Net Revenue Grew 45% Year-Over-Year to $58.8 Million

Net Loss Improved to $0.8 Million, Adjusted EBITDA Improved to $5.1 Million

NEW YORK, Nov. 09, 2020 (GLOBE NEWSWIRE) — Mohawk Group Holdings, Inc. (NASDAQ: MWK) (“Mohawk” or the “Company”) today announced results for the third quarter ended September 30, 2020.

Third Quarter 2020 Highlights

• 8 new products launched in the third quarter compared to 3 in the third quarter of 2019.
• Net revenue grew 45% to $58.8 million, compared to $40.6 million in the third quarter of 2019.
• Gross margin improved to 47.8% versus 43.2% in the third quarter of 2019.
• Operating income increased to $0.1 million compared to an operating loss of $(14.1) million in the third quarter of 2019.
• Contribution margin improved to 19.1% from 8.0% in the third quarter of 2019.
• Excluding non-cash stock-based compensation of $4.9 million in the third quarter of 2020 and $11.4 million in the third quarter of 2019, fixed operating expenses for the third quarter decreased as a percentage of net revenue to 10.5% compared to 14.6% in the third quarter of 2019.
• Net loss of $(0.8) million improved from a net loss of $(15.0) million in the third quarter of 2019.
• Adjusted EBITDA improved to $5.1 million versus a loss of $(2.7) million in the third quarter of 2019.
• Total cash balance at September 30, 2020 increased by $20.2 million from June 30, 2020 to $37.4 million, while reducing our revolving credit facility and term loan debt by $5.9 million.

Yaniv Sarig, Co-Founder and Chief Executive Officer, commented, “The third quarter was an exciting one for Mohawk, as we saw solid revenue growth and Adjusted EBITDA profitability growth. E-commerce adoption continues to accelerate and we feel very well positioned to capitalize on this trend. In the third quarter we also successfully executed on the acquisition of Truweo, a wellness brand, and we are pleased with the integration of the brand into our portfolio. We are already expanding the brand’s offerings through our core business model by developing several new products that we expect to launch in the first quarter of 2021. We expect to continue to invest in our M&A strategy in the coming quarters by acquiring and integrating additional accretive e-commerce businesses into our platform while continuing to grow the number of new products we develop and launch.”

Outlook

For full year 2020, the Company continues to expect net revenue to be in the range of $175.0 million to $185.0 million driven primarily by continued growth of its existing product portfolio, new products launched in 2020, and the positive contribution from wholesale personal protective equipment (“PPE”). The Company continues to expect to generate positive Adjusted EBITDA in the fourth quarter of 2020 and for the full year 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.

Non-GAAP Financial Measures

For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the “Non-GAAP Financial Measures and Reconciliations” section below.

Webcast and Conference Call Information

Mohawk will host a live conference call to discuss financial results today, November 9, 2020, at 5:00 p.m. Eastern Time. To access the call, participants from within the U.S. should dial (877) 295-1077 and participants from outside the U.S. should dial (470) 495-9485 and provide the conference ID: 3541208. Participants may also access the call through a live webcast at https://ir.mohawkgp.com/investor-relations. Please visit the website at least 15 minutes prior to the start of the call to register and download any necessary software. The archived online replay will be available for a limited time after the call in the Investor Relations section of Mohawk’s website.

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. 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), personal protective equipment, 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.

Forward Looking Statements

All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements about our expected 2020 net revenue, our expected Adjusted EBITDA and net loss for the fourth quarter of 2020 and full year 2020, our ability to leverage our tech enabled business model, our ability to continue to invest in our software platform to drive efficiencies, our ability to capitalize on the adoption of e-commerce and the shift to online consumer spending, our ability to expand Truweo’s product offerings, the expected timing of new product launches, including the expected launch of new products for the Truweo brand in the first quarter of 2021, expectations regarding continued investment in our M&A strategy in the future, our ability to integrate additional e-commerce businesses into our platform, our ability to acquire accretive e-commerce businesses, our ability to grow the number of new products we develop and launch and our ability to continue to maintain or grow our existing product portfolio, including our ability to maintain or grow sales of PPE.

These forward-looking statements are based on management’s current expectations and beliefs and are subject to uncertainties and factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to, those related to the impact of the COVID-19 pandemic including its impact on consumer demand, our cash flows, financial condition and revenue growth rate; our supply chain including sourcing, manufacturing, warehousing and fulfillment; our ability to manage expenses, working capital and capital expenditures efficiently; our business model and our technology platform; our ability to disrupt the consumer products industry; our ability to grow market share in existing and new product categories, including PPE; our ability to generate profitability and stockholder value; international tariffs and trade measures; inventory management, product liability claims, recalls or other safety and regulatory concerns; reliance on third party online marketplaces; seasonal and quarterly variations in our revenue; acquisitions of other companies and technologies and our ability to integrate any such companies and technologies with our business and other factors discussed in the “Risk Factors” section of our most recent periodic reports filed with the Securities and Exchange Commission (“SEC”), all of which you may obtain for free on the SEC’s website at www.sec.gov.

Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by us on our website or otherwise. We do not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Disclaimer:

Spotlight Growth is compensated, either directly or via a third party, to provide investor relations services for its clients. Spotlight Growth creates exposure for companies through a customized marketing strategy, including design of promotional material, the drafting and editing of press releases and media placement.

All information on featured companies is provided by the companies profiled, or is available from public sources. Spotlight Growth and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever and we are not qualified to give financial advice. The information contained herein is based on external sources that Spotlight Growth believes to be reliable, but its accuracy is not guaranteed. Spotlight Growth may create reports and content that has been compensated by a company or third-parties, or for purposes of self-marketing. Spotlight Growth was compensated ten thousand dollars by Mohawk for the creation and dissemination of this content by the company.

This material does not represent a solicitation to buy or sell any securities. Certain statements contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements with respect to the Company’s plans and objectives, projections, expectations and intentions. These forward-looking statements are based on current expectations, estimates and projections about the Company’s industry, management’s beliefs and certain assumptions made by management.

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