Purple Innovation, Inc. · NASDAQ:PRPL
Purple Innovation — Global Partner Acquisition — SPAC Merger (December 2017)
41 slides from Purple Innovation's SPAC merger presentation, Dec 15, 2017
Slide 1: Purple Investor Presentation December 2017
ANY ROS | ACQUISITION con? GH, Ac purple Purple Investor Presentation December 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: Investment highlights
4 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 provide competitive advantages Financial Attractive
Slide 6: Purple changes lives
5 Purple changes lives See www.purple.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 lif
Slide 7: Purple has a large and growing market opportunity
6 Purple has a large and growing market opportunity (1) Purple has not yet entered into the stand market (2) “Mattresses” includes sales of mattresses and foundations by traditional manufacturers and total revenues of DTC mattress pla yer s (3) Commentary based on ISPA report Source: ISPA, Wall Stre
Slide 8: Purple is poised for greater DTC market penetration and disruption
7 Purple is poised for greater DTC market 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 Housew
Slide 9: Purple's massive market share gains
8 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 officially launched one year after Helix, two years after Leesa and Casper, four years after Tuft & Needle and 6 years after Saat
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 Patented advanced comfort technology Hyper - Elastic Polymer ®
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 78 granted and pending patents owned or exclusive right to use Innovation M
Slide 15: Consistent voice promoting a true lifestyle brand
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 Video views Sleep Sit Stand (1) Purple’s video campaigns have extensive social reach x Lo
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 provide competitive advantages Financial Attractive
Slide 22: Recent initiatives update
Recent initiatives update
Slide 23: Mattress Firm pilot test
22 Mattress Firm Dedicated Purple zone and branding Start date 11/22/17 Roll - out Washington, D.C. metro area (open) Sacramento, CA (open) Austin, TX (before year - end) Projected store presence 50+ pilot test stores Products offered Mattresses (new and existing models) PowerBases Pillo
Slide 24: Product developments
23 Product developments (1) Product launches Pricing Twin XL Queen King Existing The Purple Bed $799 $999 $1,299 New Purple.2H $799 $999 $1,299 Purple.2 $1,049 $1,299 $1,699 Purple.3 $1,499 $1,899 $2,499 Purple.4 $1,999 $2,499 $3,299 1. Cover 2. Hyper - Elastic Polymer TM Smart Comfort Grid TM (2”,
Slide 25: Financial highlights
Financial highlights
Slide 26: Historical financials
25 Historical financials Net revenue ($m) and growth (%) Adjusted gross profit ($m) and margin (%) (2) Adjusted EBITDA ($m) and margin (%) ( 2) Commentary Revenue Hyper - growth at scale, achieving 227% year - over - year growth in the first 9 months of 2017 Growth driven by DTC sales, increasin
Slide 27: Q3 2017 results
26 Q3 2017 results Commentary Revenue Continued to experience tremendous growth, achieving year - over - year growth of 178 % in Q3 2017 Growth driven by DTC sales across entire product portfolio Q3 2017 continued to be impacted by capacity constraints (1) – Mattress Max #2 (launched in May 20
Slide 28: Projected financials
27 Projected financials Commentary Forecasting & budgeting overview Based on top - down and bottoms - up methodologies for financial forecasting and analysis New forecast driven by 2017YTD results and review of assumptions by Purple’s new CFO, Mark Watkins, who joined November 2017 Revenue Gro
Slide 29: Revenue detail
28 Revenue detail Revenue bridge ($m) Opportunities 2018E range Commentary Long - term outlook DTC $335m - $365m Based on current trends of Purple market share gains and growth in DTC market overall Assumes no capacity constraints in 2018 (1) Expectation of continued rapid growth of DTC for se
Slide 30: Purple DTC market share sensitivity
29 Purple DTC market share sensitivity 2018E Purple DTC net revenue ($m) Note: “Traditional ” per ISPA, multiplied by a 2.0x retail markup; “Direct - to - consumer” per published Wall Street research, representing total reve nues of e - Commerce mattress brands. Purple financials shown at midpoint o
Slide 31: Key margin detail
30 Key margin detail Adjusted OPEX and COGS as a % of net revenue (1)(2)(3) Key takeaways (1) Excludes “Loss on disposal of property and equipment” (2) Due to continued investments to expand capacity, under the current forecast, Purple does not expect to be capacity - constrained f or the full year
Slide 32: Mattress production machinery cycle and manufacturing capacity
31 Purple’s mattress production machinery cycle and manufacturing capacity Build - out Production ramp Continued optimization 0 Launch Optimized Launch date Commentary Mattress Max #1 Pre 2016 F ocus in 2016 - 2017 on manufacturing efficiencies and increasing throughput which resulted in a 8x impr
Slide 33: Medium-term business outlook (3 years)
32 Medium - term business outlook (3 – 5 years) 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 p
Slide 34: PF shares outstanding and summary transaction terms
33 PF shares outstanding (millions) Purple roll - over 80.1 GPAC shareholders 12.1 GPAC sponsor shares not subject to forfeiture 1.3 Total share count 93.6 Summary transaction terms Note: Transaction structure and terms are illustrative, based on current capital structure, subject to change based on
Slide 35: Appendix
Appendix
Slide 36: Comparable company benchmarking: revenue metrics
35 Comparable company benchmarking Revenue metrics 2016 – 2018E revenue CAGR 2018E EV / revenue Note: Market data as of December 7, 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 F
Slide 37: Comparable company benchmarking: margin metrics
36 Comparable company benchmarking Margin metrics 2018E gross margin 2016 – 2018E gross margin expansion (bps) High - growth consumer High - growth e - Commerce Traditional mattress and furniture Low Mid High Low Mid High Note: Projections based on Wall Street research unless otherwise noted. Financ
Slide 38: Projected non-GAAP income statement
37 Projected non - GAAP income statement Note: Refer to page 28 for 2018E revenue detail ($m) (unaudited) 2016 2017E 2018E 9M 2016 9M 2017 Total net revenue $65.5 $190.1 $370.0 - $480.0 $40.9 $133.8 % YoY growth NM 190% 94.7% - 152.5% NM 227% Cost of goods sold 39.9 104.5 192.4 - 240.0 25.6 73.9 Adj
Slide 39: Adjusted EBITDA reconciliation
38 Adjusted EBITDA reconciliation Note: Refer to page 28 for 2018E revenue detail ($m) (unaudited) 2016 2017E 2018E 9M 2016 9M 2017 Net income ($1.9) ($2.4) ($20.6) - $6.5 ($1.7) ($3.4) Depreciation & amortization 0.1 0.8 1.8 0.0 0.5 Net interest expense 0.0 0.1 0.3 0.0 0.0 Other expense, net (0.0)
Slide 40: Adjusted COGS and G&A reconciliation
39 Adjusted COGS and G&A reconciliation Note: Refer to page 28 for 2018E revenue detail ($m) (unaudited) 2016 2017E 2018E 9M 2016 9M 2017 GAAP COGS $44.0 $104.5 $192.4 - $240.0 $29.2 $73.9 Related party royalties (4.1) - - (3.6) - Adjusted COGS $39.9 $104.5 $192.4 - $240.0 $25.6 $73.9 % net revenue
Slide 41: Disclaimer
40 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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