PLBY (US:PLBY)2022-11-08 16:00Acquisitions - The Business Combination with Mountain Crest Acquisition Corp. was completed on February 10, 2021, with an aggregate consideration of approximately $381.3 million, including 23,920,000 shares of common stock and the assumption of up to $142.1 million in net debt [200]. - The acquisition of TLA Acquisition Corp. was finalized on March 1, 2021, for a cash consideration of $24.9 million, expanding the company's presence in the sexual wellness market with 39 stores across five states as of September 30, 2022 [206]. - The acquisition of Honey Birdette was completed on August 9, 2021, for total consideration of $288.8 million, which included approximately $235.0 million in cash and 2,155,849 shares of common stock [207]. - The acquisition of GlowUp Digital Inc. was completed on October 22, 2021, with total consideration valued at approximately $34.4 million at closing, including 548,034 shares of common stock and $342,308 in cash for non-accredited investors [209]. - The company has made substantial investments in acquisitions to enhance its market position and expand its product offerings in the lifestyle sector [206][207][208]. - The company will continue to identify and assess merger and acquisition opportunities to complement organic growth, supported by operating cash flow and balance sheet flexibility [213]. Financial Performance - Net revenues increased by $5.3 million, or 9%, primarily due to an increase in direct-to-consumer revenue of $8.0 million, with $13.0 million attributable to the acquisition of Honey Birdette [236]. - Revenues from China (including Hong Kong) accounted for 16.8% and 16.3% of total revenues for the three and nine months ended September 30, 2022, respectively, indicating a reduced reliance on China licensing revenues [211]. - Cost of sales increased by $10.3 million, or 39%, primarily due to direct-to-consumer costs related to the acquisition of Honey Birdette and inventory reserve charges [237]. - Selling and administrative expenses rose by $6.3 million, or 17%, driven by increased direct-to-consumer costs and higher employee compensation costs, including $3.7 million in stock-based compensation [238]. - The operating loss for the three months ended September 30, 2022, was $312.9 million, compared to a loss of $5.5 million in the same period of 2021 [234]. - The company reported a net loss of $264.7 million for the three months ended September 30, 2022, compared to a net loss of $7.7 million in the same period of 2021 [234]. - Total operating expense increased significantly, leading to an operating loss of $312.2 million compared to a loss of $13.5 million in the previous year [246]. - For the three months ended September 30, 2022, net loss was $264.7 million, compared to a net loss of $7.7 million for the same period in 2021 [264]. - Net loss attributable to PLBY Group, Inc. was $267.5 million, compared to a net loss of $21.6 million in the prior year [246]. - For the nine months ended September 30, 2022, the company incurred a net loss of $267.5 million, with net cash used in operating activities amounting to $56.9 million [302]. Revenue Segments - The company operates through three reportable segments: Licensing, Direct-to-Consumer, and Digital Subscriptions and Content, focusing on diverse revenue streams from consumer products and digital offerings [199]. - Direct-to-Consumer segment net revenues increased by $8.0 million, or 22.2%, for the three months ended September 30, 2022, primarily due to $13.0 million from the acquisition of Honey Birdette [270]. - Licensing segment net revenues decreased by $2.3 million, or 13.3%, for the three months ended September 30, 2022, primarily due to a decline in overages from licensing partners [267]. Impairments and Expenses - Impairments totaled $301.9 million, representing a 100% increase compared to the previous year, significantly impacting operating loss [234]. - Impairments increased by $308.2 million, or 100%, primarily due to impairment charges on Playboy-branded trademarks and goodwill [253]. - Operating income for the Direct-to-Consumer segment decreased by $190.2 million, or over 100%, for the three months ended September 30, 2022, primarily due to $184.8 million of non-cash impairment charges [272]. - Selling and administrative expenses rose by $19.6 million, or 21%, driven by increased costs associated with the acquisition of Honey Birdette and higher employee compensation [251]. Cash Flow and Liquidity - The company’s main source of liquidity includes cash generated from operating activities and proceeds from the issuance of Series A Preferred Stock totaling $50 million in 2022 [282]. - As of September 30, 2022, the company's cash balance was $60.1 million, sufficient to fund operations for at least the next 12 months [287]. - The company raised $48.3 million from the issuance of preferred stock, contributing to net cash provided by financing activities of $37.1 million for the nine months ended September 30, 2022 [306]. - Cash flows from operating activities showed a significant increase in net cash outflows from changes in working capital, totaling $44.4 million for the nine months ended September 30, 2022 [302]. - The company may seek additional equity or debt financing in the future to satisfy capital requirements or fund growth opportunities [287]. Market Strategy and Risks - The company emphasizes its strategy in the Sexual Wellness, Style and Apparel, Gaming and Lifestyle, and Beauty and Grooming market categories, reaching millions of consumers globally [198]. - The company reported significant risks and uncertainties that could impact future performance, including the effects of the COVID-19 pandemic and potential disruptions from acquisitions [196]. - The company has a focus on maintaining its Nasdaq listing and managing growth profitably while navigating economic challenges such as inflation and supply chain disruptions [196]. - Inflationary factors may adversely affect the company's operating results, although no material impact has been observed in recent periods [320]. Interest and Taxation - Interest expense increased by $3.3 million, or 36%, primarily due to incremental borrowings and higher interest rates [255]. - Benefit from income taxes increased from $1.6 million to $47.4 million, primarily related to impairment of intangible assets and other tax adjustments [259]. - A 1% increase or decrease in underlying interest rates would result in a change of $2.3 million in annual interest expense [315]. - The company has not entered into any interest rate swap contracts as of September 30, 2022, to mitigate interest rate fluctuations [314]. Other Financial Information - The fair value remeasurement gain was $9.1 million, contributing positively to nonoperating income for the period [234]. - The company recognized a net gain of $5.8 million from the sale of an aircraft in September 2022 [286]. - The company completed the sale of the aircraft for $17.5 million, resulting in a net gain of $5.8 million [298]. - The company recorded an unrealized loss of $10.3 million for the three months ended September 30, 2022, primarily due to the strengthening of the U.S. dollar against the Australian dollar [318]. - Impairment losses on the company's Ethereum digital assets were $4.9 million for the nine months ended September 30, 2022 [319]. - The company has not adopted any new accounting pronouncements that would materially affect its financial statements for the quarter ended September 30, 2022 [311]. - There were no material changes to the company's critical accounting policies or estimates during the nine months ended September 30, 2022 [310].