Purple Innovation (PRPL) Misses Q4 EPS by 4c, Revenues Miss; Offers FY21 Revenue Guidance Above Consensus, 1Q Revenue Views Below Consensus

Purple Innovation (NASDAQ: PRPL) reported Q4 EPS of $0.07, $0.04 worse than the analyst estimate of $0.11. Revenue for the quarter came in at $173.9 million versus the consensus estimate of $196.33 million.

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

• Net revenue increased 39.9% to $173.9 million as compared to $124.3 million.
  • Direct-to-Consumer (DTC) revenue increased 57%; Wholesale revenue increased 9%
• Gross margin was 47.2% compared to 47.7%.
• Operating expenses as a percent of net revenue were 42.9% as compared to 45.4%.
• Operating income increased 171.1% to $7.5 million as compared to $2.8 million.
• Net loss was $(2.1) million as compared to a net loss of $(12.7) million. Adjusted net income was $5.0 million, or $0.07 per diluted share as compared to $1.2 million, or $0.02 per diluted share.
• EBITDA was $(7.7) million as compared to $(9.3) million. Adjusted EBITDA was $12.2 million compared to $5.8 million.

"We concluded an amazing year of profitable growth for Purple with a strong fourth quarter performance," said Joe Megibow, Chief Executive Officer. "Despite the many challenges in 2020, our teams leaned-in and executed successfully, including this holiday season, identifying and capitalizing on market opportunities while at the same time investing in future growth. With our coveted and innovative products, internal manufacturing capabilities, and omni-channel distribution strategy combined with effective marketing and promotional programs, we have doubled our share of the U.S. premium mattress market over the past two years. Fiscal 2021 is off to a solid start and we believe we are well positioned to build on our recent accomplishments and intend to continue investing in capacity expansion, innovation and company showrooms to further expand our market share for years to come."

GUIDANCE:

Purple Innovation sees Q1 2021 revenue of $160-170 million, versus the consensus of $176.46 million.

Purple Innovation sees FY2021 revenue of $840-880 million, versus the consensus of $826.53 million.

For 2021, the Company currently expects full year revenue to be in the range of $840 to $880 million, an increase of 30% to 36% over 2020 results. Adjusted EBITDA for 2021 is expected to be between $90 million and $100 million, primarily reflecting a channel mix shift back towards wholesale and planned investments in growth, capacity and infrastructure.

The company expects capital expenditures for 2021 to be in the range of $45 to $50 million consisting primarily of approximately $20 million for the continued buildout of the Georgia manufacturing facility and $19 million related to the acceleration of showroom expansion, as well as expansion of wholesale displays and additional equipment for production and innovation facilities in Utah.

For the first quarter of 2021, the Company currently expects revenue to be in the range of $160 to $170 million, an increase of 31% to 39% over the first quarter of 2020 and adjusted EBITDA between $11 million and $14 million, reflecting seasonality and the Company's investments in expanding capacity necessary for our 2021 targets.

In the second quarter last year, the Company saw significant wholesale decline as the result of COVID required wholesale door closures and saw a corresponding 128% increase in DTC as offline consumers shifted to online channels in record numbers. In addition, reduced marketing costs drove efficiency improvements. This distorted both net revenue and gross margin as compared to prior trends. For the second quarter this year, the Company anticipates a significant mix-shift back to wholesale, supported by planned wholesale door expansion and more normalized consumer behaviors, along with more typical marketing rates. The Company will also continue investing in the buildout of the new Georgia facility and new e-commerce platform. Because of the atypical 2020 comparison and the new investments in future growth, second quarter adjusted EBITDA margins will be correspondingly lower than last year.

For the balance of the year, the Company expects revenue growth to be driven by both its wholesale and DTC channels, with wholesale delivering a higher growth rate as it realizes the benefit of new door expansion while DTC growth will be fueled by investments in e-commerce and marketing capabilities as well as significant showroom expansion. Based on its current outlook, the Company expects to achieve modest improvement in adjusted EBITDA over the comparable prior year period as it leverages costs associated with its Georgia facility and other operating expenses on higher revenue, partially offset by the continued channel shift to wholesale.

For earnings history and earnings-related data on Purple Innovation (PRPL) click here.

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