NEW YORK, Aug. 24, 2020 (GLOBE NEWSWIRE) — Mohawk Group Holdings, Inc. (NASDAQ: MWK) today announced that it has entered into a definitive agreement to purchase the assets of Truweo, a leading ecommerce brand in the health and personal wellness category. The Company will pay approximately $16.4 million, which reflects an approximately 2.5x multiple on Truweo’s trailing twelve month operating income measured as of July 31, 2020. Truweo’s TTM revenue and operating income, ending as of July 31, 2020, were approximately $14.0 million and $6.5 million, respectively.
Yaniv Sarig, Co-Founder and Chief Executive Officer, commented, “We are excited at the prospect of adding Truweo to our growing portfolio of brands. A vast ecosystem of small e-commerce sellers has emerged over the last five years and it includes many more great companies like Truweo. This transaction marks an acceleration of our M&A strategy. We believe that our investments in our proprietary technology platform will put us in a unique position to acquire many more high quality accretive businesses in the coming years. Our team’s expertise, the economies of scale of our supply chain and the automation driven by our platform create significant operating leverage and efficiency when integrating companies, like Truweo, once acquired. It’s important to note that despite the evident talent the Truweo team has demonstrated in creating the brand, this acquisition is an asset deal and we will not add any employees from Truweo to our staff or have any of Truweo’s fixed costs after the completion of the acquisition. We are continuing to execute on our vision of building the consumer product platform of the future and expect to see further exciting growth through launching more products under our brands and through the acquisition of additional brands.”
The acquisition is contingent upon obtaining certain required third party approvals and the satisfaction of customary conditions, and is expected to close on or about August 26, 2020.
Increased 2020 Outlook
For full year 2020, contingent upon the completion of the acquisition, the Company expects net revenue to be in the range of $175.0 million to $185.0 million, up from $170.0 million to $180.0 million, reflecting the addition of Truweo. After the completion of the acquisition, the Company continues to expect to generate positive Adjusted EBITDA on a quarterly basis as well as on a full year basis for 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 September 30, 2020 and 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 Truweo are subject to the completion of the Company’s standard procedures for the preparation and completion of its financial statements and the review of the Company’s financial statements by the Company’s independent registered public accounting firm.
About Mohawk Group Holdings, Inc.
Mohawk Group Holdings, Inc. and 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 six owned and operated brands: hOmeLabs, Vremi, Xtava, RIF6, Holonix Health, and Aussie Health Co. 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.
