NEW YORK, Dec. 01, 2020 (GLOBE NEWSWIRE) -- Mohawk Group Holdings, Inc. (Nasdaq: MWK) announced it acquired the assets of leading e-commerce business brands Mueller, Pursteam, Pohl and Schmitt, and Spiralizer from 9830 Macarthur LLC, ZN Direct LLC, and Reliance Equities Group, LLC. The Acquired Brand’s unaudited trailing twelve month revenue and operating income as of September 30, 2020, were approximately $77.5 million and $13.1 million, respectively.
Yaniv Sarig, Co-Founder and Chief Executive Officer of the Company, commented, “We are excited to announce this acquisition, which we are confident will achieve key strategic, financial and growth objectives for Mohawk and furthers our goal of building the consumer product platform of the future. By acquiring the assets of these four strong brands, we are demonstrating how our M&A strategy can be a powerful factor in our growth and profitability going forward. The 43 new products we are adding to our portfolio are mainly part of the home and kitchen small appliances category and will expand our existing large appliance product portfolio. In the last twelve months, private equity and venture capital backed companies have raised significant funding to fuel the acquisition of Amazon brands and we believe our technology platform and agile supply chain position Mohawk to be a leader in this space moving forward.”
Refinancing of Term Loan
Mohawk today also announced the refinancing of its existing term loan credit facility through the issuance of a Senior Secured Note to an institutional lender. The Company received gross proceeds of $38 million in exchange for the Senior Secured Note with an aggregate principal amount of $43 million. The new loan will be repaid over 24 equal monthly cash payments of $1.8 million. In connection with the Senior Secured Note, the Company issued to the institutional lender warrants to purchase an aggregate of 2,864,133 shares of the Company’s common stock at a strike price of $9.01, which represents a 27.6% premium to the closing price on November 30, 2020.
A.G.P. / Alliance Global Partners acted as sole placement agent on the debt transaction.
Increased 2020 Outlook
For full year 2020, the Company expects net revenue to be in the range of $180.0 million to $190.0 million, up from $175.0 million to $185.0 million, reflecting the addition of the Acquired Brands. The Company continues to expect to generate positive Adjusted EBITDA in the fourth quarter of 2020, excluding one-time items for transaction-related costs of the acquisition, and for the full year basis 2020.
The most directly comparable GAAP financial measure for Adjusted EBITDA is net loss and we expect to report a net loss for the three months ending December 31, 2020, and for the twelve months ending December 31, 2020, due primarily to quarterly interest expense, net and stock-based compensation expense.
The historical revenue and operating income of the Acquired Brands are subject to the completion of the Company’s standard procedures for the preparation and completion of its financial statements and completion of an audit by the Company’s independent registered public accounting firm.
2021 Preliminary Outlook
For full year 2021, the Company expects net revenue to be in the range of $290.0 million to $320.0 million.
About Mohawk Group Holdings, Inc.
Mohawk Group Holdings, Inc., together with its subsidiaries (“Mohawk”), is a rapidly growing technology-enabled consumer products company that uses machine learning, natural language processing, and data analytics to design, develop, market and sell products. Mohawk predominantly operates through online retail channels such as Amazon and Walmart. In addition to the Acquired Brands, Mohawk has seven owned and operated brands: hOme, Vremi, Xtava, Truweo, Holonix, Aussie Health and RIF6. Mohawk sells products in multiple categories, including home and kitchen appliances, kitchenware, environmental appliances (i.e., dehumidifiers and air conditioners), beauty-related products and, to a lesser extent, consumer electronics. Mohawk was founded on the premise that if a company selling consumer packaged goods was founded today, it would apply artificial intelligence and machine learning, the synthesis of massive quantities of data and the use of social proof to validate high caliber product offerings as opposed to over-reliance on brand value and other traditional marketing tactics.
