Purple Innovation Reports Record Third Quarter 2020 Results

Rhea-AI Summary

Purple Innovation, Inc. (NASDAQ: PRPL) reported third-quarter 2020 results, showcasing a robust 59.4% revenue growth to $187.1 million. The direct-to-consumer segment surged 97.5%, while gross margin improved to 47.2%. Operating income rose 120.9% to $24.3 million, despite a net loss of ($1.2) million. Adjusted net income was $17.2 million or $0.27 per diluted share. The company anticipates continued growth with a focus on expanding manufacturing capabilities and marketing investments, yet it faces challenges in supply chain management.

Positive

• Net revenue increased 59.4% to $187.1 million.
• Direct-to-consumer revenue rose by 97.5%.
• Gross margin improved by 220 basis points to 47.2%.
• Operating income surged 120.9% to $24.3 million.
• Adjusted net income reached $17.2 million, or $0.27 per diluted share.
• Cash and cash equivalents increased by 192.5% to $98.0 million.
• New $100 million credit facility secured, enhancing financial flexibility.

Negative

• Net loss of ($1.2) million compared to a net income of $8.4 million in Q3 2019.
• EBITDA decreased to $2.5 million from $10.5 million year-over-year.
• Supply chain challenges impacting ability to meet demand.

LEHI, Utah, Nov. 10, 2020 /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 third quarter ended September 30, 2020.

Third Quarter Financial Summary (Comparisons versus Third Quarter 2019)¹

• Net revenue increased 59.4% to $187.1 million, compared to $117.4 million.
• Direct-to-Consumer (DTC) revenue increased 97.5%; Wholesale revenue increased 6.9%
• Gross margin improved 220 basis points to 47.2% compared to 45.0%.
• Operating expenses as a percent of net revenue were 34.2% compared to 35.7%.
• Operating income increased 120.9% to $24.3 million compared to $11.0 million.
• Net loss was ($1.2) million compared to net income of $8.4 million. Adjusted net income was $17.2 million, or $0.27 per diluted share compared to $7.3 million, or $0.14 per diluted share.
• EBITDA was $2.5 million compared to $10.5 million. Adjusted EBITDA was $30.1 million compared to $15.3 million.

"Demand for the Purple brand was at an all-time high during the third quarter and our organization did a terrific job capitalizing upon opportunities, translating record revenue to strong cash flow," said Joe Megibow, Chief Executive Officer. "The investments we made earlier this year to expand our manufacturing capacity helped support strong year-over-year growth in our direct-to-consumer mattress business, as well as a resurgence in our wholesale channel as our retail partners experienced improved store traffic. We also continued to see strong gains in seat cushions, pillows and sheets, underscoring the progress we've made increasing awareness and driving demand for our premium, non-mattress categories. The combination of outstanding top-line performance, improved operating margins, and marketing efficiencies, resulted in an increase in operating profit of more than 120% over the third quarter of 2019 and continued strong cash generation."

Megibow continued, "We believe that we are on track for an exceptional year of growth and enhanced profitability. As we head into the final months of 2020, our focus is on successfully fulfilling demand during the holiday season and preparing to kick off the new year from a position of strength to profitably accelerate market share growth. This includes continuing the rapid build-out of our new 520,000 square foot facility in Georgia that will significantly expand our domestic manufacturing capacity, as well as expanding our brand showrooms in additional major markets.  We are also increasing marketing investment in the fourth quarter with incremental spending on website development and new creative set to debut in 2021 aimed at attracting new consumers and further advancing the premium positioning of the Purple brand. Our work over the past year has significantly strengthened our foundation and we believe has put the Company on a clear path to maintain successful growth in the coming years."

______________________________
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.

Third Quarter 2020 Review

Third quarter 2020 net revenue increased 59.4% to $187.1 million, compared to $117.4 million in the third quarter of 2019. The increase in net revenue was driven primarily by strong growth in mattress sales in the DTC channel along with higher demand for pillows, sheets and seat cushions.

Gross margin for the third quarter 2020 improved to 47.2% compared to 45.0% in the year ago period. The 220 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. DTC revenues comprised approximately 72% of net revenue for the quarter, compared with approximately 58% in the same quarter last year.

Operating expenses were 34.2% of net revenue for the third quarter of 2020 compared to 35.7% in the year ago period.  The improvement in operating expenses as a percent of net revenue was driven by 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 retail showrooms.  For the third quarter 2020, marketing and sales expense as a percent of net revenue decreased to 27.4% compared with 29.0% last year due to creative efforts to improve efficiency in marketing spend as well as lower advertising costs.

Operating income increased 120.9% to $24.3 million for the third quarter 2020 compared to an operating income of $11.0 million in the prior year period.

Net loss was ($1.2) million for the third quarter 2020 compared to a net income of $8.4 million in the year ago period. Adjusted net income, which excludes adjustments for certain non-cash items, including expenses associated with the change in fair value of warrant liabilities and the Tax Receivable Agreement, the loss on extinguishment of debt and previous period sales tax liability, was $17.2 million, or $0.27 per diluted share, compared to $7.3 million, or $0.14 per diluted share in the prior year period. The main items in the third quarter 2020 included an $18.0 million non-cash expense associated with the change in fair value of warrant liabilities, a $5.8 million loss on the extinguishment of debt related to the retirement of the Company's previous debt agreement, a $0.6 million non-cash expense associated with the Tax Receivable Agreement (see complete reconciliation in the table below).  The third quarter 2019 included a $1.4 million non-cash expense associated with the change in fair value of warrant liabilities. Adjusted net income has been adjusted to reflect an estimated effective income tax rate of 25.2% for the current year period and 25.6% for the comparable prior year period and excludes certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance (see "Non-GAAP Financial Measures").

EBITDA for the third quarter 2020 was $2.5 million compared to $10.5 million in the third quarter 2019. Adjusted EBITDA, which excludes non-cash expenses associated with the change in fair value of warrant liabilities, the Tax Receivable Agreement and non-cash stock based compensation, along with the loss on extinguishment of debt, legal fees, interim CFO & consulting costs, severance, vendor impairment, previous period sales tax liability and COVID-19 related expenses, was $30.1 million. This compares to Adjusted EBITDA of $15.3 million in the prior year period.

Balance Sheet

As of September 30, 2020, the Company had cash and cash equivalents of $98.0 million compared to $33.5 million as of December 31, 2019, an increase of 192.5%. The Company expects to invest a portion of these resources to expand our manufacturing capacity and fulfillment capabilities, to expand our IP portfolio, selectively grow our company-owned showrooms, and to fund working capital related to wholesale expansion and restocking.

Inventories as of September 30, 2020 totaled $50.8 million compared with $47.6 million as of December 31, 2019.

During the third quarter of 2020, the Company executed a new five-year $100 million senior secured credit facility with a group of financial institutions led by KeyBanc Capital Markets. The new credit facility consists of a $45 million term loan and a $55 million revolving line of credit. Proceeds from the term loan, which was fully drawn at closing, were used to retire all indebtedness related to the Company's existing credit agreement. No amounts have been drawn on the revolving line of credit.

The borrowing rates are based on the Company's leverage ratio, as defined in the Credit Agreement, and can range from LIBOR plus 3.00 percent to 3.75 percent with a LIBOR floor of 0.50 percent. The initial borrowing rate is LIBOR plus 3.00 percent, which is 850 basis points lower than the Company's previous borrowing rate.

Share Count

For the period October 1 through October 26, 2020, approximately 8.0 million public warrants were exchanged for 4.0 million Class A shares resulting in cash proceeds to the Company of approximately $45.6 million. On October 27, 2020, the Company announced the redemption of previously issued public and incremental loan warrants, to take place on November 30, 2020.  For the period October 27 through November 9, 2020, approximately 1.7 million public and all 2.6 million incremental loan warrants have been exercised and, as a result, there were 60.9 million Class A shares outstanding on November 9, 2020. The approximately 9.3 million public warrants that remain may be cashless exercised at any time prior to November 30, 2020. Any public warrants remaining outstanding at that date will be redeemed. As of November 9, 2020, approximately 8.5 million sponsor warrants remain outstanding. Sponsor warrants are not redeemable, and do not need to be exercised on a cashless basis prior to November 30, 2020, if they are held by the sponsor or a permitted transferee.

Outlook

For the year ending December 31, 2020, the Company previously withdrew guidance as a result of uncertainty due to the COVID-19 pandemic. Due to the continued uncertainty in the overall economy, the Company is not providing formal Q4 guidance at this time. While Q4 is historically a more promotional quarter, with increased marketing expense, the Company does expect year-over-year quarterly growth rates similar to Q3 in revenue and adjusted EBITDA balanced with a modest channel shift toward wholesale and the planned Q4 investments in people, capacity, showrooms and infrastructure. It is also important to note that the Company, like the rest of the mattress industry, continues to manage supply chain challenges from supply of foam and coils, which could limit its ability to manufacture and fulfill a portion of demand in the fourth quarter.  

Webcast and Conference Call Information

Purple Innovation, Inc. will host a live conference call to discuss financial results November 11, 2020 at 8:30 a.m. Eastern Time.  To access the call dial (877) 425-9470 (domestic) or (201) 389-0878 (international) at 8:25 a.m. ET and provide the Conference ID: 13712736. 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 use of cash resources, the possible inability to meet demand due to constraints on the supply of foam and coils, expected future growth of our business, anticipated levels of demand for our products, expected performance of our business in the fourth quarter with respect to demand for our products, marketing expense, and supply chain issues, and the redemption of outstanding warrants. 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 the risk factors outlined in the "Risk Factors" section of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2020 and our Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2020, August 13, 2020, and November 10, 2020. 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.

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

 

PURPLE INNOVATION, INC. Condensed Consolidated Balance Sheets (In thousands, except par value) (Unaudited)
		September 30,				December 31,
		2020				2019
Assets
Current assets:
Cash and cash equivalents		$	97,955			$	33,478
Accounts receivable, net			21,894				28,692
Inventories, net			50,775				47,628
Prepaid inventory			1,888				879
Other current assets			8,443				3,442
Total current assets			180,955				114,119
Property and equipment, net			44,983				31,979
Intangible assets, net			9,620				1,101
Deferred income taxes			205,486				—
Other long-term assets			1,586				525
Total assets		$	442,630			$	147,724
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable		$	61,961			$	50,240
Accrued sales returns			10,285				7,271
Accrued compensation			12,515				7,954
Customer prepayments			6,207				6,258
Accrued sales tax			7,327				5,602
Accrued rebates and allowances			7,232				5,311
Other current liabilities			7,995				4,229
Total current liabilities			113,522				86,865
Long-term debt, related-party			—				35,399
Long-term debt, net of current portion			41,911				—
Warrant liabilities			64,930				21,622
Tax receivable agreement liability, net of current portion			168,328				—
Other long-term liabilities, net of current portion			12,375				8,570
Total liabilities			401,066				152,456
Commitments and contingencies (Note 11)
Stockholders' equity (deficit):
Class A common stock; $0.0001 par value, 210,000 shares authorized; 53,787 issued    and outstanding at September 30, 2020 and 22,494 issued and outstanding at    December 31, 2019			5				2
Class B common stock; $0.0001 par value, 90,000 shares authorized; 605 issued and    outstanding at September 30, 2020 and 31,394 issued and outstanding at December    31, 2019			—				3
Additional paid-in capital			44,032				5,990
Accumulated deficit			(2,517)				(8,349)
Total stockholders' equity (deficit)			41,520				(2,354)
Noncontrolling interest			44				(2,378)
Total equity (deficit)			41,564				(4,732)
Total liabilities and stockholders' equity (deficit)		$	442,630			$	147,724

 

 

PURPLE INNOVATION, INC. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019
Revenues, net		$	187,111			$	117,406			$	474,582			$	304,058
Cost of revenues			98,857				64,523				251,515				174,323
Gross profit			88,254				52,883				223,067				129,735
Operating expenses:
Marketing and sales			51,206				34,055				127,313				94,039
General and administrative			11,087				6,745				27,312				19,243
Research and development			1,687				1,070				4,712				3,004
Total operating expenses			63,980				41,870				159,337				116,286
Operating income			24,274				11,013				63,730				13,449
Other income (expense):
Interest expense			(1,232)				(1,356)				(4,045)				(3,801)
Other income, net			3				138				109				373
Loss on extinguishment of debt			(5,782)				—				(5,782)				(6,299)
Change in fair value – warrant liabilities			(17,971)				(1,384)				(43,308)				(3,372)
Tax receivable agreement expense			(567)				—				(33,512)				—
Total other expense, net			(25,549)				(2,602)				(86,538)				(13,099)
Net income (loss) before income taxes			(1,275)				8,411				(22,808)				350
Benefit from income taxes			106				—				35,818				—
Net income (loss)			(1,169)				8,411				13,010				350
Net income (loss) attributable to noncontrolling interest			(147)				6,817				7,178				224
Net income (loss) attributable to Purple Innovation, Inc.		$	(1,022)			$	1,594			$	5,832			$	126
Net income (loss) per share:
Basic		$	(0.02)			$	0.18			$	0.18			$	0.01
Diluted		$	(0.02)			$	0.16			$	0.16			$	0.01
Weighted average common shares outstanding:
Basic			44,266				8,828				32,117				8,576
Diluted			44,266				52,793				36,628				52,454

 

 

PURPLE INNOVATION, INC.  Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019
Cash flows from operating activities:
Net income (loss)		$	(1,169)			$	8,411			$	13,010			$	350
Adjustments to reconcile net income (loss) to net cash    provided in operating activities:
Depreciation and amortization			2,550				918				6,366				2,492
Non-cash interest			182				874				2,973				2,439
Paid-in-kind interest			(6,616)				—				(6,616)				—
Loss on extinguishment of debt			5,782				—				5,782				6,299
Loss on change in fair value - warrant liabilities			17,971				1,384				43,308				3,372
Tax receivable agreement expense			567				—				33,512				—
Stock-based compensation			347				2,934				1,559				9,740
Deferred income taxes			8,189				—				(35,818)				—
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable			(2,865)				(1,842)				6,798				(16,446)
Increase in inventories			(10,954)				(9,761)				(3,147)				(11,878)
Increase in prepaid inventory and other assets			(2,691)				(1,704)				(5,740)				(2,935)
Increase in accounts payable			8,775				6,492				9,678				11,102
Increase (decrease) in accrued sales returns			(1,664)				(707)				3,014				(163)
Increase in accrued compensation			2,187				761				4,561				2,830
Increase (decrease) in customer prepayments			(2,131)				2,618				(51)				170
Decrease in income tax payable			(8,791)				—				(567)				—
Increase in other accrued liabilities			5,441				3,317				8,840				8,472
Net cash provided by operating activities			15,110				13,695				87,462				15,844
Cash flows from investing activities:
Purchase of property and equipment			(6,184)				(2,521)				(14,194)				(5,657)
Investment in intangible assets			(8,455)				(125)				(10,890)				(246)
Net cash used in investing activities			(14,639)				(2,646)				(25,084)				(5,903)
Cash flows from financing activities:
Proceeds from related-party debt			—				—				—				10,000
Proceeds from long-term debt			45,000				—				45,000				—
Proceeds from exercise of options and warrants			2,101				—				2,124				—
Repurchase of stock options			—				—				—				(97)
Payments on related-party debt			(37,497)				—				(37,497)				—
Payments for debt issuance costs			(2,460)				—				(2,460)				(758)
Distribution to members			(5,006)				—				(5,006)				—
Principal payments on capital lease obligations			(56)				(11)				(62)				(25)
Net cash provided by (used in) financing activities			2,082				(11)				2,099				9,120
Net increase in cash			2,553				11,038				64,477				19,061
Cash, beginning of the period			95,402				20,255				33,478				12,232
Cash, end of the period		$	97,955			$	31,293			$	97,955			$	31,293
Supplemental disclosures of cash flow information:
Cash paid during the period for interest		$	932			$	452			$	954			$	1,364
Cash paid during the period for income taxes		$	2,350			$	—			$	2,422			$	—
Supplemental schedule of non-cash investing and financing activities:
Property and equipment included in accounts payable		$	1,761			$	(283)			$	2,786			$	155
Equipment acquired through capital lease		$	147			$	386			$	147			$	386
Non-cash leasehold improvements		$	—			$	—			$	615			$	—
Tax Receivable Agreement liability		$	89,677			$	—			$	134,943			$	—
Deferred income taxes		$	112,670			$	—			$	169,306			$	—

 

 

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) income before interest expense, other (income) expense, net, and depreciation and amortization. Adjusted EBITDA represents EBITDA excluding costs incurred due to stock-based compensation expense, debt extinguishment, warrant liability, nonrecurring legal fees, interim CFO and consulting fees and severance costs. 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  September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019
GAAP net income (loss)		$	(1,169)				8,411				13,010				350
Interest expense			1,232				1,356				4,045				3,801
Income tax benefit			(106)				—				(35,818)				—
Other income, net			(3)				(138)				(109)				(373)
Depreciation and amortization			2,550				918				6,366				2,492
EBITDA			2,504				10,547				(12,506)				6,270
Adjustments:
Debt extinguishment and warrant liability			23,753				1,384				49,090				9,671
Stock-based compensation expense			347				2,935				1,559				9,740
Product reserve			—				—				500				—
Tax Receivable Agreement expense			567				—				33,512				—
Legal fees			448				16				1,056				419
Interim CFO and consulting			—				183				—				676
Severance costs			28				40				133				700
Vendor impairment			1,660				—				1,660				—
Previous period sales tax liability			689				200				689				200
COVID-19 related expenses			90				—				207				—
Adjusted EBITDA		$	30,086			$	15,305			$	75,900			$	27,676

 

 

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 September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019
Net income (loss)		$	(1,169)			$	8,411			$	13,010			$	350
Income tax benefit, as reported			(106)				—				(35,818)				—
Loss on extinguishment of debt			5,782				—				5,782				6,299
Tax receivable agreement expense			567				—				33,512				—
Change in fair value – warrant liabilities			17,971				1,384				43,308				3,372
Adjusted net income before income taxes			23,045				9,795				59,794				10,021
Adjusted income taxes(1)			(5,807)				(2,509)				(15,068)				(2,567)
Adjusted net income		$	17,238			$	7,286			$	44,726			$	7,454
Adjusted net income per share, diluted		$	0.27			$	0.14			$	0.74			$	0.14
Adjusted weighted-average shares outstanding, diluted(2)			64,433				53,728				60,790				52,979
(1) Represents the estimated effective tax rate of 25.2% and 25.6%  for the three months ended September 30, 2020 and 2019, respectively, and 25.2% and 25.6% for the nine months ended September 30, 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 based on the adjusted net income before taxes, 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 and nine months ended September 30, 2020 and 2019:
		For the Three Months Ended
		September 30, 2020												September 30, 2019
		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.(1)		$	(1,022)				44,266			$	(0.02)			$	1,594				52,793			$	0.16
Assumed exchange of shares(2)			(147)				9,765								6,817				369
Net income (loss)			(1,169)												8,411
Adjustments to arrive at adjusted    income before taxes(3)			24,214				10,402								1,384				566
Adjusted income before taxes			23,045												9,795
Adjusted income taxes(4)			(5,807)												(2,509)
Adjusted net income		$	17,238				64,433			$	0.27			$	7,286				53,728			$	0.14
		For the Nine Months Ended
		September 30, 2020												September 30, 2019
		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)		$	5,832				36,628			$	0.16			$	126				52,454			$	0.01
Assumed exchange of shares(2)			7,178				21,549								224				284
Net income (loss)			13,010												350
Adjustments to arrive at adjusted    income before taxes(3)			46,784				2,613								9,671				241
Adjusted income before taxes			59,794												10,021
Adjusted income taxes(4)			(15,068)												(2,567)
Adjusted net income		$	44,726				60,790			$	0.74			$	7,454				52,979			$	0.14
(1) Represents net income attributable to Purple Innovation, Inc. and the associated weighted average diluted shares, of Class A common stock outstanding.
(2) Assumes the full exchange of all outstanding Paired Securities for shares of Class A common stock as of the beginning of the period. Also assumes the addition of net income attributable to noncontrolling interests corresponding with the assumed exchange of the Paired Securities for shares of Class A common stock.
(3) Represents the total impact of all adjustments identified in the adjusted net income table above to arrive at adjusted income before income taxes. Also assumes the dilutive warrants, options and restricted stock as calculated in accordance with GAAP.
(4) Represents the estimated effective tax rate of 25.2% and 25.6%  for the three months ended September 30, 2020 and 2019, respectively, and 25.2% and 25.6% for the nine months ended September 30, 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 based on the adjusted net income before taxes, 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.

FAQ

What were the third quarter 2020 revenue results for Purple Innovation (PRPL)?

Purple Innovation reported a net revenue of $187.1 million for Q3 2020, a 59.4% increase from $117.4 million in Q3 2019.

How did operating income change for PRPL in the third quarter of 2020?

Operating income for Purple Innovation increased by 120.9% to $24.3 million in Q3 2020.

What was the net income for Purple Innovation in Q3 2020?

Purple Innovation experienced a net loss of $1.2 million in the third quarter of 2020.

What challenges is Purple Innovation facing regarding supply chain in Q4 2020?

The company is managing supply chain challenges related to the availability of foam and coils that may affect its manufacturing and fulfillment capacity.

What is the outlook for Purple Innovation for the remainder of 2020?

Purple Innovation does not provide formal Q4 guidance but expects year-over-year growth to continue, with a focus on fulfilling demand during the holiday season.