VANCOUVER, BC, April 24,
2024 /CNW/ - Simply Better Brands Corp. ("SBBC" or
the "Company") (TSXV: SBBC) (OTCQB: SBBCF) today reported its
audited financial results for the year ended December 31, 2023. 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.
Selected financial and operating information are outlined below
and should be read with the Company's consolidated financial
statements and related management's discussion and analysis for the
year ended December 31, 2023, which
are available under the Corporation's profile on SEDAR+ at
www.sedarplus.ca.
SBBC generated revenue of $79.9
million in fiscal 2023, a 22% increase over the prior year,
gross profit of $46.9 million, and an
adjusted EBITDA loss of $2.7 million.
The primary driver of the adjusted EBITDA loss was the performance
of the Purekana subsidiary which commenced bankruptcy proceedings
earlier this month following completion by SBBC of a comprehensive
review of strategic alternatives for the business.
"Our 2023 performance was highlighted by the continued robust
growth of TRUBARTM which further expanded
its distribution footprint across North
America and delivered year over year revenue growth of
133%," said SBBC Interim Chief Executive Officer and Chairman,
Kingsley Ward. "With our exit of
Purekana now complete, we are putting additional resources and
investment behind TRUBARTM and we are well positioned
for continued TRUBARTM revenue growth, driving further
profit improvement, and debt reduction for SBBC in 2024."
2023 YEAR KEY COMMERCIAL HIGHLIGHTS
- TRUBARTM Protein Bar: TRUBARTM
revenue was $24.7 million in 2023
compared to $10.6 million in 2022, an
increase of $14.1 million. Growth of
the brand in 2023 was driven by continued multi-channel
distribution expansion to a growing list of major retailers in
convenience, grocery, ecommerce and club channels led by Costco..
To support its retail expansion, TRUBARTM signed a
strategic agreement with Acosta, a full-service sales agency with
deep CPG brand experience and added a second manufacturing facility
to its supply chain to meet growing product demand.
- No B.S. Skincare: Following its online launch and
exclusive sale at livenobs.com and Amazon, the No B.S. brand became
available at retail in TJ Maxx locations in Q2 2023 followed by a
national launch into Walgreen's in Q4 2023 across 3,400
locations.
FINANCIAL HIGHLIGHTS FOR YEAR ENDED
DECEMBER 31, 2023
For the twelve months ended December 31,
2023, the Company generated revenue of $79.9 million with a gross profit of $46.9 million (59%) compared to $65.4 million with a gross profit of $44.6 million (68%) during the twelve months
ended December 31, 2022.
Revenue increased by $14.5 million
(22% increase) over the prior year's revenues.
Operating costs for the twelve months ended December 31, 2023, were $57.6 million, an increase of $3.1 million (6%), compared to $54.3 million for the twelve months ended
December 31, 2022.
During the twelve months ended December
31, 2023, the Company recorded a net loss of $24.3 million compared to a net loss of
$12.3 million for the twelve months
ended December 31, 2022.
Non-cash charges including goodwill impairment,
intangible asset impairment, amortization expense and stock-based
compensation were $18.1
million. Finance charges accounted for $2.3 million. The impairment charges
in 2023 were largely related to the Company's hemp-based businesses
and the operating loss was driven by Purekana during 2023.
Purekana filed for Chapter 7 bankruptcy on April 3, 2024 after the completion by SBBC of a
comprehensive review of strategic alternatives for the
business.
For the three months ended December 31,
2023, the Company generated revenue of $12.3 million with a gross profit of $6.7 million (54%) compared to $23.0 million with a gross profit of $16.1 million (70%) during the three months ended
December 31, 2022.
Operating costs for the three months ended December 31, 2023, were $10.0 million, a decrease of $9.9 million (50%), compared to $19.9 million for the three months ended
December 31, 2022.
During the three months ended December
31, 2023, the Company recorded a net loss of $14.6 million compared to a net loss of
$5.4 million for the three months
ended December 31, 2022.
Non-cash charges including goodwill impairment,
intangible asset impairment, amortization expense and stock-based
compensation were $12.9
million. Finance charges accounted for $0.6 million.
Non-IFRS Measures (EBITDA and Adjusted EBITDA)
EBITDA and Adjusted EBITDA are non-IFRS 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 the business
excluding non-cash charges.
"EBITDA" is calculated as earnings before interest, taxes,
depreciation, depletion and amortization. "Adjusted EBITDA" is
calculated as EBITDA adjusted for non-cash, extraordinary,
non-recurring and other items unrelated to the Company's core
operating activities.
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
twelve months ending December 31,
2023, and 2022, and a reconciliation of same to net income
(loss):
|
For the years
ended
|
|
|
|
December 31,
2023
|
December 31,
2022
|
Change
in
|
|
$
|
$
|
$
|
%
|
Net
loss
|
(24.30)
|
(12.30)
|
(12.00)
|
49 %
|
Amortization
|
3.80
|
4.70
|
(0.90)
|
(24 %)
|
Depreciation
|
-
|
0.10
|
(0.10)
|
100 %
|
Finance
costs
|
2.30
|
1.40
|
0.90
|
39 %
|
Income tax
recovery
|
-
|
(1.00)
|
1.00
|
100 %
|
EBITDA
|
(18.20)
|
(7.10)
|
(11.10)
|
|
Acquisition-related
costs
|
-
|
0.20
|
(0.20)
|
100 %
|
Acquisition costs paid
by common shares
|
-
|
0.20
|
(0.20)
|
100 %
|
Fair value adjustment
of derivative liability
|
(0.20)
|
(0.10)
|
(0.10)
|
50 %
|
Impairment of
intangible assets
|
1.00
|
1.60
|
(0.60)
|
(60 %)
|
Impairment of
goodwill
|
10.90
|
-
|
10.90
|
100 %
|
Impairment of
inventories
|
0.10
|
0.20
|
(0.10)
|
(100 %)
|
Impairment of plant and
equipment
|
-
|
0.20
|
(0.20)
|
100 %
|
Impairment of
receivable
|
0.20
|
0.10
|
0.10
|
50 %
|
Gain on settlement of
the milestone shares
|
-
|
(0.40)
|
0.40
|
100 %
|
Share-based
payments
|
2.00
|
4.30
|
(2.30)
|
(115 %)
|
Consulting fees to be
paid by shares
|
-
|
0.30
|
(0.30)
|
100 %
|
Shares issued for
services
|
-
|
0.40
|
(0.40)
|
100 %
|
Warrants issued for
services
|
-
|
0.10
|
(0.10)
|
100 %
|
Write-off of advance
payments
|
0.30
|
0.50
|
(0.20)
|
(67 %)
|
Non-recurring
expenses
|
1.20
|
-
|
1.20
|
100 %
|
Adjusted
EBITDA
|
(2.70)
|
0.50
|
(3.20)
|
|
The Company had an Adjusted EBITDA loss of $2.7 million for the twelve months ending
December 31, 2023, a decrease of
$3.2 million over the Adjusted EBITDA
of $0.5 million for the comparable
period in 2022. The primary driver for the increased Adjusted
EBITDA loss of $2.7 million for the
twelve months ending December 31,
2023, is the increase in cash operating expenses
($6.2 million) which were offset by
increased gross profits ($2.3
million) and non-recurring expenses ($1.2 million) compared to the prior period in
2022. The biggest contributor to the Adjusted EBITDA loss was
Purekana for the twelve months ended December 31, 2023. On a stand-alone basis,
Purekana was the biggest driver of the EBITDA loss before
non-recurring expenses. Purekana's 2023 EBITDA loss was
$4.1 million compared to TRU's
positive EBITDA of $1.0 million
during the year. The other divisions did not contribute
materially to the Adjusted EBITDA loss for the year.
Purekana filed for Chapter 7 bankruptcy on April 3, 2024 after the Company's Board had
explored all viable options for this business.
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 December 31, 2023,
and 2022, and a reconciliation of same to net income (loss):
|
For the three months
ended
|
|
|
|
December 31,
2023
|
December 31,
2022
|
Change
in
|
|
$
|
$
|
$
|
%
|
Net
loss
|
(14.60)
|
(5.40)
|
(9.20)
|
63 %
|
Amortization
|
0.70
|
3.30
|
(2.60)
|
(371 %)
|
Finance
costs
|
0.60
|
0.50
|
0.10
|
17 %
|
Income tax
recovery
|
-
|
(1.00)
|
1.00
|
100 %
|
EBITDA
|
(13.30)
|
(2.60)
|
(10.70)
|
|
Fair value adjustment
of derivative liability
|
(0.10)
|
-
|
(0.10)
|
100 %
|
Impairment of
intangible assets
|
0.80
|
1.60
|
(0.80)
|
(100 %)
|
Impairment of
goodwill
|
10.90
|
-
|
10.90
|
100 %
|
Impairment of
inventories
|
(0.10)
|
0.20
|
(0.30)
|
300 %
|
Impairment of plant and
equipment
|
-
|
0.20
|
(0.20)
|
100 %
|
Share-based
payments
|
0.40
|
0.80
|
(0.40)
|
(100 %)
|
Consulting fees to be
paid by shares
|
-
|
0.30
|
(0.30)
|
100 %
|
Shares issued for
services
|
-
|
(0.10)
|
0.10
|
100 %
|
Warrants issued for
services
|
-
|
0.10
|
(0.10)
|
100 %
|
Write-off of advance
payments
|
0.20
|
0.10
|
0.10
|
50 %
|
Non-recurring
expenses
|
0.40
|
-
|
0.40
|
100 %
|
Adjusted
EBITDA
|
(0.80)
|
0.60
|
(1.40)
|
|
The Company had an Adjusted EBITDA loss of $0.8 million for the three months ended
December 31, 2023, a $1.4 million reduction over the Adjusted EBITDA
achieved in the comparable period in 2022. The
reduction in Adjusted EBITDA was due to the lower sales and gross
profit in the fourth quarter of 2023 compared to the prior year's
sales and gross profit.
Readers are cautioned that EBITDA and Adjusted EBITDA should not
be construed as an alternative to net income as determined under
IFRS; nor as an indicator of financial performance as determined by
IFRS; nor a calculation of cash flow from operating activities as
determined under IFRS; nor as a measure of liquidity and cash flow
under IFRS. The Company's method of calculating EBITDA and Adjusted
EBITDA may differ from methods used by other companies and,
accordingly, the Company's EBITDA and Adjusted EBITDA may not be
comparable to similar measures used by any other company. Except as
otherwise indicated, EBITDA and Adjusted EBITDA are calculated and
disclosed by SBBC on a consistent basis from period to period.
Specific adjusting items may only be relevant in certain
periods.
See also Earnings before Interest, Taxes, Depreciation, and
Amortization ("EBITDA") and Adjusted EBITDA (Non-GAAP Measures) in
the Company's management discussion and analysis for the year ended
December 31, 2023 available on SEDAR+
at www.sedarplus.ca.
Liquidity and Capital Resources
The Company's primary liquidity and capital requirements are for
inventory and general corporate working capital purposes. The
Company had a cash balance of $2.3
million as of December 31,
2023, which will provide capital to support the planned
growth of the business and for general corporate working capital
purposes. The Company's working capital deficiency increased from
$9.3 million as of December 31, 2022, to a working capital
deficiency of $12.4 million as of
December 31, 2023 ($3.1 million increase). Working capital
deficiency included the Mainstreet loan ($10.4 million) which is classified as current
whereas the term of the loan is maturing in December 2025.
The Mainstreet loan has a five-year term with principal repayments
due to start in December 2023 with
the first $1.5 million principal
repayment. Purekana was in discussions with the financial
institution to restructure that Mainstreet loan payment into
several installments to be paid in 2024 at year-end. This loan has
several covenants including annual and quarterly reporting and debt
service coverage. It has been classified as current as a
result of the noncompliance with the debt service covenant. Also
see subsequent events in the financial statements concerning the
status of the Company's Purekana subsidiary and the Mainstreet loan
(Purekana, LLC filed for Chapter 7 bankruptcy on April 3, 2024). The bankruptcy of Purekana
will remove Purekana's $10.4 Million
loan obligation from SBBC's consolidated financial statements.
The Company continues to focus on improving its working capital
position through a number of initiatives including equity and
convertible debt private placements, issuance of promissory notes
and establishment of lines of credit for its
subsidiaries.
Private Placements
In February 2023, the Company
completed a private placement of units for CAD $7 million in equity to be used for further debt
reduction, working capital and for growth initiatives in
2023.
The Company also announced on April 17,
2024 a non-brokered private placement of up to 5,714,285
units of the Company (the "Units") at a price of $0.35 per Unit, for aggregate gross proceeds of
up to $2,000,000. Each Unit will
consist of one (1) common share in the capital of the Company
(each, a "Share") and one-half of one Share purchase warrant (each
whole warrant, a "Warrant"). Each Warrant will entitle the holder
thereof to purchase one (1) additional Share at an exercise price
of $0.45 per Share for a period of 24
months following the closing of the non-brokered private
placement.
Convertible Debentures
The Company paid down $1.7 million
in convertible debentures including accrued interest that were due
in February 2023.
Line of Credit Facilities
Additionally, the Company has secured several lines of credit
facilities for three of its subsidiaries to support the financing
of purchase orders from key customers. These
lines of credit have been critical to finance the large retail
purchase orders the Company's subsidiaries have successfully
generated during the twelve months ended December 31, 2023. For more information of
the line of credit facilities please refer to note 10 in the
audited financial statements for the year ended December 31, 2023. During the twelve months
ended December 31, 2023, the Company
raised over $18.1 million in funds
from these lines of credit to finance purchase orders from its
large retail customers. Over the same period, the Company
repaid over $16.1 million of these
credit facilities to the lender. TRU was able to increase its
primary line of credit with this lender to $6 million in December 2022. The
nature of these loans is to turnover between 3-5 months from the
time the money is advanced to repayment.
Promissory Notes
During the three months ended December
31, 2023, the Company reduced the balance of promissory
notes outstanding by approximately $1.0
million (see note 13 in the financial statements for the
year ended December 31, 2023).
All promissory notes paid off during the year had a maturity less
than 12 months. The balance of promissory notes was
$2.4 million as of December 31, 2022, and the balance as of
December 31, 2023, is $1.45 million.
The Company's ability to fund operating expenses will depend on
its future operating performance which will be affected by general
economic, financial, regulatory, and other factors including
factors beyond the Company's control (See
"Risk and Uncertainties").
Management continually assesses liquidity in terms of the
ability to generate sufficient cash flow to fund the business. Net
cash flow is affected by the following items: (i) operating
activities, including the level of accounts receivable, other
receivable, accounts payable, accrued liabilities and unearned
revenue and deposits; (ii) investing activities (iii) financing
activities.
About Simply Better Brands Corp.
Simply Better Brands Corp. is an international
omni-channel platform with a portfolio of diversified assets in the
rapidly growing plant-based, natural, and clean ingredient space.
The Company targets informed, health conscious Millennial and
Generation Z consumers with a focus opportunities for expansion
into high-growth consumer product categories. For more
information on Simply Better Brands Corp., please visit: 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 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: expansion plans for TRU
Brands products, 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 management's discussion and analysis available under
the Company's SEDAR+ 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.
SOURCE Simply Better Brands Corp.