Purple(US:PRPL)2024-11-04 21:00Financial Performance - Total revenues for the three months ended September 30, 2024, were $118,598 thousand, a decrease of 15.2% compared to $139,996 thousand for the same period in 2023[8]. - Gross profit for the three months ended September 30, 2024, was $35,193 thousand, down 25.6% from $47,309 thousand in the prior year[8]. - Operating loss for the three months ended September 30, 2024, was $(46,813) thousand, compared to $(32,614) thousand for the same period in 2023, reflecting a deterioration of 43.5%[8]. - Net loss attributable to Purple Innovation, Inc. for the three months ended September 30, 2024, was $(39,228) thousand, compared to $(36,004) thousand in the same period last year, representing an increase in loss of 6.2%[8]. - Net loss for Q3 2024 was $89.6 million, an improvement from a net loss of $102.8 million in Q3 2023, representing a 12.3% reduction[12]. - Net revenues decreased by $21.4 million, or 15.3%, to $118.6 million for Q3 2024 compared to $140.0 million for Q3 2023, primarily due to industry-wide demand softness and reduced advertising spend[142]. - Gross profit decreased by $12.1 million, or 25.6%, to $35.2 million for Q3 2024, with a gross profit percentage of 29.7%, down from 33.8% in Q3 2023[143]. - Operating loss increased by $14.2 million, or 43.5%, to $46.8 million for Q3 2024, primarily due to restructuring and impairment charges[162]. Assets and Liabilities - Total current assets decreased to $123,188 thousand as of September 30, 2024, down 13.2% from $141,810 thousand at December 31, 2023[7]. - Total liabilities increased to $281,260 thousand as of September 30, 2024, compared to $275,018 thousand at December 31, 2023, indicating a rise of 2.5%[7]. - Cash and cash equivalents decreased to $23,399 thousand as of September 30, 2024, down 13.3% from $26,857 thousand at December 31, 2023[7]. - Accounts receivable, net, decreased to $29,662 thousand as of September 30, 2024, down 21.5% from $37,802 thousand at December 31, 2023[7]. - Inventories decreased to $59,881 thousand as of September 30, 2024, down 10.4% from $66,878 thousand at December 31, 2023[7]. - Total stockholders' equity attributable to Purple Innovation, Inc. decreased to $27,967 thousand as of September 30, 2024, down 75.8% from $115,422 thousand at December 31, 2023[7]. Cash Flow and Financing Activities - Cash used in operating activities decreased to $24.6 million in Q3 2024 from $55.8 million in Q3 2023, indicating a 56% improvement[12]. - Cash provided by financing activities in Q3 2024 was $27.5 million, down from $50.8 million in Q3 2023, a decrease of 46%[12]. - The company reported a net cash decrease of $3.5 million for Q3 2024, compared to a decrease of $15.1 million in Q3 2023, showing a 77% improvement[12]. - The company has $68.0 million of variable rate debt, with a potential increase in interest expense of approximately $0.7 million for a 100 basis point rise in interest rates[192]. Restructuring and Operational Changes - The company initiated a restructuring plan in August 2024, which includes the closure of two manufacturing facilities in Utah and consolidation of production in Georgia, expected to be completed by Q1 2025[27]. - The company recognized total restructuring, impairment, and other related charges of $32.682 million during Q3 2024, including $18.881 million in non-cash charges[28]. - The company expects the Restructuring Plan to streamline operations and improve gross profits over the long term[143]. - The company plans to launch multiple new products across major categories over the next 12 months as part of its Path to Premium Sleep strategy[151]. Legal and Compliance Matters - Purple LLC entered into a settlement agreement regarding a class action lawsuit, resulting in a cash payment, with the lawsuit dismissed on August 16, 2024[82]. - A lawsuit was filed by Purple's founders claiming approximately $2.5 million in damages related to a real estate lease dispute, with additional claims of $0.8 million in holdover rent[83]. - A class action lawsuit was filed by a former employee alleging failure to pay wages and overtime, with mediation scheduled for May 8, 2025[84]. - The company may face delisting from NASDAQ if it fails to maintain a minimum bid price of $1.00 per share, which has been below this threshold since September 30, 2024[202]. Stockholder Rights and NOLs - The Company adopted a limited-duration stockholder rights agreement to protect its estimated $238 million of net operating losses from ownership changes[76]. - The NOL Rights Plan was ratified by stockholders on October 15, 2024, aimed at protecting the company's ability to utilize approximately $238 million in current NOLs[140]. - The NOL Protective Charter Amendment was approved to prevent ownership changes that could limit the use of Current NOLs[98]. - The company has approximately $238 million in Current NOLs, with a NOL Rights Plan adopted to protect stockholder value[205]. - The company's Current NOLs (Net Operating Losses) and other tax benefits are contingent on its ability to generate taxable income in the future[206]. Stock-Based Compensation - Stock-based compensation for the quarter ending June 30, 2024, amounted to $791,000, an increase from $492,000 in the previous quarter[9]. - Total non-cash stock-based compensation recognized for the nine months ended September 30, 2024, was $2.1 million, down from $3.8 million for the same period in 2023[121]. - The Company granted 1.8 million restricted stock units during the nine months ended September 30, 2024, with a weighted average grant date fair value of $1.00 per share for awards without market vesting conditions[115]. Other Income and Expenses - Other income totaled $7.6 million for Q3 2024, compared to other expense of $3.5 million in Q3 2023, including $7.3 million from a business interruption insurance claim settlement[145]. - The Company received a total of $11.6 million from a business interruption claim settlement, recorded as other income in the condensed consolidated statement of operations[74].