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PLBY (PLBY) - 2022 Q3 - Quarterly Report
PLBYPLBY (PLBY)2022-11-08 16:00
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Acquisitions - The Business Combination with Mountain Crest Acquisition Corp. was completed on February 10, 2021, with an aggregate consideration of approximately 381.3million,including23,920,000sharesofcommonstockandtheassumptionofupto381.3 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 24.9million,expandingthecompany′spresenceinthesexualwellnessmarketwith39storesacrossfivestatesasofSeptember30,2022[206].−TheacquisitionofHoneyBirdettewascompletedonAugust9,2021,fortotalconsiderationof24.9 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 235.0millionincashand2,155,849sharesofcommonstock[207].−TheacquisitionofGlowUpDigitalInc.wascompletedonOctober22,2021,withtotalconsiderationvaluedatapproximately235.0 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 342,308incashfornon−accreditedinvestors[209].−Thecompanyhasmadesubstantialinvestmentsinacquisitionstoenhanceitsmarketpositionandexpanditsproductofferingsinthelifestylesector[206][207][208].−Thecompanywillcontinuetoidentifyandassessmergerandacquisitionopportunitiestocomplementorganicgrowth,supportedbyoperatingcashflowandbalancesheetflexibility[213].FinancialPerformance−Netrevenuesincreasedby342,308 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 8.0million,with8.0 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 10.3million,or3910.3 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 3.7millioninstock−basedcompensation[238].−TheoperatinglossforthethreemonthsendedSeptember30,2022,was3.7 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 5.5millioninthesameperiodof2021[234].−Thecompanyreportedanetlossof5.5 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 7.7millioninthesameperiodof2021[234].−Totaloperatingexpenseincreasedsignificantly,leadingtoanoperatinglossof7.7 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 13.5millioninthepreviousyear[246].−ForthethreemonthsendedSeptember30,2022,netlosswas13.5 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 7.7millionforthesameperiodin2021[264].−NetlossattributabletoPLBYGroup,Inc.was7.7 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 21.6millionintheprioryear[246].−FortheninemonthsendedSeptember30,2022,thecompanyincurredanetlossof21.6 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 56.9million[302].RevenueSegments−Thecompanyoperatesthroughthreereportablesegments:Licensing,Direct−to−Consumer,andDigitalSubscriptionsandContent,focusingondiverserevenuestreamsfromconsumerproductsanddigitalofferings[199].−Direct−to−Consumersegmentnetrevenuesincreasedby56.9 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 13.0millionfromtheacquisitionofHoneyBirdette[270].−Licensingsegmentnetrevenuesdecreasedby13.0 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 301.9million,representinga100301.9 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 190.2million,orover100190.2 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 19.6million,or2119.6 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 60.1million,sufficienttofundoperationsforatleastthenext12months[287].−Thecompanyraised60.1 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 37.1millionfortheninemonthsendedSeptember30,2022[306].−Cashflowsfromoperatingactivitiesshowedasignificantincreaseinnetcashoutflowsfromchangesinworkingcapital,totaling37.1 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 3.3million,or363.3 million, or 36%, primarily due to incremental borrowings and higher interest rates [255]. - Benefit from income taxes increased from 1.6 million to 47.4million,primarilyrelatedtoimpairmentofintangibleassetsandothertaxadjustments[259].−A147.4 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 9.1million,contributingpositivelytononoperatingincomefortheperiod[234].−Thecompanyrecognizedanetgainof9.1 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 17.5million,resultinginanetgainof17.5 million, resulting in a net gain of 5.8 million [298]. - The company recorded an unrealized loss of 10.3millionforthethreemonthsendedSeptember30,2022,primarilyduetothestrengtheningoftheU.S.dollaragainsttheAustraliandollar[318].−Impairmentlossesonthecompany′sEthereumdigitalassetswere10.3 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].