SDSTW Stardust Power Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 4, 2024

 

Purple Innovation, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware		001-37523		47-4078206
(State of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

4100 North Chapel Ridge Rd., Suite 200
Lehi, Utah		84043
(Address of Principal Executive Offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (801) 756-2600

  

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencements communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share		PRPL		The NASDAQ Stock Market LLC
Preferred Stock Purchase Rights		N/A		The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b–2 of the Securities Exchange Act of 1934 (§240.12b–2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

On November 4, 2024, Purple Innovation, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2024. A copy of this press release is furnished as Exhibit 99.1 to this report and incorporated by reference herein.

 

The information furnished pursuant to this Item 2.02, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

The press release furnished herewith in Exhibit 99.1 contains non-GAAP financial measures. Management believes non-GAAP financial measures assist management and investors in evaluating and comparing period-to-period results and projections in a more meaningful and consistent manner. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the press release.

 

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

 

(d) Exhibits. 

  

Exhibit Number		Description
99.1		Press Release dated November 4, 2024, regarding financial results for the third quarter ended September 30, 2024.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: November 4, 2024	PURPLE INNOVATION, INC.
	By:	/s/ Todd Vogensen
		Todd Vogensen
		Chief Financial Officer

 

 

2

Exhibit 99.1

 

 

Purple Innovation Reports Third Quarter 2024 Results

 

Restructuring Initiatives are On Track and Delivering Significant Margin Improvement

GAAP Gross Margin of 29.7%; Adjusted Gross Margin Improved 340bps versus Last Year to 40.5%

Adjusted EBITDA Loss Narrowed Notably to $(6.4) Million versus $(16.3) Million Last Year

 

Lehi, Utah, November 4, 2024 – 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, 2024.

 

“While our third quarter revenue was challenged, we are encouraged by both our year-to-date performance modestly exceeding the broader industry and the sustained improvements in our profitability,” said CEO Rob DeMartini.

 

“The restructuring plan we announced earlier this quarter is on track to deliver meaningful cost savings in the new year as we improve our operational efficiencies and positions us to capitalize on tailwinds when the market improves. Looking forward, we remain confident in our Path to Premium Sleep strategy’s ability to deliver long-term value and we look forward to building on this momentum into 2025.”

 

Third Quarter 2024 Financial Results

 

Third quarter 2024 net revenue declined by 15.3% to $118.6 million, compared to $140.0 million in the third quarter of 2023. This decrease was primarily driven by industry-wide demand softness for home-related products, a reduction in advertising spend towards more profitable marketing, and the lapping of our successful launch of new premium mattresses in 2023. By channel, DTC net revenues decreased 11.7%, and wholesale net revenues decreased 20.1%. Within DTC, e-commerce net revenues decreased 15.7%, while showroom net revenues were approximately flat. In addition to the factors above, the decline in wholesale net revenues reflected the exit of certain customers.

 

Gross margin for the third quarter of 2024 decreased to 29.7% down 410 basis points compared to 33.8% in the prior year, negatively impacted by the $12.9 million of restructuring related charges offset in part by improved production efficiencies. The increase in production efficiencies was primarily due to supply chain initiatives and manufacturing efficiencies. We expect the restructuring plan will further streamline our operations and provide increased gross profits. Despite deleveraging from lower sales, adjusted gross margin, which excludes restructuring related charges during the quarter and launch costs in the prior year period, grew to 40.5%, an increase of 340 basis points compared to adjusted gross margin last year.

 

Operating expenses for the third quarter were $82.0 million, up 2.6% from $79.9 million in Q3 2023. This increase was driven by $19.8 million in restructuring related charges as part of the consolidation of our manufacturing operations to achieve significant operational efficiencies. Excluding all restructuring related charges this year and loss on impairment of goodwill last year, adjusted operating expenses were down by $10.9 million, primarily due to a $9.1 million reduction in advertising spend.

 

Net loss attributable to Purple Innovation, Inc. for the third quarter of 2024 was $(39.2) million or $(0.36) per diluted share, compared to a net loss of $(36.0) million or $(0.34) per diluted share in the third quarter 2023. Adjusted net loss, excluding restructuring related charges and certain non-cash and one-time items, was $(8.4) million or $(0.08) per diluted share, an improvement from $(19.4) million or $(0.18) per diluted share in the prior year.

 

EBITDA for the third quarter 2024 was $(27.4) million compared to $(29.7) million in the third quarter 2023. Adjusted EBITDA was $(6.4) million, an improvement from $(16.3) million in the prior year.

 

 

 

Restructuring, Impairment and Other Related Charges

 

In August 2024, we initiated a restructuring plan to strategically realign our operational focus to achieve significant operational efficiencies. This plan includes the closure of our two Utah manufacturing facilities to consolidate mattress production to our Georgia plant, as well as a headcount reduction at our Utah headquarters. As a result, we have a $32.7 million total restructuring, impairment and other related charges in the third quarter 2024. We expect to record additional restructuring and other related charges in the amount of $9.9 million through the second quarter of 2025. The supply chain consolidation and corporate restructure is expected to yield annual EBITDA savings of $15 to $20 million starting in 2025, and we plan to have positive cash flow and adjusted EBITDA next year.

 

Balance Sheet

 

Cash and cash equivalents were $23.4 million as of September 30, 2024, compared to $26.9 million as of December 31, 2023.

 

Inventories as of September 30, 2024 totaled $59.9 million, representing a decrease of 10.5%, or $7.0 million compared with December 31, 2023.

 

2024 Outlook

 

For the full year 2024, we expect to be at the lower end of our guidance range for net revenue of $490 million to $510 million, and also at the lower end of our guidance range for Adjusted EBITDA outlook of $(20) million to $(10) million. The company continues to prioritize and benefit from operational improvements and expects positive Adjusted EBITDA in the fourth quarter.

 

Conference Call and Webcast Information

 

Purple Innovation, Inc. will host a live conference call to discuss financial results today, November 4, 2024 at 4:30 p.m. Eastern Time. To access the call dial 844-481-1976 (domestic) or 412-317-0642 (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, the leading premium mattress company with the #1 Gel Grid technology in the world, the GelFlex^® Grid, thoughtfully engineers products that make restorative sleep effortless for every kind of sleeper. The result of over 30 years of innovation and in comfort technologies, Purple’s GelFlex Grid is the most significant advancement in mattresses in decades and is proven to reduce aches and pains. It instantly adapts as you move, balances temperature, relieves pressure and offers support in all the right places. Purple products, including mattresses, pillows, cushions, frames, sheets, and more, can be found online at Purple.com, in 59 Purple stores and over 3,000 retailers nationwide. Sleep Better. Live Purple.

 

 

 

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. 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: changes in economic, financial and end-market conditions in the markets in which we operate; fluctuations in raw material prices and cost of labor; the financial condition of our customers and suppliers; competitive pressures, including the need for technology improvement, successful new product development and introduction; changes in consumer demand, including pullbacks in consumer spending; disruptions to our manufacturing processes; 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 on March 12, 2024, and in our other filings made with the SEC. 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 third quarter and full year 2024, 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:

 

Stacy Turnof, Edelman Smithfield
stacy.turnof@edelmansmithfield.com
917-362-2581

 

 

 

PURPLE INNOVATION, INC.

Condensed Consolidated Balance Sheets

(unaudited – in thousands, except for par value)

 

		September 30, 2024				December 31, 2023
Assets
Current assets:
Cash and cash equivalents		$	23,399			$	26,857
Accounts receivable, net			29,662				37,802
Inventories			59,881				66,878
Prepaid expenses			9,241				8,536
Other current assets			1,005				1,737
Total current assets			123,188				141,810
Property and equipment, net			100,155				128,661
Operating lease right-of-use assets			74,254				95,767
Intangible assets, net			9,226				22,196
Other long-term assets			2,450				2,191
Total assets		$	309,273			$	390,625
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	30,393			$	49,831
Accrued compensation			15,109				5,064
Customer prepayments			3,778				5,718
Accrued rebates and allowances			10,040				13,243
Accrued warranty liabilities – current portion			7,634				9,793
Operating lease obligations – current portion			16,157				14,843
Other current liabilities			11,353				12,490
Total current liabilities			94,464				110,982
Related party debt			50,813				—
Long-term debt, net of current portion			—				26,909
Accrued warranty liabilities, net of current portion			27,336				25,798
Operating lease obligations, net of current portion			85,621				109,094
Warrant liabilities			19,682				—
Other long-term liabilities			3,344				2,235
Total liabilities			281,260				275,018
Commitments and contingencies (Note 14)
Stockholders’ equity:
Class A common stock; $0.0001 par value, 210,000 shares authorized; 107,516 issued and outstanding at September 30, 2024 and 105,507 issued and outstanding at December 31, 2023			11				11
Class B common stock; $0.0001 par value, 90,000 shares authorized; 192 issued and outstanding at September 30, 2024 and at December 31, 2023			—				—
Additional paid-in capital			593,343				591,380
Accumulated deficit			(565,387	)			(475,969	)
Total stockholders’ equity attributable to Purple Innovation, Inc.			27,967				115,422
Noncontrolling interest			46				185
Total stockholders’ equity			28,013				115,607
Total liabilities and stockholders’ equity		$	309,273			$	390,625

 

 

 

PURPLE INNOVATION, INC.

Condensed Consolidated Statements of Operations

(unaudited – in thousands, except per share amounts)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Revenues, net		$	118,598			$	139,996			$	358,902			$	364,605
Cost of revenues:
Cost of revenues			70,546				92,687				220,190				241,244
Cost of revenues – restructuring related charges			12,859				—				12,859				—
Total cost of revenues			83,405				92,687				233,049				241,244
Gross profit			35,193				47,309				125,853				123,361
Operating expenses:
Marketing and sales			42,939				52,816				125,778				137,368
General and administrative			17,266				17,524				55,111				67,628
Research and development			2,920				2,704				10,572				9,001
Restructuring, impairment and other related charges			18,881				—				18,881				—
Loss on impairment of goodwill			—				6,879				—				6,879
Total operating expenses			82,006				79,923				210,342				220,876
Operating loss			(46,813	)			(32,614	)			(84,489	)			(97,515	)
Other income (expense):
Interest expense			(4,394	)			(594	)			(13,029	)			(1,148	)
Other income, net			7,165				205				11,612				315
Change in fair value – warrant liabilities			4,795				—				(111	)			—
Loss on extinguishment of debt			—				(3,114	)			(3,394	)			(4,331	)
Total other income (expense), net			7,566				(3,503	)			(4,922	)			(5,164	)
Net loss before income taxes			(39,247	)			(36,117	)			(89,411	)			(102,679	)
Income tax expense			(63	)			(18	)			(176	)			(162	)
Net loss			(39,310	)			(36,135	)			(89,587	)			(102,841	)
Net loss attributable to noncontrolling interest			(82	)			(131	)			(169	)			(417	)
Net loss attributable to Purple Innovation, Inc.		$	(39,228	)		$	(36,004	)		$	(89,418	)		$	(102,424	)
Net loss per share:
Basic		$	(0.36	)		$	(0.34	)		$	(0.84	)		$	(0.99	)
Diluted		$	(0.36	)		$	(0.34	)		$	(0.84	)		$	(0.99	)
Weighted average common shares outstanding:
Basic			107,508				105,326				107,008				102,962
Diluted			107,508				105,326				107,008				102,962

 

 

 

PURPLE INNOVATION, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited — in thousands)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Cash flows from operating activities:
Net loss		$	(39,310	)		$	(36,135	)		$	(89,587	)		$	(102,841	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			14,627				6,073				27,448				18,963
Non-cash interest			1,931				234				5,303				920
Paid-in-kind interest			2,653				—				7,028				—
Non-cash restructuring, impairment and other related charges			20,115				—				20,115				—
Loss on impairment of goodwill			—				6,879				—				6,879
Change in fair value – warrant liabilities			(4,795	)			—				111				—
Loss on extinguishment of debt			—				3,114				3,394				4,331
Stock-based compensation			791				939				2,108				3,792
Loss on disposal of property and equipment			658				—				770				—
Changes in operating assets and liabilities:
Accounts receivable			2,421				(10,002	)			8,140				1,465
Inventories			5,750				5,757				2,971				696
Prepaid expenses and other assets			(4,287	)			(4,156	)			378				(1,204	)
Operating leases, net			(765	)			147				(2,105	)			1,462
Accounts payable			(7,036	)			(2,760	)			(16,558	)			544
Accrued compensation			5,923				1,908				10,045				(801	)
Customer prepayments			(954	)			(302	)			(1,940	)			723
Accrued rebates and allowances			1,405				2,748				(3,203	)			(1,229	)
Accrued warranty liabilities			(462	)			2,360				(621	)			7,422
Other accrued liabilities			2,454				5,441				1,592				3,070
Net cash provided by (used in) operating activities			1,119				(17,755	)			(24,611	)			(55,808	)
Cash flows from investing activities:
Excess restricted cash returned to acquiree			—				(826	)			—				(826	)
Purchase of property and equipment			(1,018	)			(3,326	)			(6,160	)			(8,769	)
Investment in intangible assets			(110	)			(208	)			(221	)			(588	)
Net cash used in investing activities			(1,128	)			(4,360	)			(6,381	)			(10,183	)
Cash flows from financing activities:
Payments on term loan			—				—				(25,000	)			(24,656	)
Payments on revolving line of credit			—				—				(5,000	)			—
Proceeds from related party loan			—				—				61,000				—
Proceeds from term loan			—				25,000				—				25,000
Payments for debt issuance costs			—				(3,228	)			(3,466	)			(6,126	)
Proceeds from stock offering			—				—				—				60,300
Payments for public offering costs			—				—				—				(3,301	)
Proportional Representation Preferred Linked Stock redemption fee			—				—				—				(105	)
Tax receivable agreement payments			—				—				—				(269	)
Net cash provided by financing activities			—				21,772				27,534				50,843
Net decrease in cash			(9	)			(343	)			(3,458	)			(15,148	)
Cash, beginning of the period			23,408				26,949				26,857				41,754
Cash, end of the period		$	23,399			$	26,606			$	23,399			$	26,606

 

 

 

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, adjusted net income per diluted share and adjusted gross profit. 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 loss to the non-GAAP measures of EBITDA and adjusted EBITDA is provided below. EBITDA represents net 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 changes in the fair value of the warrant liability, debt extinguishment, stock-based compensation expense, restructuring related charges, vendor separation fees, loss on project write-off, impairment of goodwill, nonrecurring legal fees, Board special committee costs, acquisition expenses, executive interim and search costs, severance costs and showroom opening and closing 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,
		2024				2023				2024				2023
GAAP net loss		$	(39,310	)			(36,135	)			(89,587	)			(102,841	)
Interest expense			4,394				594				13,029				1,148
Income tax expense			63				18				176				162
Other income, net			(7,165	)			(205	)			(11,612	)			(315	)
Depreciation and amortization			14,627				6,073				27,448				18,963
EBITDA			(27,391	)			(29,655	)			(60,546	)			(82,883	)
Adjustments:
Change in fair value - warrant liability			(4,795	)			—				111				—
Loss on extinguishment of debt			—				3,114				3,394				4,331
Stock-based compensation expense			791				939				2,108				3,792
Restructuring related charges			23,669				—				23,669				—
Vendor separation fee			—				—				—				1,050
Loss on project write-off			—				—				1,355				—
Loss on impairment of goodwill			—				6,879				—				6,879
Legal fees			16				775				940				3,520
Board special committee costs			—				—				—				14,160
Acquisition expenses			—				—				—				65
Executive interim and search costs			409				1,456				3,383				3,258
Severance costs			202				—				1,086				586
Showroom opening and closing costs			724				242				782				338
Adjusted EBITDA		$	(6,375	)		$	(16,250	)		$	(23,718	)		$	(44,904	)

 

 

 

Reconciliation of GAAP Gross Margin to Adjusted Gross Margin

 

A reconciliation of GAAP gross margin to the non-GAAP measures of adjusted gross margin is provided below. Adjusted gross margin represents adjusted net revenue less adjusted cost of revenue. Adjusted net revenue represents revenue adjusted for revenue deemed lost through discounts on products during our transition to our new product line in 2023. Adjusted cost of revenues represents cost of revenues excluding certain incremental costs incurred during our transition to our new product line in 2023 and restructuring charges recorded in cost of revenues in 2024. We believe adjusted gross margin provides additional useful information with respect to the impact of the restructuring and provides meaningful measures of our operating performance.

 

(in thousands)		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Revenues, net		$	118,598			$	139,996			$	358,902			$	364,605
Discounts on new product transition			—				3,124				—				12,752
Adjusted revenues, net			118,598				143,120				358,902				377,357
Total cost of revenues			83,405				92,687				233,049				241,244
Cost of new product transition			—				(2,692	)			—				(5,015	)
Restructuring charges in cost of revenues			(12,859	)			—				(12,859	)			—
Adjusted cost of revenues			70,546				89,995				220,190				236,229
Adjusted gross profit		$	48,052			$	53,125			$	138,712			$	141,128
Adjusted gross profit %			40.5	%			37.1	%			38.6	%			37.4	%

 

Reconciliation of GAAP Operating Expenses to Adjusted Operating Expenses

 

A reconciliation of GAAP operating expenses to the non-GAAP measures of adjusted operating expenses is provided below. Adjusted operating expenses represents operating expenses adjusted for restructuring related charges in 2024 and loss on impairment of goodwill.in 2023. We believe adjusted operating expenses provides additional useful information with respect to the impact of the restructuring and provides meaningful measures of our operating performance.

 

(in thousands)		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Operating expenses		$	82,006			$	79,923			$	210,342			$	220,876
Restructuring related charges in operating expenses			(19,832	)			—				(19,832	)			—
Loss on impairment of goodwill			—				(6,879	)			—				(6,879	)
Adjusted operating expenses		$	62,174			$	73,044			$	190,510			$	213,997

 

 

 

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 loss and adjusted net loss per diluted share, are supplemental measures of operating performance that do not represent, and should not be considered, alternatives to net loss and earnings per share, as calculated in accordance with GAAP. We believe adjusted net loss and adjusted net loss per diluted share, supplement GAAP measures and enable us to more effectively evaluate our performance period-over-period. A reconciliation of net loss, the most directly comparable GAAP measure, to adjusted net loss and the computation of adjusted net loss per diluted share, are set forth below:

 

(in thousands, except per share amounts)		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Net loss		$	(39,310	)		$	(36,135	)		$	(89,587	)		$	(102,841	)
Income tax (benefit) expense, as reported			63				18				176				162
Loss on extinguishment of debt			—				3,114				3,394				4,331
Restructuring related charges			32,682				—				32,682				—
Loss on impairment of goodwill			—				6,879				—				6,879
Board special committee fees			—				—				—				14,160
Acquisition expenses			—				—				—				65
Change in fair value – warrant liabilities			(4,795	)			—				111				—
Adjusted net loss before income taxes			(11,360	)			(26,124	)			(53,224	)			(77,244	)
Adjusted income tax benefit(1)			2,942				6,766				13,785				20,006
Adjusted net loss		$	(8,418	)		$	(19,358	)		$	(39,439	)		$	(57,238	)
Adjusted net loss per share, diluted		$	(0.08	)		$	(0.18	)		$	(0.37	)		$	(0.55	)
Adjusted weighted-average shares outstanding, diluted(2)			107,703				105,744				107,203				103,380

 

(1)

Represents the estimated effective tax rate of 25.9% for the three and nine months ended September 30, 2024 and 2023, 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 assuming no valuation allowance.

 

(2)

Assumes options and restricted stock units 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 loss per diluted share is set forth below for the three and nine months ended September 30, 2024 and 2023:

 

		For the Three Months Ended
		September 30, 2024												September 30, 2023
		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)		$	(39,228	)			107,508			$	(0.36	)		$	(36,004	)			105,326			$	(0.34	)
Assumed exchange of shares(2)			(82	)			195								(131	)			418
Net loss			(39,310	)											(36,135	)
Adjustments to arrive at adjusted loss before taxes(3)			27,950												10,011
Adjusted loss before taxes			(11,360	)											(26,124	)
Adjusted income tax benefit(4)			2,942												6,766
Adjusted net loss		$	(8,418	)			107,703			$	(0.08	)		$	(19,358	)			105,744			$	(0.18	)

 

(1)

Represents net income (loss) 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 25.9% for the three months ended September 30, 2024 and 2023, 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 assuming no valuation allowance.

 

 

		For the Nine Months Ended
		September 30, 2024												September 30, 2023
		Net Income				Weighted Average  Shares,  Diluted				Net Income per Share, Diluted				Net Income				Weighted Average Shares, Diluted				Net Income per Share, Diluted
Net loss attributable to Purple Innovation Inc.(1)		$	(89,418	)			107,008			$	(0.84	)		$	(102,424	)			102,962			$	(0.99	)
Assumed exchange of shares(2)			(169	)			195								(417	)			418
Net loss			(89,587	)											(102,841	)
Adjustments to arrive at adjusted loss before taxes(3)			36,363												25,597
Adjusted loss before taxes			(53,224	)											(77,244	)
Adjusted income tax benefit(4)			13,785												20,006
Adjusted net loss		$	(39,439	)			107,203			$	(0.37	)		$	(57,238	)			103,380			$	(0.55	)

 

(1)

Represents net loss 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 25.9% for the nine months ended September 30, 2024 and 2023, 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 assuming no valuation allowance.

 

 

11

 

v3.24.3

Cover	Nov. 04, 2024
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 04, 2024
Entity File Number	001-37523
Entity Registrant Name	Purple Innovation, Inc.
Entity Central Index Key	0001643953
Entity Tax Identification Number	47-4078206
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	4100 North Chapel Ridge Rd.
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	Lehi
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84043
City Area Code	801
Local Phone Number	756-2600
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Class A Common Stock, par value $0.0001 per share
Title of 12(b) Security	Class A Common Stock, par value $0.0001 per share
Trading Symbol	PRPL
Security Exchange Name	NASDAQ
Preferred Stock Purchase Rights
Title of 12(b) Security	Preferred Stock Purchase Rights
Trading Symbol	N/A
Security Exchange Name	NASDAQ

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