Company Reaffirms 2023 Guidance and
Provides Update on Efforts to Accelerate Revenue Growth and EBITDA
Improvement
LEHI,
Utah, Jan. 23, 2024 /PRNewswire/ -- Purple
Innovation, Inc. (NASDAQ: PRPL) ("Purple" or the "Company"), a
comfort innovation company known for creating the "World's First No
Pressure™ Mattress," today announced that it has completed a
refinancing that will provide the Company with significantly
greater financial flexibility to execute its growth strategy and
build on recent business improvements.
Coliseum Capital Management, LLC and No Street Capital, LLC,
through certain funds and accounts, have assumed the Company's two
primary outstanding debt facilities – an ABL credit agreement and a
term loan credit agreement – from the Company's previous lenders.
At closing, the facilities will be consolidated into a new, upsized
term loan of $61 million with (a)
approximately $21 million of
incremental available capital, after expenses, (b) a
payment-in-kind interest option, the combination of which provides
Purple with a stronger balance sheet and ongoing cash savings to
invest in its business, and (c) an additional incremental term loan
in the amount of up to $19.0 million available subject to agreement
by the parties on terms. Immediately preceding the transaction, net
liquidity, including cash and cash equivalents as well as ABL
availability, was approximately $26 million. Subsequent to the
transaction, cash and cash equivalents were approximately $48
million. This new term loan importantly also removes restrictions
and requirements customarily associated with an ABL credit
agreement. In connection with entering into the new term loan, the
Company issued warrants to the lenders to purchase 20 million
shares of the Company's Class A common stock at a price of $1.50
per share, subject to certain adjustments.
An independent Special Committee of Purple's Board of Directors
directed and negotiated the transaction, with the assistance of the
Company's management team and legal advisors. Following the Special
Committee's evaluation of alternatives and extensive negotiations,
the Special Committee unanimously voted to approve the
transaction.
In 2023, Purple embarked on its "Path to Premium Sleep" strategy
to improve the Company's long-term growth prospects and
competitiveness. This includes the launch of a new product
portfolio and enhanced brand positioning to better reflect Purple's
role in the premium and luxury category of the sleep space.
"Over the past six months, Purple has taken several important
steps to return to profitability and long-term growth," said
Rob DeMartini, Chief Executive
Officer of Purple. "We are pleased with both our strengthening
wholesale partnerships and the response we are seeing in our
direct-to-consumer channels, as evidenced by our anticipation that
fourth quarter Net Revenue and Adjusted EBITDA will be within our
guidance range and look forward to building on this momentum in the
year ahead."
Mr. DeMartini continued, "We believe the Company is positioned
to grow revenue in 2024, despite challenging industry conditions,
and with specific cost saving initiatives under way, we also expect
incremental improvements in EBITDA and cash flow. We are confident
that with continued, focused execution by our team and a
considerably strengthened capital structure, we are well positioned
to lean into our growth initiatives and continue to take market
share. We look forward to sharing more specific insight into our
2024 expectations on the fourth quarter earnings call."
"This transaction places our company on strong financial footing
and reaffirms our unwavering commitment to meeting the needs of our
wholesale partners, direct customers, and suppliers," Mr. DeMartini
added.
The full terms of the refinancing will be filed today on a Form
8-K with the U.S. Securities and Exchange Commission.
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
are non-GAAP financial measures that remove the impact of certain
non-cash and non-recurring costs. 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,
Board special committee costs, executive interim and search costs,
severance costs, vendor separation fee, showroom opening costs, new
production facility start-up costs and COVID-19 related expenses.
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
tables 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
fourth quarter and full year 2023, 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.
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 financial and operating results
for 2023 and 2024, including net revenue and Adjusted EBITDA,
prospects and expectations for growth in 2024, and expected cost
savings. 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 (the "SEC")
on March 22, 2023 as amended on Form
10-K/A filed with the SEC on May 1,
2023, 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.
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.
Investor Contact:
Brendon
Frey, ICR
brendon.frey@icrinc.com
203-682-8200
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SOURCE Purple Innovation, Inc.