2022 Q4 Form 10-Q Financial Statement

#000153097922000128 Filed on November 10, 2022

View on sec.gov

Income Statement

Concept 2022 Q4 2022 Q3
Revenue $81.86M $84.58M
YoY Change 1.84% 2.33%
Cost Of Revenue $59.35M $58.96M
YoY Change 5.44% 11.48%
Gross Profit $22.51M $25.62M
YoY Change -6.58% -13.92%
Gross Profit Margin 27.49% 30.29%
Selling, General & Admin $33.91M $23.49M
YoY Change 9.05% 26.51%
% of Gross Profit 150.66% 91.7%
Research & Development $1.353M $1.725M
YoY Change -15.28% -17.54%
% of Gross Profit 6.01% 6.73%
Depreciation & Amortization $728.0K $639.0K
YoY Change -27.99% -37.23%
% of Gross Profit 3.23% 2.49%
Operating Expenses $35.26M $37.36M
YoY Change 7.86% 8.76%
Operating Profit -$12.76M -$11.74M
YoY Change 48.31% 155.86%
Interest Expense $214.0K -$29.00K
YoY Change -151.69% -94.49%
% of Operating Profit
Other Income/Expense, Net -$29.00K
YoY Change -94.49%
Pretax Income -$12.54M -$11.77M
YoY Change 39.12% 130.11%
Income Tax $50.00K $20.00K
% Of Pretax Income
Net Earnings -$12.59M -$11.79M
YoY Change 39.52% 129.52%
Net Earnings / Revenue -15.38% -13.94%
Basic Earnings Per Share -$0.13
Diluted Earnings Per Share -$0.14 -$0.13
COMMON SHARES
Basic Shares Outstanding 92.67M shares 92.42M shares
Diluted Shares Outstanding 92.46M shares

Balance Sheet

Concept 2022 Q4 2022 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $15.17M $40.83M
YoY Change -83.72% -54.8%
Cash & Equivalents $9.517M $24.09M
Short-Term Investments $5.650M $16.74M
Other Short-Term Assets $15.98M $14.44M
YoY Change 21.4% 4.78%
Inventory $115.7M $100.3M
Prepaid Expenses
Receivables $42.33M $38.87M
Other Receivables $0.00 $0.00
Total Short-Term Assets $189.1M $194.4M
YoY Change -11.53% -9.0%
LONG-TERM ASSETS
Property, Plant & Equipment $44.27M $46.38M
YoY Change -16.39% -13.94%
Goodwill $2.230M $2.230M
YoY Change 0.0% 0.0%
Intangibles $370.0K $387.0K
YoY Change -15.91% -15.5%
Long-Term Investments
YoY Change
Other Assets $4.578M $4.951M
YoY Change 44.01% 19.27%
Total Long-Term Assets $51.45M $53.95M
YoY Change -12.5% -11.17%
TOTAL ASSETS
Total Short-Term Assets $189.1M $194.4M
Total Long-Term Assets $51.45M $53.95M
Total Assets $240.6M $248.4M
YoY Change -11.74% -9.48%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $24.76M $30.70M
YoY Change -13.87% -1.52%
Accrued Expenses $38.01M $29.97M
YoY Change 100.02% 73.43%
Deferred Revenue $815.0K $781.0K
YoY Change 11.49% -4.29%
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due $52.00K $53.00K
YoY Change
Total Short-Term Liabilities $63.58M $61.45M
YoY Change 31.15% 24.71%
LONG-TERM LIABILITIES
Long-Term Debt $22.00K $33.00K
YoY Change
Other Long-Term Liabilities $817.0K $33.00K
YoY Change -89.09% -99.58%
Total Long-Term Liabilities $817.0K $33.00K
YoY Change -89.09% -99.58%
TOTAL LIABILITIES
Total Short-Term Liabilities $63.58M $61.45M
Total Long-Term Liabilities $817.0K $33.00K
Total Liabilities $94.24M $93.28M
YoY Change 0.8% -1.69%
SHAREHOLDERS EQUITY
Retained Earnings -$439.8M -$427.2M
YoY Change 12.3% 11.66%
Common Stock $9.000K $9.000K
YoY Change 0.0% 0.0%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $146.4M $155.1M
YoY Change
Total Liabilities & Shareholders Equity $240.6M $248.4M
YoY Change -11.74% -9.48%

Cashflow Statement

Concept 2022 Q4 2022 Q3
OPERATING ACTIVITIES
Net Income -$12.59M -$11.79M
YoY Change 39.52% 129.52%
Depreciation, Depletion And Amortization $728.0K $639.0K
YoY Change -27.99% -37.23%
Cash From Operating Activities -$25.61M -$25.27M
YoY Change 1326.52% 573.43%
INVESTING ACTIVITIES
Capital Expenditures $184.0K -$690.0K
YoY Change -657.58% 693.1%
Acquisitions
YoY Change
Other Investing Activities $11.14M $9.774M
YoY Change -44.68% -207.32%
Cash From Investing Activities $10.96M $9.084M
YoY Change -45.51% -198.8%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 77.00K -78.00K
YoY Change -98.4% -90.56%
NET CHANGE
Cash From Operating Activities -25.61M -25.27M
Cash From Investing Activities 10.96M 9.084M
Cash From Financing Activities 77.00K -78.00K
Net Change In Cash -14.57M -16.26M
YoY Change -163.01% 18.07%
FREE CASH FLOW
Cash From Operating Activities -$25.61M -$25.27M
Capital Expenditures $184.0K -$690.0K
Free Cash Flow -$25.79M -$24.58M
YoY Change 1363.68% 570.59%

Facts In Submission

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us-gaap Net Cash Provided By Used In Financing Activities
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us-gaap Proceeds From Stock Options Exercised
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hnst Payments Of Stock Issuance Costs Initial Public Offering
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us-gaap Proceeds From Stock Plans
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us-gaap Proceeds From Stock Plans
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us-gaap Repayments Of Long Term Capital Lease Obligations
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us-gaap Net Cash Provided By Used In Financing Activities
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us-gaap Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents Period Increase Decrease Including Exchange Rate Effect
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CY2020Q4 us-gaap Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents
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CY2022Q3 us-gaap Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents
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CY2021Q3 us-gaap Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents
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us-gaap Capital Lease Obligations Incurred
CapitalLeaseObligationsIncurred
105000 usd
us-gaap Capital Expenditures Incurred But Not Yet Paid
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us-gaap Capital Expenditures Incurred But Not Yet Paid
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us-gaap Nature Of Operations
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Nature of Business<div style="margin-bottom:12pt;text-indent:36pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Honest Company, Inc. (the “Company”) was incorporated in the State of California on July 19, 2011 and on May 23, 2012 was re-incorporated in the State of Delaware under the same name. The Company is a mission-driven lifestyle brand that formulates, designs and sells clean products with a focus on sustainability and thoughtful design. The Company sells its products through digital and retail sales channels in the following product categories: Diapers and Wipes, Skin and Personal Care, and Household and Wellness. </span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Initial Public Offering</span></div><div style="text-indent:36pt"><span><br/></span></div><div style="text-indent:36pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:114%">The Company’s registration statement on Form S-1 (“IPO Registration Statement”) related to its initial public offering (“IPO”) was declared effective on May 4, 2021, and the Company’s common stock began trading on the Nasdaq Global Select Market on May 5, 2021. On May 7, 2021, the Company completed its IPO of 25,807,000 shares of the Company's common stock, $0.0001 par value per share at an offering price of $16.00 per share. The Company sold 6,451,613 shares and certain existing stockholders sold an aggregate of 19,355,387 shares. The Company received aggregate net proceeds of approximately $91.0 million after deducting underwriting discounts and commissions of $6.7 million and other offering expenses of $5.5 million. The Company granted the underwriters an option for a period of 30 days to purchase up to an additional 3,871,050 shares of common stock from the selling stockholders at $16.00 per share less the underwriting discounts and commissions. In May 2021, the underwriters fully exercised the option to purchase these additional shares from the selling stockholders. The Company did not receive any proceeds from the sale of shares of its common stock by the selling stockholders.</span></div><div><span><br/></span></div><div style="text-indent:36pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Upon completion of the IPO, the Company paid $9.5 million in cash bonuses to certain employees including members of management, as well as $0.2 million in related payroll taxes and expenses. Cash bonuses of $9.1 million were recorded in sales, general and administrative expenses and $0.4 million were recorded in research and development expenses in the accompanying condensed consolidated statements of comprehensive loss upon completion of the IPO. </span></div><div><span><br/></span></div><div style="text-indent:36pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">In April 2021, the Company’s board of directors declared a cash dividend of $35.0 million to the holders of record of its common stock and its redeemable convertible preferred stock as of May 3, 2021, which the Company paid on June 29, 2021.</span></div>Immediately prior to the completion of the IPO, the Company filed an Amended and Restated Certificate of Incorporation, which authorized a total of 1,000,000,000 shares of common stock and 20,000,000 shares of preferred stock. Upon the filing of the Amended and Restated Certificate of Incorporation, 49,100,928 shares of the Company’s redeemable convertible preferred stock then outstanding with a carrying value of $376.4 million were automatically converted into 49,649,023 shares of the Company’s common stock. Upon completion of the IPO, the Company recognized a gain on extinguishment of the redeemable convertible preferred stock for earnings per share purposes of $29.0 million from the conversion of redeemable convertible preferred stock to common stock. Following the completion of the IPO, the Company has one class of authorized and outstanding common stock.
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us-gaap Nature Of Operations
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Nature of Business<div style="margin-bottom:12pt;text-indent:36pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The Honest Company, Inc. (the “Company”) was incorporated in the State of California on July 19, 2011 and on May 23, 2012 was re-incorporated in the State of Delaware under the same name. The Company is a mission-driven lifestyle brand that formulates, designs and sells clean products with a focus on sustainability and thoughtful design. The Company sells its products through digital and retail sales channels in the following product categories: Diapers and Wipes, Skin and Personal Care, and Household and Wellness. </span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Initial Public Offering</span></div><div style="text-indent:36pt"><span><br/></span></div><div style="text-indent:36pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:114%">The Company’s registration statement on Form S-1 (“IPO Registration Statement”) related to its initial public offering (“IPO”) was declared effective on May 4, 2021, and the Company’s common stock began trading on the Nasdaq Global Select Market on May 5, 2021. On May 7, 2021, the Company completed its IPO of 25,807,000 shares of the Company's common stock, $0.0001 par value per share at an offering price of $16.00 per share. The Company sold 6,451,613 shares and certain existing stockholders sold an aggregate of 19,355,387 shares. The Company received aggregate net proceeds of approximately $91.0 million after deducting underwriting discounts and commissions of $6.7 million and other offering expenses of $5.5 million. The Company granted the underwriters an option for a period of 30 days to purchase up to an additional 3,871,050 shares of common stock from the selling stockholders at $16.00 per share less the underwriting discounts and commissions. In May 2021, the underwriters fully exercised the option to purchase these additional shares from the selling stockholders. The Company did not receive any proceeds from the sale of shares of its common stock by the selling stockholders.</span></div><div><span><br/></span></div><div style="text-indent:36pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Upon completion of the IPO, the Company paid $9.5 million in cash bonuses to certain employees including members of management, as well as $0.2 million in related payroll taxes and expenses. Cash bonuses of $9.1 million were recorded in sales, general and administrative expenses and $0.4 million were recorded in research and development expenses in the accompanying condensed consolidated statements of comprehensive loss upon completion of the IPO. </span></div><div><span><br/></span></div><div style="text-indent:36pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">In April 2021, the Company’s board of directors declared a cash dividend of $35.0 million to the holders of record of its common stock and its redeemable convertible preferred stock as of May 3, 2021, which the Company paid on June 29, 2021.</span></div>Immediately prior to the completion of the IPO, the Company filed an Amended and Restated Certificate of Incorporation, which authorized a total of 1,000,000,000 shares of common stock and 20,000,000 shares of preferred stock. Upon the filing of the Amended and Restated Certificate of Incorporation, 49,100,928 shares of the Company’s redeemable convertible preferred stock then outstanding with a carrying value of $376.4 million were automatically converted into 49,649,023 shares of the Company’s common stock. Upon completion of the IPO, the Company recognized a gain on extinguishment of the redeemable convertible preferred stock for earnings per share purposes of $29.0 million from the conversion of redeemable convertible preferred stock to common stock. Following the completion of the IPO, the Company has one class of authorized and outstanding common stock.
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CY2021Q2 us-gaap Sale Of Stock Price Per Share
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CY2021Q2 us-gaap Preferred Stock Shares Authorized
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CY2021Q2 us-gaap Preferred Stock Shares Authorized
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<div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Use of Estimates</span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:700;line-height:120%">    </span></div><div style="margin-bottom:12pt;text-indent:36pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s estimates, which are subject to varying degrees of judgment, include the valuation of inventories, sales returns and allowances, allowances for doubtful accounts, valuation of short-term investments, capitalized software, useful lives associated with long-lived assets, valuation allowances with respect to deferred tax assets, accruals and contingencies, recoverability of non-cash marketing credits, recoverability of goodwill and long-lived assets, and the valuation and assumptions underlying stock-based compensation and for the periods prior to the Company’s IPO, the fair value of common stock. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.</span></div><div style="margin-bottom:12pt;text-indent:36pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">In March 2020, the World Health Organization declared the outbreak of the novel coronavirus disease (“COVID-19”) a pandemic. The full extent to which the outbreak of the COVID-19 pandemic and any COVID-19 variants will impact the Company’s business, results of operations and financial condition is still unknown and will depend on future developments, which are uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak of COVID-19 and its variants, their severity, the actions to contain the virus and its variants or treat their impact, and how quickly and to what extent normal economic and operating conditions can resume.</span></div>In light of the unknown ultimate duration and severity of COVID-19 and the impact of any COVID-19 variants, the Company faces a greater degree of uncertainty than normal in making certain judgments and estimates needed to apply significant accounting policies. The Company assessed certain accounting matters and estimates that generally require consideration of forecasted information in context with the information reasonably available to the Company as of September 30, 2022 and through the date these condensed consolidated financial statements were issued. Management is not aware of any specific event or circumstance that would require an update to estimates or judgments or a revision to the carrying value of assets or liabilities. However, these estimates and judgments may change as new events occur and additional information is obtained, which may result in changes being recognized in the Company’s consolidated financial statements in future periods. For example, based on macro trends within our Household and Wellness product category, consumer demand for sanitizing and disinfecting products has decelerated at a more rapid than expected rate as more consumers are vaccinated and retailers continue to manage heavy inventories of sanitization and disinfecting products in stores. The Company recorded an inventory write-down of $0.8 million during the nine months ended September 30, 2022 and $5.6 million for the year ended December 31, 2021 relating to certain sanitization and disinfecting products as the amount of inventory was significantly in excess of the decreasing demand. During the three months ended September 30, 2022, the Company donated $1.5 million of excess sanitization products. The Company will continue to monitor and evaluate the uncertainty and volatility of these conditions, in particular, the impact on the amount and valuation of the Company’s inventory in the future.
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us-gaap Share Based Compensation Arrangements By Share Based Payment Award Options Exercises In Period Weighted Average Exercise Price
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us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Forfeitures In Period
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CY2022Q3 us-gaap Allocated Share Based Compensation Expense
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us-gaap Allocated Share Based Compensation Expense
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us-gaap Net Income Loss
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us-gaap Net Income Loss
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CY2022Q3 hnst Gain Loss On Conversion Of Preferred Stock
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CY2021Q3 hnst Gain Loss On Conversion Of Preferred Stock
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hnst Gain Loss On Conversion Of Preferred Stock
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CY2021Q3 us-gaap Preferred Stock Dividends Income Statement Impact
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us-gaap Preferred Stock Dividends Income Statement Impact
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CY2022Q3 us-gaap Lessee Operating Lease Liability Payments Due Next Twelve Months
LesseeOperatingLeaseLiabilityPaymentsDueNextTwelveMonths
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CY2022Q3 us-gaap Finance Lease Liability Payments Due Next Twelve Months
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2068000 usd
CY2022Q3 us-gaap Lessee Operating Lease Liability Payments Due Next Twelve Months
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8468000 usd
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LesseeOperatingLeaseLiabilityPaymentsDueYearTwo
8704000 usd
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CY2022Q3 us-gaap Lessee Operating Lease Liability Payments Due Year Three
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8950000 usd
CY2022Q3 us-gaap Finance Lease Liability Payments Due Year Three
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CY2022Q3 us-gaap Lessee Operating Lease Liability Payments Due Year Four
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88000 usd
CY2022Q3 us-gaap Lessee Operating Lease Liability Undiscounted Excess Amount
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CY2022Q3 us-gaap Finance Lease Liability
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CY2022Q3 us-gaap Finance Lease Liability Payments Due Year Two
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CY2021Q4 us-gaap Capital Leases Future Minimum Payments Interest Included In Payments
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350000 usd

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