August 30, 2022 — (Vancouver, BC) good natured Products Inc. (the “Company” or “good natured®”) (TSX-V: GDNP) (OTCQX: GDNPF), a North American leader in plant-based products, today announced its financial results for the three months (“Q2 2022”) and six months (“H1 2022”) ended June 30, 2022.
For Q2 2022, the Company delivered another quarter of positive adjusted EBITDA1 coupled with strong growth in revenues. Gross margins remained in the targeted range despite continued inflationary pressure, while growth in revenue and gross profit outpaced increases in operating expenses.
Revenue in Q2 2022 grew on a year-over-year basis by 106% to $25.5 million, driven by strong organic growth, increases in average selling price per unit and contribution from strategic acquisitions. The Company’s active business-to-business (“B2B”) customer accounts grew to over 1,400 as at June 30, 2022.
“I remain incredibly proud of our team’s unwavering commitment to serving our customers while navigating challenging market conditions and inflationary pressures over the last few quarters. We’ve delivered another solid quarter of growth by focusing on strong execution and leveraging our investments in production capability, like with our recent acquisition of FormTex Plastics in Houston,” stated Paul Antoniadis, CEO of good natured®. “In future quarters, you’ll continue to see our commitment to strong execution and productivity improvements that are laying the foundation to profitably scale our business and the associated positive environmental impact that comes with our growth.”
- Revenues for Q2 2022 increased 106% to $25.5 million compared to $12.4 million for the three months ended June 30, 2021 (“Q2 2021”). H1 2022 revenues increased 154% to $51.5 million compared to $20.3 million for the six-month period ended June 30, 2021 (“H1 2021“).
- Variable gross profit1 for Q2 2022 increased 97% to $8.5 million, representing a variable gross margin1 of 33.1%, compared to $4.3 million and 34.7% for Q2 2021. Variable gross profit for H1 2022 increased 122% to $16.7 million, 32.4% of sales, compared to $7.5 million, 37.1% of sales, in H1 2021.
- Gross profit for Q2 2022 increased 92% to $6.7 million representing a gross margin of 26.4%, compared to $3.5 million and 28.3% respectively for Q2 2021. Gross profit for H1 2022 increased 113% to $13.4 million, 26.0% of sales, compared to $6.3 million, 31.1% of sales, in H1 2021.
- Selling, general and administrative (“SG&A”) expenses, excluding acquisition activity and one-time charges,1 for Q2 2022 and H1 2022 were $4.0 million and $7.5 million compared to $2.2 million and $3.8 million for Q2 2021 and H1 2021. As a percent of sales, SG&A expenses, excluding acquisition activity and one-time charges,1 declined to 16% for Q2 2022 and 15% for H1 2022 compared to 18% in Q2 2021 and 19% in H1 2021.
- SG&A expenses for Q2 2022 and H1 2022, including acquisition activity and one-time charges, were $4.6 million and $8.4 million compared to $3.2 million and $4.9 million for Q2 2021 and H1 2021. As a percent of sales, SG&A expenses declined to 18% for Q2 2022 and 16% for H1 2022 compared to 26% in Q2 2021 and 24% in H1 2021.
- The Company’s adjusted EBITDA1 for Q2 2022 and H1 2022 was $1.0 million and $2.2 million respectively, compared to a loss of $0.2 million for Q2 2021 and break-even for H1 2021.
- In Q2 2022, the Company incurred a net loss of $3.0 million compared to a net loss of $3.7 million in Q2 2021. Net loss for H1 2022 was $4.6 million compared to a net loss of $5.6 million in H1 2021
Subsequent to quarter end, on August 26, 2022, the Company announced that it had completed a senior secured revolving credit facility with Wells Fargo Bank, N.A., through its wholly owned subsidiary Well Fargo Capital Finance Corporation Canada, of up to USD $55 million and closed a $6.6 million mortgage financing with Business Development Bank of Canada. Further details regarding these announcements can be found in the Company’s press release dated August 26, 2022.
Q2 2022 Results Conference Call
The Company will hold a conference call to discuss its financial results for Q2 2022, hosted by Paul Antoniadis, Executive Chair & CEO, and Kevin Leong, Chief Financial Officer, on August 30, 2022 at 11:00 AM Eastern / 8:00 AM Pacific time.
Date: August 30, 2022
Time: 11:00 AM ET / 8:00 AM PT
Toll-Free: 1-888-396-8049 International: +1 (416) 764-8646
Conference ID: 08064469
Participants are asked to dial in 10 minutes prior to the start of the call.
A replay of the call will be available approximately two hours after its completion through to September 13, 2022. The replay will be available by dialing 1-877-674-7070 or +1 (416) 764-8692 and by using the passcode 064469.
The good natured® corporate profile can be found at: investor.goodnaturedproducts.com
About good natured Products Inc.
good natured® is passionately pursuing its goal of becoming North America’s leading earth-friendly product company by offering the broadest assortment of plant-based products made from rapidly renewable resources instead of fossil fuels. The Company is focused on making it easy and affordable for business owners and consumers to shift away from petroleum to better everyday products® that use more renewable materials, less fossil fuel, and no chemicals of concern.
good natured® offers over 400 products and services through wholesale, direct to business, and retail channels. From plant-based home organization products to certified compostable food containers, bio-based industrial supplies and medical packaging, the Company is focused on making plant-based products more readily accessible to people as a means to create meaningful environmental and social impact.
For more information: goodnaturedproducts.com
On behalf of the Company:
Paul Antoniadis – Executive Chair & CEO
1-877-286-0617 ext. 113
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.
Non-GAAP Financial Measures
We have included in this press release a discussion of the Company’s variable gross profit, variable gross margin, SG&A excluding acquisition activity and one-time charges, and adjusted EBITDA, all non-GAAP measures, for Q2 2022, H1 2022, Q2 2021 and H1 2021 to provide, what management believes, is a meaningful comparison of the Company’s performance in Q2 2022 and H1 2022. In this news release, variable gross profit is gross profit excluding fixed production costs such as depreciation, repairs and maintenance, utilities and similar overhead items, and variable gross margin is variable gross profit divided by revenue; SG&A excluding acquisition activity and one-time charges is SG&A expenses but excluding acquisition costs and certain one-time charges and adjusted EBITDA is earnings before interest and finance costs, taxes, depreciation and amortization, other non-cash items and one-time gains and losses. Variable gross profit, SG&A excluding acquisition activity and one-time charges and Adjusted EBITDA do not have standardized meanings, and therefore may not be comparable to similar measures presented by other issuers. The use of variable gross profit and variable gross margin provides deeper insight into normalized product margins related to variable material input costs, inbound freight and labour costs associated with producing the goods being sold. Variable gross margin also removes gross margin percentage fluctuations due to changes in revenue from factors such as mix of insourced versus outsourced manufacturing to respond to specific customer requirements for multiple-facility production, depreciation from facility capital investments and the addition of manufacturing facility acquisitions with factory overhead charges. The use of SG&A excluding acquisition activity and one-time charges allows for an evaluation of Company’s expenses disregarding the expenses associated with the Company’s voluntary execution of Its growth through acquisition strategy. The use of the adjusted EBITDA by management allows for evaluation of the Company’s principal business activities as certain non-core items such as interest and finance costs, taxes, depreciation and amortization, and other non-cash items and one-time gains and losses are removed.
The following table provides a reconciliation of net loss to adjusted EBITDA for the periods ended:
The following table provides a reconciliation of variable gross profit to gross profit and gross margin to variable gross margin for the periods ended:
The following table provides a reconciliation of selling, general and administrative expense excluding acquisition activity and one-time charges:
Cautionary Statement Regarding Forward-Looking Information
This news release contains forward-looking information within the meaning of securities laws including statements related to Company plans and focuses for 2022, the upcoming results conference call and management’s outlook for 2022.
By their nature, forward-looking statements involve known and unknown risks, uncertainties, changes in circumstances and other factors that are difficult to predict and many of which are outside of the Company’s control which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Forward-looking information contained in this news release is based on our current estimates, expectations and projections regarding, among other things, future plans and strategies, projections, anticipated events and trends, general market conditions, the economy, sales volume and pricing and other future conditions which we believe are reasonable as of the current date. Important factors that could cause actual results and financial conditions to differ materially from those indicated in the forward-looking statements include, among others risks relating to general economic, market and business conditions and unforeseen delays in the realization of the Company’s plans. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date.
If relying on the Company’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed that the material factors referred to herein will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
Other than as required under securities laws, we do not undertake to update this information at any particular time.
All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.
A non-GAAP financing measure. Please refer to the “Non-GAAP Financial Measures” below for an explanation of these measures and reconciliation to the Company’s financial results reported in accordance with GAAP.