Purple Innovation, Inc. · NASDAQ:PRPL
Purple Innovation — Global Partner Acquisition — SPAC Merger (November 2017)
35 slides from Purple Innovation's SPAC merger presentation, Nov 6, 2017
Slide 1: Investor presentation - Purple, November 2017
OIE OKIE SS A NAINA AAA AMAA AAAI EY NANNY WAAAY | ACQUISITION Con GLOBAL PARTNER | GB Ac e purp) fon tor presentat inves Purple November 2017
Slide 2: Company overview
1 Company overview Company overview Who: Purple is a leading comfort technology company that leverages its operational and innovation expertise to design and sell a portfolio of patented comfort products backed by a unique brand What: Purple designs, manufactures and sells a range of comfort tec
Slide 3: GPAC investment thesis
2 GPAC investment thesis Large and growing bedding industry. The over $22.4bn U.S. bedding industry is large and growing and is being revolutionized by direct - to - consumer distribution models. Purple is a leader in the direct - to - consumer segment and aims to further drive industry change acros
Slide 4: Company overview
Company overview
Slide 5: Purple changes lives
4 Purple changes lives See www.onpurple.com/reviews “I am disabled and suffer from Spastic Cerebral Palsy. My disability causes me to suffer with constant back and leg pain. After the first night of sleeping on our Purple, I had no pain at all, and have had no pain since. This product has saved my l
Slide 6: Investment highlights
5 Investment highlights Market opportunity Large and growing market, with a DTC segment that more than doubled its market share between 2015 and 2016 (2) Vertical integration Purple’s integrated innovation, manufacturing and marketing capabilities provides competitive advantages Financial Unusual in
Slide 7: Purple has a large and growing market opportunity
6 Purple has a large and growing market opportunity Segmentation of U.S. bedding industry (2016) ($bn) 17.5 22.4 3.2 1.3 0.4 Mattresses Sheets & mattress protectors Pillows Mattress pads Total bedding industry U.S . mattress industry is large, stable and growing (1)(2) ($bn) (1) (1) “Mattresses ” an
Slide 8: Purple is poised for greater digital penetration and disruption
7 Purple is poised for greater digital penetration and disruption The industry is still in relatively early stages in terms of online penetration ~5% 0% 20% 40% 60% 80% 100% Food & Drug Health & Beauty Automotive Parts Hardware & Home Improvement Mattresses Specialty Jewelry Sporting Goods Houseware
Slide 9: Purple's massive market share gains
8 0 20 40 60 80 100 Feb-00 Mar-01 Apr-02 May-03 Google interest over time (1) Purple’s massive market share gains Purple’s brand recognition is growing at a rapid clip… (1) …translating into rapid market share gains vs. competitors (2) Purple was launched one year after Leesa and Helix, two years af
Slide 10: One of a kind solution
9 One of a kind solution A superior product at a competitive price that is functionally different and visually unique Purple’s comfort technology, performance and unique feel differentiates the mattress Other products in market Hyper - Elastic Polymer ® Smart - Comfort Grid and quality cushioning ba
Slide 11: Purple's innovative proprietary and patented technologies
10 Purple’s innovative proprietary and patented technologies History of innovation led to the rise of comfort technologies across sleep, sit and stand (1) Hyper - Elastic Polymer ® Purple’s proprietary and patented Hyper - Elastic Polymer ® , one of a portfolio of advanced comfort technologies; a bl
Slide 12: Competitive moat with multiple barriers to entry
11 Competitive moat with multiple barriers to entry Proprietary & patent protected technology Proprietary processes Process knowledge and know - how Proprietary and patent - protected comfort technologies and Mattress Max ™ machinery Competitors in general use the same old, basic materials - a m
Slide 13: Expanding product portfolio creates compelling long-term value proposition
12 Launch date 2016 2017 Platform Base Sheets Expanding product portfolio creates compelling long - term value proposition Seat Cushions (since 2010) Pillow Mattress Protector PowerBase Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Mattress Patented advanced cushioning technology Hyper - Elast
Slide 14: Innovation + manufacturing + marketing = vertical integration
13 Innovation + manufacturing + marketing = vertical integration Dedicated team focused on improving existing products and prototyping new designs Proprietary and patent - protected Hyper - Elastic Polymer ® technology 76 granted and pending patents owned or exclusive right to use Innovation M
Slide 15: Innovative marketing drives unparalleled awareness
14 Consistent voice promoting a true lifestyle brand… Innovative marketing drives unparalleled awareness Differentiated branding that is humorous, memorable and communicates unique & compelling product features Campaigns 125m 70m 34m 35m 11m 17m 27m 30m 3 dozen others 309m 117m Video views Sleep Sit
Slide 16: Multi-channel distribution strategy
15 Direct - to - consumer Brick - and - mortar relationships Specialty Purple continues to increase sales and penetration through existing channels Millions of unique visitors per month Coveted digital platform statistics (YouTube, Facebook etc.) Established relationships given long history
Slide 17: Purple growth opportunities
16 Purple growth opportunities Multi - channel distribution / retail relationships Category & vertical expansion Purple has multiple vectors to drive growth International expansion Existing product innovation Direct - to - consumer growth & penetration New product launches across sleep, sit & stand
Slide 18: Visionary leaders
17 Visionary leaders… Over 20 years of product development history with Purple’s predecessor companies Tony is the visionary behind Purple’s patented Hyper - Elastic Polymer ® technology Has numerous patents and has been key to taking many ideas to the manufacturing stage Over 13 years of ex
Slide 19: Complemented by an exceptional executive team
18 …Complemented by an exceptional executive team Wayne Moorehead Chief Brand Officer Previously CMO for a large public company as well as an INC 500 company where he was instrumental in building their billion - dollar brand Has led brand strategy at multiple creative agencies where he worked wi
Slide 20: Complemented by an exceptional executive team (continued)
19 Complemented by an exceptional executive team (continued) Charlie Smith Chief Operating Officer Held executive leadership roles in pharmaceutical, consumer goods, food and beverage and international consulting Over 20 years of experience leading supply chain, manufacturing, product developmen
Slide 21: Investment highlights
20 Investment highlights Market opportunity Large and growing market, with a DTC segment that more than doubled its market share between 2015 and 2016 (2) Vertical integration Purple’s integrated innovation, manufacturing and marketing capabilities provides competitive advantages Financial Unusual i
Slide 22: Financial highlights
Financial highlights
Slide 23: Financial highlights
22 Financial highlights Net revenue ($m) and growth (%) Adjusted gross profit ($m) and margin (%) (1) Adjusted EBITDA ($m) and margin (%) (1) Commentary Hyper - growth at scale – achieved 276% year - over - year growth in 1H 2017 ― Q3’17 revenue expected to be $52.0m – $55.0m Profitable on an ad
Slide 24: Key revenue detail
23 Key revenue detail Revenue growth % and distribution mix ($m) Upside opportunities not in the model Key takeaways DTC 97% Retail 3% 1H 2017 gross revenue mix Numerous retail opportunities ― Pilot partnership with Mattress Firm at 40+ locations with the potential to expand to over 3,500 location
Slide 25: Key margin detail
24 Key margin detail Adjusted OPEX and COGS as a % of net revenue (1)(2) Key takeaways (1) Excludes “Loss on disposal of property and equipment” (2) Refer to pages 32 - 33 for GAAP reconciliation COGS as a % of net revenue improvement driven by multiple efficiency gains associated with scale and m
Slide 26: Medium-term business outlook
25 Medium - term business outlook Target range Commentary Revenue growth 35% - 50%+ Further DTC growth Expand retail penetration Cross - sell existing customers New product introductions Category expansion International expansion Adjusted gross margin 50%+ Higher margin products due to
Slide 27: Summary transaction terms
26 Summary transaction terms (1) Existing Purple owners’ $900.0 million valuation is adjusted by its $30,089,832 of total liabilities, $4,000,000 of expected tra nsaction expenses and $2,159,052 of cash on hand (2) Assumes an illustrative per share price of $ 10.00 and $12,404,000 of available SPAC
Slide 28: Comparable company benchmarking: trading metrics
27 Comparable company benchmarking Trading metrics 2018E EV / revenue 2018E EV / adjusted EBITDA Note: Market data as of October 30, 2017. Multiples that are negative, unavailable or above a certain limit (50x) are considered not meani ng ful (“NM”) Source: Company filings, Wall Street research and
Slide 29: Comparable company benchmarking: growth metrics
28 Comparable company benchmarking Growth metrics 2016 – 2018E revenue CAGR 2016 – 2018E adjusted EBITDA expansion (bps) High - growth consumer High - growth e - Commerce Traditional mattress and furniture Note: Projections based on Wall Street research unless otherwise noted. Financials are normali
Slide 30: Comparable company benchmarking: operating metrics
29 Comparable company benchmarking Operating metrics 2018E gross margin 2018E adjusted EBITDA margin High - growth consumer High - growth e - Commerce Traditional mattress and furniture Note: Projections based on Wall Street research unless otherwise noted. Financials are normalized (adjusted for st
Slide 31: Appendix
Appendix
Slide 32: Projected non-GAAP income statement
31 Projected non - GAAP income statement ($m) 2016 2017E 2018E 1H 2016 1H 2017 Total net revenue $65.5 $190.0 $425.0 $20.7 $77.8 % YoY growth NM 190% 124% NM 276% Cost of goods sold 39.9 102.5 216.7 12.9 42.3 Adjusted gross profit $25.6 $87.5 $208.3 $7.8 $35.5 % gross margin 39.1% 46.1% 49.0% 37.5%
Slide 33: Adjusted EBITDA reconciliation
32 Adjusted EBITDA reconciliation ($m) (unaudited) 2016 2017E 2018E 1H 2016 1H 2017 Net income ($1.9) ($8.5) $19.9 ($1.6) $1.7 Depreciation & amortization 0.1 0.8 1.9 0.0 0.2 Net interest expense 0.0 0.1 (0.1) 0.0 0.0 Other expense, net (0.0) (0.0) - (0.0) (0.0) Income tax expense - - 11.4 - - EBITD
Slide 34: Adjusted COGS and G&A reconciliation
33 Adjusted COGS and G&A reconciliation ($m) (unaudited) 2016 2017E 2018E 1H 2016 1H 2017 GAAP COGS $44.0 $102.5 $216.7 $15.0 $42.3 Related party royalties (4.1) - - (2.1) - Adjusted COGS $39.9 $102.5 $216.7 $12.9 $42.3 % net revenue 60.9% 53.9% 51.0% 62.5% 54.4% ($m) (unaudited) 2016 2017 2018 1H 2
Slide 35: This is for informational purposes only and does not constitute an offer to sell,
34 This Investor Presentation is for informational purposes only and does not constitute an offer to sell, a solicitation of an off er to buy, or a recommendation to purchase any equity, debt or other financial instruments of Purple Innovation, LLC (“Purple ” o r the “Company”) or GPAC or any of Pur
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