TORONTO, June 20, 2018 /CNW/ - GreenSpace Brands Inc.
("GreenSpace" or "the Company") (TSXV: JTR) today reported its
fourth quarter and fiscal year financial results for the period
ending March 31, 2018.
Key Highlights for the Fourth Quarter of Fiscal 2018:
- Gross revenue of $19.1 million
sets record high, representing a 47% increase over the prior year
period
- Adjusted gross margin declined to 20.4% compared to 22.5%
for the prior year period due to one-time liquidation of unsold
seasonal inventory and commodity increases in butter.
- Adjusted EBITDA margins fell to (1.5%) as a percentage of
net revenue excluding listing fees, from 3.4% earned in the third
quarter of fiscal 2018, due in part to expected costs associated
with the Go Veggie business and acquisition.
- Rebates and Discounts as a percentage of gross revenue
stayed relatively consistent at 11.1% in the fourth quarter versus
11.0% in the third quarter.
Consolidated Performance Summary
|
Three months
ended
|
Year
ended
|
|
March
31
|
March
31
|
(in thousands
of Canadian dollars, except per share amounts)
|
2018
|
2017
|
2018
|
2017
|
$
|
$
|
$
|
$
|
|
|
|
|
|
Gross
revenue
|
19,132
|
12,945
|
65,082
|
41,959
|
Less: rebates and
discounts
|
(2,116)
|
(1,485)
|
(7,408)
|
(4,076)
|
Less: listing
fees
|
(543)
|
(354)
|
(1,369)
|
(796)
|
Net
revenue
|
16,473
|
11,106
|
56,305
|
37,087
|
|
|
|
|
|
Gross
profit
|
2,935
|
2,227
|
11,434
|
8,327
|
Adjusted gross
profit1
|
3,478
|
2,581
|
12,083
|
9,123
|
Adjusted gross profit
margin1
|
20.4%
|
22.5%
|
22.2%
|
24.1%
|
|
|
|
|
|
SG&A
expenses
|
4,579
|
2,572
|
13,412
|
8,497
|
Amortization of
intangible assets
|
600
|
322
|
1742
|
1,102
|
Deferred income tax
(recovery)
|
20
|
(85)
|
(283)
|
(292)
|
Interest
expense
|
272
|
91
|
518
|
485
|
Accretion
expense
|
22
|
104
|
171
|
1,335
|
Unrealized foreign
exchange loss
|
317
|
-
|
317
|
-
|
Loss from continuing
operations
|
(2,875)
|
(775)
|
(4,443)
|
(2,800)
|
Loss from
discontinued operations, net of income taxes
|
-
|
-
|
-
|
(503)
|
Net income
(loss)
|
(2,875)
|
(775)
|
(4,443)
|
(3,303)
|
Net loss per share
(basic and diluted)
|
(0.04)
|
(0.02)
|
(0.06)
|
(0.07)
|
EBITDA
|
(1,530)
|
(274)
|
(1,668)
|
38
|
EBITDA, as a
percentage of net revenue
|
(9.3%)
|
(2.5%)
|
(3.0%)
|
0.1%
|
Adjusted
EBITDA1
|
(262)
|
348
|
1,150
|
1,394
|
Adjusted EBITDA,
as a percentage of net revenue excluding listing
fees1
|
(1.5%)
|
3.0%
|
2.0%
|
3.7%
|
|
|
|
|
|
1 – These are not
measures of financial performance under IFRS. These measures are
not necessarily comparable to similarly titled measures used by
other companies and should not be construed as an alternative to
net income or cash flow from operating activities as determined in
accordance with IFRS. See the discussion included in the
Company's annual MD&A for the year-ended March 31, 2018,
available on www.sedar.com on non-IFRS disclosure for further
details, including reasons for presentation of these financial
measures.
|
Gross revenue, for the fourth quarter ended March 31, 2018, was the highest gross revenue
amount earned by the Company in a single quarter to date. Gross
revenue for the fourth quarter ended March
31, 2018 increased 47.8% and net revenue, which is gross
revenue net of deductions for rebates, discounts and one-time
listing fees, increased 48.3% over the same period in prior
year.
The year on year improvement was the result of growth across the
majority of the brand portfolio, with Love
Child and Kiju performing above expectations. Q4 also
included approximately 2 months of contribution from the recent
acquisition of Go Veggie.
Adjusted gross margin for the fourth quarter, which excludes
one-time, non-recurring listing fees, fell to 20.4% from 22.5% a
year earlier due primarily to a significant increase in
commodity-based butter costs related to the Kiwi Pure line, driving
that brand to negative gross margin. Price increases for the brand
have been processed subsequent to the end of the quarter, which are
expected to bring the gross margins for the Kiwi Pure products back
in-line with historical levels. Gross margin was also negatively
impacted by the liquidation of excess holiday season inventory in
Central Roast during the quarter. Excluding the impact of these two
items, gross margin would have been approximately 23.2%. Gross
margin is expected to improve in the future driven by higher gross
margin contribution from new product launches and the recent
acquisition of Go Veggie. Rebates and discounts as a percentage of
revenue decreased in Q4 to 11.1% from 11.5% in the previous
year.
For the quarter ending March 31,
2018, SG&A expense, as a percentage of gross revenue,
increased in comparison to the previous year, representing 25.8% of
revenue versus 22.4% in Q4 2017. The increase was primarily due to
one-time restructuring expense from the discontinuation of the
Nudge Brand, costs associated with the launch of Meatbar and costs
associated with the acquisition and integration of Galaxy Foods,
partially offset by favourable salaries and benefits and storage
and delivery expenses. As discussed last quarter, the Company
expects several quarters of higher SG&A costs as a percentage
of revenue as it launches new brands and integrates and
rationalizes the cost structure of Go Veggie.
Outlook
GreenSpace continues to believe that there are a number of
fundamental trends occurring within both the Global and North
American food industries. These trends will continue to drive
consumer demand for GSB brands and customers will continue to be
attracted by the Company's innovation within the natural and
organic marketplace.
As a result of this the Company is optimistic that anticipated
market growth will continue to drive demand for the Company's
acquired and developed brands and provides a significant
opportunity for further expansion into new product offerings. This
has been evidenced by several distribution wins announced over the
last three quarters. In particular GreenSpace expects that it will
continue to execute on a two-pronged growth strategy. Firstly, the
Company expects to have a strong and ongoing internal brand and
product development program. There are currently a number of new
product offerings in various stages of development that the Company
expects to release strategically, to fill gaps in the Canadian
natural and organic marketplace, over the next few quarters.
Secondly, the tripling in size of the Canadian natural and organic
food market over the last decade has been driven by a number of new
entrants, creating a highly fragmented competitive landscape. The
Company seeks to continue to take advantage of this and expects to
eventually grow through strategic investments in strong, simple
ingredient businesses which are accretive to revenue and
profitability.
With its increasing revenue base and numerous new distribution
wins, management expects to see year on year organic revenue growth
of 20% or more, incremental gross margin improvement and to
continue to generate positive adjusted EBITDA margins, once the Go
Veggie acquisition is integrated. The Company continues to believe
it is in a strong position to be one of the innovation leaders, as
well as a principle consolidator, in the North American natural and
organic food market, due to its industry position and accumulated
reputational goodwill.
About GreenSpace Brands Inc.
GreenSpace is a Canadian-based brand ideation team that
develops, markets and sells premium natural food products to
consumers across North America.
GreenSpace owns Rolling Meadow Dairy, Canada's first grass fed dairy business, Life
Choices, convenience meat products made with grass fed and
pasture raised meats without the use of added hormones and
antibiotics, Nudge, a line of family favorite foods made
better, Love Child, a producer of 100% organic food for
infants and toddlers made with the purest, natural and most
nutritionally-rich ingredients, Central Roast, a clean snacking
brand featuring a wide assortment of nut and seed mixes, Kiju, the
Canadian market leader in the shelf stable organic juice segment,
Cedar, the leaders in the Canadian Cold Press Juice category and
the most recently acquired brand, Go Veggie, one of the leaders in
the US plant based dairy market All brands are wholly owned
and retail in a variety of natural and mass retail grocery
locations across Canada.
For more information, visit www.greenspacebrands.ca.
GreenSpace's filings are also available at
www.SEDAR.com.
Forward-Looking Statements
Certain statements in this
press release constitute forward-looking statements within the
meaning of applicable securities laws. Forward-looking
statements include, but are not limited to, statements made under
the heading "Outlook" and other statements concerning the Company's
2018 objectives, strategies to achieve those objectives, as well as
statements with respect to management's beliefs, plans, estimates,
and intentions, and similar statements concerning anticipated
future events, results, circumstances, performance or expectations
that are not historical facts. Forward-looking statements
generally can be identified by the use of forward-looking
terminology such as "outlook", "objective", "may", "will",
"expect", "intend", "estimate", "anticipate", "believe", "should",
"plans" or "continue", or similar expressions suggesting future
outcomes or events. Such forward-looking statements reflect
management's current beliefs and are based on information currently
available to management. Forward-looking statements involve
risks and uncertainties that could cause actual results to differ
materially from those contemplated by such statements and there can
be no assurance that actual results will be consistent with these
forward-looking statements. Factors that could cause such
differences include the cyclical nature of the construction and
agriculture industries, changes in general economic conditions and
interest rates, adverse weather, cost and availability of materials
used to manufacture the Company's products, competitive
developments, legislative and government policy changes, as well as
other risk factors included in the Company's Annual Information
Form dated July 18, 2017 under the
heading "Risks and Uncertainties Related to the Business" and as
described from time to time in the reports and disclosure documents
filed by the Company with Canadian securities regulatory agencies
and commissions. This list is not exhaustive of the factors
that may impact the Company's forward-looking statements. These and
other factors should be considered carefully and readers should not
place undue reliance on the Company's forward-looking
statements. As a result of the foregoing and other factors, no
assurance can be given as to any such future results, levels of
activity or achievements or levels of dividends and neither the
Company nor any other person assumes responsibility for the
accuracy and completeness of these forward-looking
statements. The factors underlying current expectations are
dynamic and subject to change. Certain statements included in
this press release may be considered "financial outlook" for
purposes of applicable securities laws, and such financial outlook
may not be appropriate for all purposes. All forward-looking
statements in this press release are qualified by these cautionary
statements. The forward-looking statements contained herein
are made as of the date of this press release and except as
required by applicable law, the Company undertakes no obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise.
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.
SOURCE GreenSpace Brands Inc.