|
|
(1) Reflects the
effect of the previously disclosed restatement due to the
outstanding warrants being accounted for as liabilities and
recorded at fair value.
|
|
(2) Represents the
estimated effective tax rate of 25.4% for the three and six months
ended June 30, 2021 and 25.6% for the three and six months ended
June 30, 2020 and 2019, 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.
|
|
(3) 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 and six months ended
June 30, 2021 and 2020:
|
|
|
For the Three
Months Ended
|
|
|
|
June 30,
2021
|
|
|
June 30,
2020(1)
|
|
|
June 30,
2019(1)
|
|
|
|
Net
Income
|
|
|
Weighted
Average
Shares,
Diluted
|
|
|
Net
Income
per
Share,
Diluted
|
|
|
Net
Income
|
|
|
Weighted
Average
Shares,
Diluted
|
|
|
Net
Income
per
Share,
Diluted
|
|
|
Net
Income
|
|
|
Weighted
Average
Shares,
Diluted
|
|
|
Net
Income
per
Share,
Diluted
|
|
Net income (loss)
attributable to
Purple Innovation Inc.(2)
|
|
$
|
2,578
|
|
|
|
66,864
|
|
|
$
|
(0.03)
|
|
|
$
|
(93,275)
|
|
|
|
29,277
|
|
|
$
|
(3.19)
|
|
|
$
|
(5,274)
|
|
|
|
8,457
|
|
|
$
|
(0.62)
|
|
Assumed exchange of
shares(3)
|
|
|
(16)
|
|
|
|
448
|
|
|
|
|
|
|
|
(3,841)
|
|
|
|
30,216
|
|
|
|
|
|
|
|
(6,003)
|
|
|
|
44,071
|
|
|
|
|
|
Net income
(loss)
|
|
|
2,562
|
|
|
|
|
|
|
|
|
|
|
|
(97,116)
|
|
|
|
|
|
|
|
|
|
|
|
(11,277)
|
|
|
|
|
|
|
|
|
|
Adjustments to arrive
at adjusted
net income before taxes(4)
|
|
|
2,212
|
|
|
|
|
|
|
|
|
|
|
|
127,662
|
|
|
|
4,617
|
|
|
|
|
|
|
|
14,354
|
|
|
|
12,515
|
|
|
|
|
|
Adjusted net income
before taxes
|
|
|
4,774
|
|
|
|
|
|
|
|
|
|
|
|
30,546
|
|
|
|
|
|
|
|
|
|
|
|
3,077
|
|
|
|
|
|
|
|
|
|
Adjusted income
taxes(5)
|
|
|
(1,213)
|
|
|
|
|
|
|
|
|
|
|
|
(7,820)
|
|
|
|
|
|
|
|
|
|
|
|
(788)
|
|
|
|
|
|
|
|
|
|
Adjusted net
income
|
|
$
|
3,561
|
|
|
|
67,312
|
|
|
$
|
0.05
|
|
|
$
|
22,726
|
|
|
|
64,110
|
|
|
$
|
0.35
|
|
|
$
|
2,289
|
|
|
|
65,043
|
|
|
$
|
0.04
|
|
|
(1) Reflects the
effect of the previously disclosed restatement due to the
outstanding warrants being accounted for as liabilities and
recorded at fair value.
|
|
(2) Represents net
income attributable to Purple Innovation, Inc. and the associated
weighted average diluted shares, of Class A common stock
outstanding.
|
|
(3) 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.
|
|
(4) 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.
|
|
(5) Represents the
estimated effective tax rate of 25.4%, 25.6% and 25.6% for the
three months ended June 30, 2021, 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.
|
|
|
For the Six Months
Ended
|
|
|
|
June 30,
2021
|
|
|
June 30,
2020(1)
|
|
|
June 30,
2019(1)
|
|
|
|
Net
Income
|
|
|
Weighted
Average
Shares,
Diluted
|
|
|
Net
Income
per
Share,
Diluted
|
|
|
Net
Income
|
|
|
Weighted
Average
Shares,
Diluted
|
|
|
Net
Income
per
Share,
Diluted
|
|
|
Net
Income
|
|
|
Weighted
Average
Shares,
Diluted
|
|
|
Net
Income
per
Share,
Diluted
|
|
Net income (loss)
attributable to
Purple Innovation Inc.(2)
|
|
$
|
23,402
|
|
|
|
68,341
|
|
|
$
|
0.14
|
|
|
$
|
(76,440)
|
|
|
|
25,976
|
|
|
$
|
(2.94)
|
|
|
$
|
(5,311)
|
|
|
|
8,447
|
|
|
$
|
(0.63)
|
|
Assumed exchange of
shares(3)
|
|
|
99
|
|
|
|
459
|
|
|
|
|
|
|
|
7,325
|
|
|
|
27,455
|
|
|
|
|
|
|
|
(6,593)
|
|
|
|
44,071
|
|
|
|
|
|
Net income
(loss)
|
|
|
23,501
|
|
|
|
|
|
|
|
|
|
|
|
(69,115)
|
|
|
|
|
|
|
|
|
|
|
|
(11,904)
|
|
|
|
|
|
|
|
|
|
Adjustments to arrive
at adjusted
net income before taxes(4)
|
|
|
(2,458)
|
|
|
|
|
|
|
|
|
|
|
|
105,864
|
|
|
|
2,613
|
|
|
|
|
|
|
|
18,936
|
|
|
|
3,838
|
|
|
|
|
|
Adjusted net income
before taxes
|
|
|
21,043
|
|
|
|
|
|
|
|
|
|
|
|
36,749
|
|
|
|
|
|
|
|
|
|
|
|
7,032
|
|
|
|
|
|
|
|
|
|
Adjusted income
taxes(5)
|
|
|
(5,345)
|
|
|
|
|
|
|
|
|
|
|
|
(9,408)
|
|
|
|
|
|
|
|
|
|
|
|
(1,802)
|
|
|
|
|
|
|
|
|
|
Adjusted net
income
|
|
$
|
15,698
|
|
|
|
68,800
|
|
|
$
|
0.23
|
|
|
$
|
27,341
|
|
|
|
56,044
|
|
|
$
|
0.49
|
|
|
$
|
5,230
|
|
|
|
56,356
|
|
|
$
|
0.09
|
|
|
(1) Reflects the
effect of the previously disclosed restatement due to the
outstanding warrants being accounted for as liabilities and
recorded at fair value.
|
|
(2) Represents net
income attributable to Purple Innovation, Inc. and the associated
weighted average diluted shares, of Class A common stock
outstanding.
|
|
(3) 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.
|
|
(4) 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.
|
|
(5) Represents the
estimated effective tax rate of 25.4%, 25.6% and 25.6% for the six
months ended June 30, 2021, 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.