Third quarter results reflect year over year
growth in all strategic brands of TRUBAR, No B.S. Skincare,
PureKana, and Vibez, while delivering positive adjusted EBITDA of
$0.1 M.
VANCOUVER, BC, Nov. 29,
2023 /CNW/ - Simply Better Brands Corp. ("SBBC" or
the "Company") (TSXV: SBBC) (OTCQB: SBBCF) is pleased to announce
its interim financial results for the three and nine months ended
September 30, 2023. The Company's
third quarter 2023 revenue delivered a record $19.4 M or 45% year over year growth, while
maintaining essentially flat gross margin versus year ago. The
strong revenue growth in Q3 2023 was achieved while simultaneously
reducing operating expense by $4.3 M
compared to the previous quarter and recording a positive adjusted
EBITDA. The Q3 year to date revenue of $67.6
M already exceeds full year 2022 at $65.4 M. All amounts are expressed in
United States dollars unless
otherwise noted. Certain metrics, including those expressed on an
adjusted basis, are non-International Financial Reporting Standards
("IFRS") measures, see "Non-IFRS Measures" below.
2023 THIRD QUARTER KEY COMMERCIAL ACHIEVEMENTS
- TRUBAR Protein Bar: Supporting TRUBAR's continued
expansion are four initiatives: confirmed manufacturing capacity
expansion, material COGS reduction, continued omni-channel
distribution in the Club, Convenience, and Grocery channels, and
category expansion into the protein powder category. Q3 2023
represented expansion in Costco with a second item in rotation of a
"Mint to be Chip" and "Get in my Belly, PB & Jelly" dual pack,
BJ's Wholesale, Sodexo, Andretti Oil and Circle K. This growth
trend continues with planned Q4 expansion into Longo's, Sobey's,
and Sheetz. The 2023 revenue forecast is three times more than the
previous period at $30 M+ versus $10
M in 2022.
- PureKana Wellness: PureKana, a leading plant-based
wellness brand, remained focused on its customer acquisition
initiative, adding over 60,443 customers during the quarter and
replenishing the sales funnel into a subscription model. PureKana's
strong D2C models based on review of its publicly traded
competitors financial statements earns it the top share position in
eCommerce hemp/CBD. To expand beyond human consumption, PureKana
commenced its pet offering in the $196
M hemp-based pet category (per Grandview Research)
with planned offerings in with calming chews, hip & joint
chews, and hair & coat drops. As an estimated 60% of PureKana's
loyal customers have pets, the growth opportunity is expected to be
sizeable.
- No B.S. Skincare: Originally, the No B.S. brand was
sourced exclusively online at livenobs.com and Amazon. In 2022, the
brand entered 3,200 CVS Health stores for a Back-to-School Event
and continues to maintain an on shelf presence in CVS's healthy
skin section. Initial brick and mortar success enabled the brand to
enter TJ Maxx in Q2, a national launch into Walgreen's in Q4 2023
in 3,400 locations, as well as placement on BJs.com. Sources of
growth include omni-channel expansion supported by insight-driven
innovation with an expanded facial acne patch portfolio (overnight
pimple patch and acne patch plus retinol night cream) and a natural
deodorant category entry.
- Vibez Wellness: The Vibez Wellness line was launched in
November 2022 to capture incremental
millennial consumers on their preventative wellness journey. With
an initial keto gummy supplement offering, the new brand has
achieved $3.7 M in revenue
year-to-date 2023. Vibez's primary focus is non-CBD solutions into
the weight management, gut health, calm, focal acuity, and healthy
hair consumer need states.
"As our Q3 2023 financial and commercial results illustrate, we
are positioned for continued revenue growth, profit optimization,
and debt reduction in 2023. Our strategic priorities remain to lead
consumer-centric innovation and relentlessly acquire customers to
these emerging brands by driving category and omni-channel
expansion. Our clean ingredient wellness brands are resonating with
our targeting Generation Z and Millennial consumers and retailers
as we innovate to solve their daily challenges. This commercial
relevancy has all four of strategic brands in growth mode, while
focusing on cost reduction to fuel the continued momentum. As we
assess all opportunities, our highest priority is keeping up with
the relentless demand on the unicorn of TRUBAR." says SBBC CEO,
Kathy Casey.
FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023
|
For the three months
ended
|
|
|
|
September 30,
2023
|
September 30,
2022
|
Change
|
expressed in Ms
*
|
$
|
% (in terms
of revenue)
|
$
|
% (in terms
of revenue)
|
$
|
%
|
Revenue
|
19.40
|
100 %
|
13.40
|
100 %
|
6.00
|
45 %
|
Cost of goods
sold
|
(6.70)
|
(35 %)
|
(4.60)
|
(34 %)
|
(2.10)
|
46 %
|
Gross
profit
|
12.70
|
65 %
|
8.80
|
66 %
|
3.90
|
44 %
|
Third Quarter September 30,
2023 – Revenue
The Company's revenue is generated by one segment – consumer
products and within that segment by four main subsidiaries,
PureKana, Tru, BRN (Vibez and Seventh Sense), No BS and other
subsidiaries which do not generate material revenue
currently. Revenue for the third quarter of 2023 was
$19.4 M, an increase of $6.0 M or 45% growth compared to $13.4 M in the third quarter of 2022.
PureKana's third quarter revenue for the three months ended
September 30, 2023, was $13.0 M compared to $9.3
M for the comparable period in 2022 (increase of
$3.7 M or 40%). PureKana's
revenue increase was driven by PureKana's marketing investments
made in the later part of the second quarter to increase new sales
and subscriptions. Tru's third quarter revenue for the three
months ended September 30, 2023, was
$4.5 M compared to $2.8 M for the comparable period in 2022
(increase of $1.7 M or 62%). No
BS's third quarter revenue for the three months ended September 30, 2023, was $0.8 M compared to $0.7
M for the comparable period in 2022. BRN's third
quarter revenue for the three months ended September 30, 2023, was $1.1 M, compared to $0.4
M in the third quarter of 2022. SBBC's other
subsidiaries contributed $0.0 M in
the third quarter compared to 0.2 M
in the prior period.
SBBC's cost of sales in the third quarter (35%) were comparable
to the prior period 2022 (34%). The Company continues to
manage its finished goods costs with co-manufacturers with the
higher order volumes it has been able to place. Cost of goods
sold for online sales (Direct to consumer "DTC") typically range in
the low to mid 70's and retailer (Business to Business "B2B") gross
margins range in the mid 30's to higher 40's. Cost of
goods sold was $6.7 M in the third
quarter of 2023 (35% of revenues) compared to $4.6 M (34% of revenues) in the comparable
period.
Gross profit for the third quarter of 2023 was $12.7 M (65%) compared to $8.8 M (66%) in the third quarter of 2022.
The gross profit margin was flat in the third quarter of 2023 over
the gross profit in the comparable period. There was a higher
mix of online sales in the third quarter of 2023 compared to the
second quarter of 2023 which had a higher percentage of lower
margin B2B sales.
Operating costs for the third quarter of 2023 were $14.2 M, an increase of $3.7 M (or 35%), compared to $10.5 M in the third quarter of 2022. The
majority of the operating costs increase incurred in the three
months ended September 30, 2023, were
marketing expenses ($9.8 M for Q3 or
69% of operating expenses) and they increased $3.6 M over the previous year directly related to
the increase in revenues for PureKana, BRN and Tru. Marketing
was down $3.6 M from the second
quarter in 2023. There are three main categories of marketing
expenses. They are online (1) online advertising, (2) email
marketing and social media and (3) retailer promotional
allowances. The first two categories of marketing expenses
are directly related to DTC sales whereas the retailer promotional
allowances are related to B2B sales. In the third quarter of 2023,
online advertising accounted for 82% of the marketing expenses
compared to 83% in the comparable period in 2022. In the third
quarter of 2023, email marketing and social media accounted for 7%
compared to 7% in the comparable period in 2022. DTC sales in the
third quarter of 2023 were 45% higher than DTC revenues in the
comparable period 2022. Marketing expenses related to DTC
were up by $3.3 M in the third
quarter of 2023 compared to those in the third quarter of 2022 due
to higher advertising and email marketing activities related to the
45% higher DTC sales in the third quarter of 2023 compared to the
prior period. In the third quarter of 2023, retailer
promotional allowances accounted for 13% of marketing expenses
compared to 8% in the comparable period in 2022. The increase
in this category of $0.2 M in the
third quarter was directly related to the higher sales of TRUBAR
and No BS brick and mortar sales in the third quarter of 2023
compared to the prior period. B2B sales increased from $3.0 M in Q3 2022 to $5.1
M in Q3 2023 ($2.1 M increase
in B2B sales). Customer services support represented 10% of
operating expenses for the three months ended September 30, 2023 ($1.4
M) and increased $0.9 M or
180% over the prior year ($0.5
M). These expenses were also directly related to the
increase in sales at PureKana and BRN. Salaries and Wages
were $0.9 M in the third quarter of
2023 represent 6% of total expenses and decreased $0.1 M from the prior year ($1.0 M) as a result of headcount reductions made
in the Herve and BRN acquisitions as the Company sought operating
synergies post-acquisition. Professional fees reduced
$0.3 M to $0.3
M for the three months ended September 30, 2023, compared to the prior year
($0.6 M). The $0.3 M reduction was driven by lower audit fees
($0.1 M) and lower consulting fees
($0.2 M).
Other income for the third quarter 2023 was $1.0 M compared to other income of $0.2 M in the third quarter of 2022 or an
increase of $0.8 M. The main
components in the third quarter of 2023 for other income and
expenses were finance costs of $0.5 M
and gain on remeasurement of warrant liabilities of $1.3 M.
The Company incurred a net loss of $0.6
M for the third quarter of 2023 which decreased by
$5.7 M over the loss in the second
quarter of 2023. The decrease in the third quarter loss is
primarily related to the decrease in operating expenses
($4.2 M) in the third quarter of 2023
compared to the second quarter of 2023. The decrease in operating
expenses was driven by a decrease in marketing expenses of
$3.6 M on the PureKana and TRUBAR
brands, decrease in impairment of inventories and A/R of
$0.3 M, and decrease in amortization
costs of $0.2 M.
Non-IFRS Measures (Earnings before Interest, Taxes,
Depreciation, and Amortization ("EBITDA") and Adjusted
EBITDA)
EBITDA and Adjusted EBITDA are non-GAAP measures used by
management that are not defined by IFRS. EBITDA and Adjusted EBITDA
do not have a standardized meaning prescribed by IFRS and therefore
may not be comparable to similar measures presented by other
issuers. Management believes that EBITDA and Adjusted EBITDA
provide meaningful and useful financial information as these
measures demonstrate the operating performance of a business
excluding non-cash charges.
The most directly comparable measure to EBITDA and Adjusted
EBITDA calculated in accordance with IFRS is net loss. The
following table presents the EBITDA and Adjusted EBITDA for the
three months ended September 30,
2023, and 2022, and a reconciliation of same to net income
(loss):
|
For the three months
ended
|
|
|
|
September 30,
2023
|
September 30,
2022
|
Change
in
|
|
$
|
$
|
$
|
%
|
Net
loss
|
(0.60)
|
(1.50)
|
0.90
|
(150 %)
|
Amortization
|
0.80
|
0.60
|
0.20
|
25 %
|
Finance
costs
|
0.50
|
0.40
|
0.10
|
20 %
|
EBITDA
|
0.70
|
(0.50)
|
1.20
|
(105 %)
|
Fair value adjustment
of derivative liability
|
(0.30)
|
(0.20)
|
(0.10)
|
33 %
|
Impairment of
receivable
|
-
|
0.20
|
(0.20)
|
100 %
|
Gain on settlement of
the milestone shares
|
-
|
(0.40)
|
0.40
|
100 %
|
Loss on remeasurement
of warrant liabilities
|
(1.30)
|
-
|
(1.30)
|
100 %
|
Share-based
payments
|
0.50
|
0.80
|
(0.30)
|
(60 %)
|
Shares issued for
services
|
-
|
0.10
|
(0.10)
|
100 %
|
Write-off of advance
payments
|
0.10
|
-
|
0.10
|
100 %
|
Non-recurring
expenses
|
0.40
|
-
|
0.40
|
100 %
|
Adjusted
EBITDA
|
0.10
|
0.00
|
0.10
|
468 %
|
The Company generated positive adjusted EBITDA of $0.1 M for the three months ended September 30, 2023, a $2.5
M improvement over the adjusted EBITDA loss incurred in the
second quarter of 2023. Q3 adjusted EBITDA of $0.1 M was an increase of $0.1 M over the adjusted EBITDA of $0.0 M for the comparable period in 2022. The
primary driver for the positive adjusted EBITDA of $0.1 M for the third quarter of 2023 is due to
the increase in cash operating expenses ($3.7 M) which were offset by increased gross
profits ($3.8 M) compared to the
prior period in 2022.
CONFERENCE DETAILS
A conference call to discuss the results is scheduled for the
following day on November 30, 2023,
at 10:00 a.m. EST.
Conference Call
Participant Details
|
RapidConnect
URL:
|
https://emportal.ink/3tzAPMb
|
Local:
|
Toronto:
416-764-8650
|
North American Toll
Free:
|
888-664-6383
|
Webcast
URL
|
Audience
URL:
|
https://app.webinar.net/p4JBDoWDqx6
|
Conference
Replay
|
Conference Replay
Local:
|
416-764-8677
|
Conference Replay
North American Toll Free:
|
1-888-390-0541
|
Conference Replay
Entry Code:
|
409892 #
|
About Simply Better Brands Corp.
Simply Better Brands Corp. leads an international
omni-channel platform with diversified assets in the emerging
plant-based and holistic wellness consumer product categories. The
Company's mission is focused on leading innovation for the informed
Millennial and Generation Z generations in the rapidly growing
plant-based, natural, and clean ingredient space. The Company
continues to focus on expansion into high-growth consumer product
categories including plant-based food, clean ingredient
skincare and plant-based wellness. For more information on
Simply Better Brands Corp., please visit:
https://www.simplybetterbrands.com/investor-relations.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Forward-Looking Information
Certain statements contained in this news release constitute
"forward-looking information" and "forward looking statements" as
such terms are used in applicable Canadian securities laws.
Forward-looking statements and information are based on plans,
expectations and estimates of management at the date the
information is provided and are subject to certain factors and
assumptions, including, among others, that the Company's financial
condition and development plans do not change as a result of
unforeseen events, the impact of the COVID-19 pandemic, the
regulatory climate in which the Company operates, and the Company's
ability to execute on its business plans. Specifically, this news
release contains forward-looking statements relating to, but not
limited to: planned Q4 expansion into Longo's, Sobey's, and Sheetz,
size of the growth opportunity in the hemp-based pet category, No
BS's planned launch in Walgreens in Q4 and expansion of its
facial acne patch portfolio (overnight pimple patch and acne patch
plus retinol night cream) and a natural deodorant category entry,
2023 guidance and results of operations, growth of the Company's
brands, and, success of the Company's marketing efforts.
Forward-looking statements and information are subject to a
variety of risks and uncertainties and other factors that could
cause plans, estimates and actual results to vary materially from
those projected in such forward-looking statements and information.
Factors that could cause the forward-looking statements and
information in this news release to change or to be inaccurate
include, but are not limited to, the risk that any of the
assumptions referred to prove not to be valid or reliable, that
occurrences such as those referred to above are realized and result
in delays, or cessation in planned work, that the Company's
financial condition and development plans change, ability to obtain
necessary regulatory approvals for proposed transactions, as well
as the other risks and uncertainties applicable to the plant-based
food, clean ingredient skincare and plant-based wellness or
broader wellness industries and to the Company, and as set forth in
the Company's annual information form available under the Company's
profile at www.sedarplus.com.
The above summary of assumptions and risks related to
forward-looking statements in this news release has been provided
in order to provide shareholders and potential investors with a
more complete perspective on the Company's current and future
operations and such information may not be appropriate for other
purposes. There is no representation by the Company that actual
results achieved will be the same in whole or in part as those
referenced in the forward-looking statements and the Company does
not undertake any obligation to update publicly or to revise any of
the included forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required
by applicable securities law.
Financial Outlook
This press release contains future-oriented financial
information and financial outlook information (collectively,
"FOFI") about the financial results the quarter ended
September 30, 2023, and the year
ended December 31, 2023, including
net sales, gross margin, and Adjusted EBITDA, all of which are
subject to the same assumptions, risk factors, limitations, and
qualifications as set out under the heading "Forward-Looking
Information". The actual financial results of the Company may vary
from the amounts set out herein and such variation may be material.
The Company and its management believe that the financial outlook
has been prepared on a reasonable basis, reflecting management's
best estimates and judgments and the FOFI contained in this press
release was approved by management as of the date hereof. However,
because this information is subjective and subject to numerous
risks, it should not be relied on as necessarily indicative of
future results. Except as required by applicable securities laws,
the Company undertakes no obligation to update such FOFI. FOFI
contained in this press release was made as of the date hereof and
was provided for the purpose of providing further information about
the Company's anticipated future business operations on a quarterly
and annual basis. Readers are cautioned that the FOFI contained in
this press release should not be used for purposes other than for
which it is disclosed herein.
SOURCE Simply Better Brands Corp