VANCOUVER, BC, Aug. 12, 2021 /CNW/ - Kits Eyecare Ltd.
(KITS) (TSX: KITS) (OTCQX: KTYCF), a digital eyecare platform
inspired by the beauty of Kits beach, where the Pacific Ocean meets
the rainforest and snow covered mountains of Vancouver, British Columbia has released its
financial results for the second quarter of 2021.
Second Quarter 2021 Highlights
- First half 2021 revenue was $42,101,000, an increase of 21% compared to the
same period last year. On a constant currency basis, first half
2021 revenue grew by 28% year-on-year
- Record 2Q 2021 revenue, reaching $21,669,000, an increase of 7% compared to 2Q
2020. On a constant currency basis, 2Q 2021 revenue grew by 16%
over 2Q 2020
- Orders delivered grew by 27% vs. 2Q 2020 and 15% vs. 1Q 2021
demonstrating our ability to grow and retain customers in a post
COVID environment
- Record 43,000 eyeglasses delivered in 2Q 2021, up 8x
compared to 2Q 2020
- Delivered our first 100,000 pairs of prescription
eyeglasses
- KITS generated over 45% more in revenue per Autoship customer
compared to our average non-subscription contact lens customer in
the last twelve months
- Gross margins in the quarter were 22% as we maximized all
levers for acquisition in the first half
- First half 2021
net loss of $8.4 million, which includes
IPO related costs of $1.5 million,
share-based compensation expense of $0.7
million, and brand investment of $2.4
million from proceeds earmarked from our IPO
The second quarter was a key strategic investment period as we
completed the build out of our new state-of-the-art optical lab,
with the ability to produce both single vision and progressive
lenses and glasses. Our strong second quarter revenue and
exceptional order growth reflects our continued investment to
acquire first time glasses patients and move our contact lens
patients from transactional to recurring subscription revenue. We
believe our best use of capital is to acquire new glasses and
subscription customers now as consumers are changing their
traditional buying behaviors. These are long-term investments to
drive financial performance and growth.
Our strong order volume in the second quarter reflects the
success of our investment strategy. We organically grew orders by
27% compared to 2Q 2020. We delivered a record 43,000 pairs of
eyeglasses to patients in 2Q 2021 as compared to 5,000 eyeglasses
in 2Q 2020, an 8-fold increase in a year, and we delivered our
100,000th pair of prescription glasses.
The transition to our 'giga' lab, within our new fulfillment
center, occurred a month earlier than planned and pairs
manufacturing with fulfillment enabling us to provide superior
speed of service to our customers as we maintain one of the largest
contact lens and glasses inventories in the optical industry. We
expect to complete two additional new production lines in the
second half of the year, which will expand production capability to
meet growing demand.
In the second quarter, we delivered 136,000 contact lens orders,
a 17% increase over the prior quarter. The strong growth in order
and reorder volume was driven by our continued investment in
expanding our inventory selection and improving speed to customers
via logistics and fulfillment improvements. We are constantly
refining our Autoship subscription introductory and program offers
to both attract new subscribers and increase subscriber retention
as we balance revenue and margin growth. Our new customer growth
outstripped growth in our Autoship program which represented 20% of
contact lens orders this quarter. In addition, overall revenue from
repeat customers rose slightly to 66% in the first half of 2021
relative to 65% for the full year 2020.
In summary, 2Q 2021 was another record quarter in terms of
adding predictable recurring revenue and new glasses customers,
with a strong long-term margin profile. We believe the combination
of building the largest subscription business in the category
paired with the lowest cost of eyeglasses production is
strategically critical as patients continue to move online in
search for better and more cost-effective ways of buying eyewear.
The balance of the year will be centered on continuing to improve
our offering, service times, and satisfaction numbers.
Financial Outlook
Based on our strategic investments this year and the positive
momentum we are seeing on new customer growth and the expansion of
LTV through our subscription program, we expect sustained growth of
our core contact lens customers and substantial growth in our newly
launched glasses business to continue through 2022 and
beyond.
Having invested heavily in the first half of 2021 in our
infrastructure and customers, we expect revenue of $115-125 million in 2022 and to return to
positive EBITDA in early 2022. This will enable us to return to
funding our growth from internally generated cash flow.
We look forward to updating stakeholders on our progress in the
coming quarters.
Conference Call and Webcast Information
Roger Hardy, Chief Executive
Officer, Joseph Thompson, Chief
Operating Officer, and Sabrina Liak, Chief Financial Officer
will host a conference call at 1:30 p.m.
Pacific Time on August 12,
2021 to discuss KITS' financial results and outlook. To
attend the call, participants may dial: (416) 764-8659 or (888)
664-6392 Conference Id: 94667977 or join our webcast:
https://produceredition.webcasts.com/starthere.jsp?ei=1486503&tp_key=c7e7ba2993
About KITS
KITS is a rapidly growing, vertically integrated, digitally
native eyecare platform for eyes everywhere. We offer customers
access to a vast selection of contact lenses and eyeglasses,
including our own exclusive KITS designed products, as well as a
robust suite of online vision tools. Our efficient digital
platform, backed by our industry-leading manufacturing and designs,
removes intermediaries and enables us to offer great prices and
deliver made to order personalized products with incredible care
and accuracy. We are creating disruption in the industry by
constantly pursuing cutting-edge technologies to enable the best
customer experience, including online eyewear fitting tools,
virtual try-on for glasses, and an integrated online vision test.
We strive to delight our customers with our competitive prices, a
convenient digital shopping experience, fast and reliable delivery
options and an unrelenting focus on earning our customers' lifelong
trust. For more information on KITS, visit: www.KITS.com.
Financial Highlights
The following selected financial information is qualified in its
entirety by and should be read in conjunction with our unaudited
condensed interim consolidated financial statements for the three
and six months ended June 30, 2021
and June 30, 2020 and accompanying
notes and Management's Discussion and Analysis ("MD&A") which
may be viewed on SEDAR at www.sedar.com.
|
Three Months
Ended
|
|
Six Months
Ended
|
Financial and
Operating Data
|
June 30,
2021
(unaudited)
|
|
June 30,
2020
(unaudited)
|
|
June 30,
2021
(unaudited)
|
|
June 30,
2020
(unaudited)
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
21,669
|
|
$
|
20,322
|
|
$
|
42,101
|
|
$
|
34,733
|
Gross
profit
|
$
|
4,686
|
|
$
|
6,410
|
|
$
|
9,590
|
|
$
|
10,711
|
Net income
(loss)
|
$
|
(4,858)
|
|
$
|
221
|
|
$
|
(8,426)
|
|
$
|
(235)
|
|
|
|
|
|
|
|
|
Non-IFRS Measures
(a):
|
|
|
|
|
|
|
|
Constant currency
revenue
|
$
|
21,669
|
|
$
|
18,496
|
|
$
|
42,101
|
|
$
|
32,277
|
EBITDA
|
$
|
(5,508)
|
|
$
|
1,511
|
|
$
|
(10,418)
|
|
$
|
2,695
|
Adjusted EBITDA
|
$
|
(3,290)
|
|
$
|
1,636
|
|
$
|
(5,853)
|
|
$
|
3,050
|
Adjusted EBITDA Margin
%
|
(15.2%)
|
|
8.1%
|
|
(13.9%)
|
|
8.8%
|
|
|
|
|
Reconciliation of
constant currency revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
21,669
|
|
$
|
20,322
|
|
$
|
42,101
|
|
$
|
34,733
|
Foreign exchange
impact
|
-
|
|
(1,826)
|
|
-
|
|
(2,456)
|
Constant Currency
Revenue
|
$
|
21,669
|
|
$
|
18,496
|
|
$
|
42,101
|
|
$
|
32,277
|
|
|
|
|
|
|
|
|
Change in constant
currency
|
$
|
3,173
|
|
|
|
$
|
9,824
|
|
|
Change in constant
currency %
|
15.6%
|
|
|
|
28.3%
|
|
|
|
|
|
|
Reconciliation of
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income / (loss)
for the period
|
$
|
(4,858)
|
|
$
|
221
|
|
$
|
(8,426)
|
|
$
|
(235)
|
Add back
|
|
|
|
|
|
|
|
Income
taxes
|
(1,433)
|
|
153
|
|
(4,019)
|
|
394
|
Finance costs -
net
|
290
|
|
625
|
|
1,026
|
|
1,530
|
Depreciation and
amortization
|
493
|
|
512
|
|
1,001
|
|
1,006
|
EBITDA
|
$
|
(5,508)
|
|
$
|
1,511
|
|
$
|
(10,418)
|
|
$
|
2,695
|
|
|
|
|
|
|
|
|
Financial and
Operating Data
|
|
|
|
|
|
|
|
Add back
|
|
|
|
|
|
|
|
Share-based
compensation (b)
|
$
|
322
|
|
$
|
48
|
|
$
|
661
|
|
$
|
178
|
Brand expenses
(c)
|
1,144
|
|
-
|
|
2,448
|
|
-
|
One-time costs
(d)
|
752
|
|
77
|
|
1,456
|
|
177
|
Adjusted
EBITDA
|
$
|
(3,290)
|
|
$
|
1,636
|
|
$
|
(5,853)
|
|
$
|
3,050
|
|
|
|
|
|
|
|
|
Notes:
|
|
(a)
|
Refer to "Non-IFRS
Measures and Industry Metrics" section of the MD&A filed on
www.sedar.com.
|
(b)
|
Represents non-cash
share-based compensation expense associated with restricted share
rights ("RSRs") and options recognized in the period.
|
(c)
|
Represent expenses
associated with brand and content creation for KITS including film
and other brand assets. The Company plans to use these brand assets
over time and therefore will be able to derive future economic
benefits from these expenses incurred.
|
(d)
|
In connection with
the acquisition of Kits.com and the IPO, the Company incurred
expenses related to professional fees, consulting, legal, and
accounting that would otherwise not have been incurred and were
directly related to these two matters. These fees are not
indicative of the Company's ongoing costs. Other than the one-time
IPO directors and officers insurance costs which is expensed over
the insurance coverage period, we expect the remaining cost to
discontinue following the completion of the IPO.
|
Non-IFRS Financial Measures and Industry Metrics
This press release includes references to certain non-IFRS
financial measures such as Constant Currency Revenue, EBITDA and
Adjusted EBITDA, and industry metrics. These financial measures and
industry metrics are employed by the company to measure its
operating and economic performance and to assist in business
decision-making, as well as providing key performance information
to senior management. The company believes that, in addition to
conventional measures prepared in accordance with IFRS, certain
investors and analysts use this information to evaluate the
company's operating and financial performance. These financial
measures are not defined under IFRS nor do they replace or
supersede any standardized measure under IFRS. Other companies in
our industry may calculate these measures differently than we do,
limiting their usefulness as comparative measures. Definitions and
reconciliations of non-IFRS measures to the nearest IFRS measure
and Industry Metrics can be found in our Management's Discussion
and Analysis. Such non- IFRS reconciliations can also be found in
this press release under "Financial Highlights".
Forward-Looking Statements
This press release contains forward-looking statements,
including statements relating to the execution of our proposed
strategy, our operating performance and prospects on the business.
These forward-looking statements generally can be identified by the
use of words such as "intend," "believe," "could," "continue,"
"expect," "estimate," "forecast," "may," "potential," "project,"
"plan," "would," "will," and other words of similar meaning. Each
forward-looking statement contained in this press release is
subject to risks and uncertainties that could cause actual results
to differ materially from those expressed or implied by such
statement. Our business is subject to substantial risks and
uncertainties. This forward-looking information and other
forward-looking information are based on our opinions, estimates
and assumptions in light of our experience and perception of
historical trends, current conditions and expected future
developments, as well as other factors that we currently believe
are appropriate and reasonable in the circumstances. Despite a
careful process to prepare and review the forward-looking
information, there can be no assurance that the underlying
opinions, estimates and assumptions will prove to be correct.
Certain assumptions in respect of the expansion and enhancement of
our optical laboratory for glasses and warehouse facilities; the
growth of our business and launch of new technologies; our ability
to drive sales growth; our ability to maintain, enhance, and grow
within our addressable market; our ability to drive ongoing
development and innovation of our exclusive brands and product
categories; our ability to continue directly sourcing from third
party suppliers and manufacturers; our ability to retain key
personnel; our ability to add, maintain and expand production,
distribution and fulfillment capabilities; our ability to continue
investing in infrastructure to support our growth; our ability to
obtain and maintain existing financing on acceptable terms;
currency exchange and interest rates; the impact of competition;
the changes and trends in our industry or the global economy; and
the changes in laws, rules, regulations, and global standards are
material factors made in preparing forward-looking information and
management's expectations. KITS' risks and uncertainties are
discussed in detail in the company's Annual Information Form, which
was filed on SEDAR on March 30,
2021. Investors, potential investors, and others should give
careful consideration to these risks and uncertainties. We caution
investors not to rely on the forward-looking statements contained
in this press release when making an investment decision in our
securities. The forward-looking statements in this press release
speak only as of the date of this release, and we undertake no
obligation to update or revise any of these statements, except as
required under applicable securities laws. If we do update
certain forward-looking information, no inference should be made
that we will further update such or other forward-looking
information.
SOURCE KITS