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15.03.2018 21:06:00
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Purple Innovation Reports Fourth Quarter and Full Year 2017 Results
ALPINE, Utah, March 15, 2018 /PRNewswire/ -- Purple Innovation, Inc. (NASDAQ: PRPL) ("Purple" or the "Company"), a comfort technology company known for creating the "World's First No Pressure™ Mattress," today announced financial results for the fourth quarter and year ended December 31, 2017.
Fourth Quarter Financial Summary
- Net revenue increased 156.1% to $63.0 million, compared to $24.6 million in the fourth quarter of 2016.
- Gross margin increased to 45.2% as compared to 39.8% in the fourth quarter of 2016.
- Operating loss was $1.9 million as compared to an operating loss of $0.2 million in the fourth quarter of 2016. Adjusted operating loss was $0.9 million compared to adjusted operating income of $0.4 million in the fourth quarter of 2016.
- Net loss was $2.0 million compared to a loss of $0.2 million in the fourth quarter of 2016.
- EBITDA was $(1.7) million compared to $(0.2) million in the fourth quarter of 2016. Adjusted EBITDA was $(0.6) million compared to $0.5 million in the fourth quarter of 2016.
Full Year 2017 Financial Summary
- Net revenue increased 200.6% to $196.9 million from $65.5 million in 2016.
- Gross margin increased to 44.9% as compared to 32.8% in 2016.
- Operating loss was $5.4 million compared to an operating loss of $1.9 million in 2016. Adjusted operating loss was $3.5 million as compared to adjusted operating income of $2.5 million in 2016.
- Net loss was $(5.4) million compared to $(1.9) million in 2016.
- EBITDA was $(4.6) million compared to $(1.8) million in 2016. Adjusted EBITDA was $(2.7) million compared to $2.6 million in 2016.
"The past two years have been a period of significant growth for our brand and business following our entrance into the direct-to-consumer mattress category in early 2016," commented Terry Pearce, Co-Founder and Chairman. "With our differentiated and patent protected product offering, coupled with our expanded manufacturing capabilities and digital marketing prowess, the Company is well positioned to build on its recent momentum. We believe that we are just beginning to scratch the surface of Purple's full potential within the $20+ billion bedding industry and beyond as we leverage our comfort technology into new markets. Our mission is to bring comfort to individuals around the world, and we believe that we can achieve this goal while also driving sustained profitability and value for our shareholders over the long-term."
Fourth Quarter 2017 Review
Fourth quarter 2017 net revenue increased 156.1% to $63.0 million, compared to $24.6 million in the fourth quarter of 2016. The increase in net revenue was driven primarily by higher direct-to-consumer demand for our original Purple mattress fueled by increased marketing investments and an improved manufacturing capacity to fulfill orders.
Gross margin for the fourth quarter 2017 was 45.2% compared to 39.8% in the year ago period. The 540 basis point increase was driven by multiple efficiency gains associated with scale and manufacturing improvements combined with leveraging our fixed cost structure on higher revenue.
Operating expenses were $30.4 million in the fourth quarter 2017 compared to $10.0 million in the prior year period. The increase in operating expenses is primarily attributable to higher marketing investments to expand brand awareness and drive direct-to-consumer demand for the Company's product portfolio.
Operating loss was $1.9 million, compared to a loss of $0.2 million in the prior year. Adjusted operating loss was $0.9 million compared to an adjusted operating income of $0.4 million, which excluded one-time, non-recurring costs related to the business combination transaction with Global Partner Acquisition Corp. The adjusted operating income for fourth quarter 2016 excluded a loss on disposal of property and equipment.
Full Year 2017 Review
Full year 2017 net revenue increased 200.6% to $196.9 million, compared to $65.5 million in 2016. The increase in net revenue was driven primarily by higher direct-to-consumer demand for our original Purple mattress and companion bedding products fueled by increased marketing investments and an improved manufacturing capacity to fulfill orders.
Gross margin for the full year 2017 was 44.9% compared to 32.8% in the prior year. The increase was driven by multiple efficiency gains associated with scale and manufacturing improvements combined with leveraging our fixed cost structure on higher revenue.
Operating expenses were $93.8 million for the 2017 year compared to $23.3 million in the prior year. The increase in operating expenses is primarily attributable to higher marketing investments to expand brand awareness and drive consumer demand for the Company's product portfolio. In addition, general and administrative costs increased to support the growth of the business.
Operating loss was $5.4 million, compared to a loss of $1.9 million in 2016. Adjusted operating loss was $3.5 million compared to an adjusted operating income of $2.5 million. The 2017 year adjusted operating loss excluded one-time, non-recurring costs related to the business combination transaction with Global Partner Acquisition Corp. as well as non-recurring legal expenses. The adjusted operating income for 2016 excluded a loss on disposal of property and equipment.
Balance Sheet Highlights
As of December 31, 2017, the Company had cash and cash equivalents of $3.6 million compared to $4.0 million as of December 31, 2016. Inventories at the end of 2017 totaled $15.8 million compared with $5.3 million at the end of 2016.
Transaction
On February 2, 2018 Global Partner Acquisition Corp. a special purpose acquisition company and predecessor to the Company ("GPAC" or the "Company"), and Purple Innovation, LLC ("Purple") announced the completion of a business combination, pursuant to which Purple became a wholly owned subsidiary of the Company. Under the terms of the merger agreement entered into by the Company, Purple and the other parties named therein, GPAC changed its corporate name to Purple Innovation, Inc. The Company's common stock and warrants are now listed on NASDAQ under the symbols "PRPL" and "PRPLW".
2018 Outlook
For 2018, the Company expects net revenues to approximately double from 2017 levels and Adjusted EBITDA to be towards the lower end of the range established in the investor presentation filed on January 8, 2018.
For the first quarter of 2018, the Company expects net revenue to be between $53 million and $56 million and adjusted EBITDA to be in the range of $(3.5) million to $(2.0) million.
Webcast and Conference Call Information
Purple Innovation, Inc. will host a live conference call to discuss financial results today, March 15, 2018, at 4:30 p.m. Eastern Time. The dial-in number for the conference call is 800-239-9838 (domestic) or 323-794-2551 (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 is a comfort technology company that designs and manufactures products to improve how people sleep, sit, and stand. It designs and manufactures a range of comfort technology products, including mattresses, pillows, and cushions, using its patented Hyper-Elastic Polymer technology designed to improve comfort. The Company markets and sells its products through its direct-to-consumer online channel, traditional retail partners, and third party online retailers. For more information on Purple, visit www.purple.com.
Forward Looking Statements
Certain statements made in this release 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 about our expectations for our financial results for the first quarter of 2018 and the fiscal year ended December 31, 2018, as well as our ability to create sustained profitability and shareholder value. 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. 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.
Investor Contact:
Brendon Frey, ICR
brendon.frey@icrinc.com
203-682-8200
Media Contact:
Alecia Pulman/Kate Kohlbrenner, ICR
purplePR@icrinc.com
646-277-1200
Purple Innovation, Inc.
For information regarding Purple products, please contact:
Savannah Turk
Director of Purple Communications
savannah@purple.com
Purple Innovation, LLC | ||||||||
STATEMENTS OF OPERATIONS | ||||||||
(In thousands) | ||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||
2017 | 2016 | 2017 | 2016 | |||||
Revenues, net | $ 63,039 | $ 24,591 | $ 196,859 | $ 65,473 | ||||
Cost of revenues: | ||||||||
Cost of revenues | 34,560 | 14,284 | 108,464 | 39,857 | ||||
Related party royalty fees | — | 528 | — | 4,139 | ||||
Total cost of revenues | 34,560 | 14,812 | 108,464 | 43,996 | ||||
Gross profit | 28,479 | 9,779 | 88,395 | 21,477 | ||||
Operating expenses: | ||||||||
Marketing and sales | 25,169 | 7,923 | 79,139 | 17,901 | ||||
General and administrative | 4,766 | 1,798 | 13,229 | 4,643 | ||||
Research and development | 483 | 270 | 1,387 | 792 | ||||
Loss on disposal of property and equipment | — | 23 | 10 | 23 | ||||
Total operating expenses | 30,418 | 10,014 | 93,765 | 23,359 | ||||
Operating loss | (1,939) | (235) | (5,370) | (1,882) | ||||
Other income (expense): | ||||||||
Other income | 7 | 6 | 9 | 8 | ||||
Interest expense | (77) | (7) | (81) | (27) | ||||
Total other income (expense) | (70) | (1) | (72) | (19) | ||||
Net loss | $ (2,009) | $ (236) | $ (5,442) | $ (1,901) | ||||
Purple Innovation, LLC | ||||
BALANCE SHEETS | ||||
(In thousands) | ||||
December 31, | ||||
2017 | 2016 | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ 3,593 | $ 4,013 | ||
Accounts receivable, net | 4,182 | 2,328 | ||
Inventories, net | 15,799 | 5,335 | ||
Prepaid inventory | 2,219 | 675 | ||
Other current assets | 492 | 247 | ||
Total current assets | 26,285 | 12,598 | ||
Property and equipment, net | 13,464 | 6,104 | ||
Intangible assets, net | 1,267 | 130 | ||
Other long term assets | 22 | 10 | ||
Total assets | $ 41,038 | $ 18,842 | ||
Liabilities and Member's Deficit | ||||
Current liabilities: | ||||
Accounts payable | $ 21,131 | $ 6,893 | ||
Accrued sales returns | 4,825 | 2,054 | ||
Accrued interest - related party | — | 22 | ||
Compensation and benefits | 2,097 | 1,810 | ||
Customer prepayments | 3,213 | 4,154 | ||
Accrued sales tax | 8,466 | 2,291 | ||
Other accrued liabilities | 1,451 | 1,141 | ||
Current portion of long-term obligations | 29 | 51 | ||
Related party notes payable | — | 300 | ||
Total current liabilities | 41,212 | 18,716 | ||
Long-term obligations, net of current portion | 8,117 | 24 | ||
Other long term liabilities | 2,251 | 914 | ||
Total liabilities | 51,580 | 19,654 | ||
Member's deficit: | ||||
Common units | 2,260 | 2,260 | ||
Distributions | (4,574) | (286) | ||
Accumulated deficit | (8,228) | (2,786) | ||
Total member's deficit | (10,542) | (812) | ||
Total liabilities and member's deficit | $ 41,038 | $ 18,842 | ||
Purple Innovation, LLC | ||||
STATEMENTS OF CASH FLOWS | ||||
(In thousands) | ||||
Year Ended December 31, | ||||
2017 | 2016 | |||
Cash flows from operating activities: | ||||
Net loss | $ (5,442) | $ (1,901) | ||
Adjustments to reconcile net loss to net cash provided in operating activities: | ||||
Depreciation and amortization | 741 | 80 | ||
Loss on disposal of property and equipment | 10 | 23 | ||
Amortization of debt issuance costs | 6 | — | ||
Bad debt | 1 | 10 | ||
Changes in operating assets and liabilities: | ||||
Increase in accounts receivable | (1,855) | (1,674) | ||
Decrease (increase) in inventories | (10,464) | (4,953) | ||
Increase in prepaid inventory and other assets | (1,761) | (922) | ||
Increase (decrease) in accounts payable | 13,847 | 5,548 | ||
Increase in accrued sales returns | 2,771 | 2,054 | ||
Increase in accrued compensation and benefits | 287 | 1,491 | ||
Increase (decrease) in customer prepayments | (941) | 4,154 | ||
Increase in other accrued liabilities | 7,800 | 5,224 | ||
Net cash provided by operating activities | 5,000 | 9,134 | ||
Cash flows from investing activities: | ||||
Purchase of property and equipment | (7,579) | (4,689) | ||
Investment in intangible assets | (1,149) | (130) | ||
Net cash used in investing activities | (8,728) | (4,819) | ||
Cash flows from financing activities: | ||||
Proceeds from draw on line of credit | 8,000 | — | ||
Proceeds from related-party notes payable | — | 245 | ||
Payments on related-party notes payable | (300) | (540) | ||
Payments on long-term obligations | (58) | (1) | ||
Payments for debt issuance costs | (46) | — | ||
Member distributions | (4,288) | (77) | ||
Net cash provided by (used in) financing activities | 3,308 | (373) | ||
Net increase (decrease) in cash | (420) | 3,942 | ||
Cash, beginning of the period | 4,013 | 71 | ||
Cash, end of the period | $ 3,593 | $ 4,013 | ||
Purple Innovation, LLC | ||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES | ||||||||
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 and adjusted operating loss. 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 | ||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | ||||
GAAP net loss | $ (2,009) | $ (236) | $ (5,442) | $ (1,901) | ||||
Other income | (7) | (6) | (9) | (8) | ||||
Interest expense | 77 | 7 | 81 | 27 | ||||
Depreciation and amortization | 276 | 42 | 741 | 80 | ||||
EBITDA | (1,663) | (193) | (4,629) | (1,802) | ||||
Adjustments: | ||||||||
Loss on disposal of property and equipment | — | 23 | 10 | 23 | ||||
Legal fees | 269 | 98 | 842 | 219 | ||||
Business combination costs | 785 | — | 1,043 | — | ||||
Related party royalty fees | — | 528 | — | 4,139 | ||||
Adjusted EBITDA | $ (609) | $ 456 | $ (2,734) | $ 2,579 | ||||
Reconciliation of GAAP Operating Loss to Non-GAAP Adjusted Operating (Loss) Income | ||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 | ||||
GAAP operating loss | (1,939) | (235) | (5,370) | (1,882) | ||||
Adjustments: | ||||||||
Loss on disposal of property and equipment | — | 23 | 10 | 23 | ||||
Legal fees | 269 | 98 | 842 | 219 | ||||
Business combination costs | 785 | — | 1,043 | — | ||||
Related party royalty fees | — | 528 | — | 4,139 | ||||
Adjusted operating (loss) income | $ (885) | $ 414 | $ (3,475) | $ 2,499 | ||||
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SOURCE Purple Innovation, Inc.
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