EMERGE Reports Full Year 2023 and Q4 Results
- Annual Revenue of
$23.8M compared to$27.6M in 2022, when excluding eliminated revenue from U.S. operations and trading (revenue in 2022 of$31.7M prior to exclusion of these items) - Annual Gross Margin of 50% compared to 44% in 2022
- Annual Adjusted EBITDA1 of
$1.14M compared to$1.13M in 2022 - Annual Cash Flow from Operations of
$2.0M compared to$1.1M in 2022 - Q4 Revenue of
$6.2M compared to$7.8M in Q4 2022 when excluding eliminated revenue from U.S. operations and trading - Q4 Adjusted EBITDA1 of
$0.5M compared to$0.3M in Q4 2022 - 2023 results include WholesalePet which has subsequently been sold in Q1 2024
- Senior credit facility was reduced to
$5.85M from$15.85M in Q1 2024, and from$25M originally
"2023 was a foundational year for us to paydown debt and significantly reduce interest expense which has been a drag on our cash flow in the current interest rate environment. Over the last year or so, through a series of transactions, we have taken aggressive steps to reduce our senior credit facility to
2023 Financial Highlights
-
Revenue of
$23.8M in 2023 compared to$27.6M in 2022, when excluding eliminated revenue fromU.S. operations and trading (revenue of$31.7M prior to exclusion of these items) - Gross Margin increased to 50% vs. 44% in 2022
-
Adjusted EBITDA1 of
$1.14M compared to$1.13M in 2022 -
Cash Flow from Operations improved to
$2.0M compared to$1.1M in 2022 -
Net loss of
$21.3M in 2023 compared to a net loss of$17.4M . The increase in net loss is mainly attributable to a goodwill impairment charge of$16.7M , a non-cash charge, due to updated assumptions that reflect current macroeconomic conditions. Excluding the impairment charge, the net loss for the year would have been$4.6M -
Cash on hand at
December 31, 2023 was$2.5M
Q4 2023 Financial Highlights
-
Q4 Revenue of
$6.2M compared to$7.8M in Q4 2022 when excluding eliminated revenue fromU.S. operations (Q4 2022 Revenue of$8.00M prior to exclusion of these items) - Q4 Gross Margin improved to 50% compared to $46% in 2022, marking the Company's 4th consecutive quarter with gross margin of at least 50%
-
Q4 Adjusted EBITDA1 improved to
$0.5M for 2023 compared to$0.3M in 2022, marking the Company's 9th consecutive quarter of positive Adjusted EBITDA
Events Subsequent to
Sale of WholesalePet
On
2023 results include WholesalePet. Q1 2024 will be the first financial report to classify WholesalePet as discontinued operations, with prior period results also reflect the reclassification where noted.
Debt Paydown and Refinancing
EMERGE utilized
On
Go Forward Business
Following the sale of WholesalePet, EMERGE retains 4 brands across 2 main verticals, Grocery and Golf, namely truLOCAL,
truLOCAL, our premium meat subscription brand, is EMERGE's largest business by revenue. truLOCAL experienced our most significant increase in profitability in 2023, following our various cost savings initiatives and gross margin improvements.
EMERGE also operates a golf vertical, across
Top Priorities
The Company's top priorities in the near-term are to i) drive organic growth, ii) continue to reduce debt and interest expense, iii) extract further operational efficiencies, and iv) enhance profitability and cash flow conversion.
Selected Financial Highlights
The tables below set out selected financial information and should be read in conjunction with the Company's consolidated financial statements and MD&A for the three and twelve months ended
|
Three months ended |
Year ended |
||||
|
2023 |
2022 |
2023 |
2022 |
||
|
$ |
$ |
$ |
$ |
||
Gross Merchandise Sales1 |
19,853,495 |
24,247,912 |
76,161,662 |
88,318,700 |
||
Total revenue |
6,214,438 |
7,988,792 |
23,829,057 |
31,698,856 |
||
Adjusted EBITDA1 |
482,592 |
282,280 |
1,141,283 |
1,128,885 |
||
Net (loss) |
(17,521,847) |
(15,503,569) |
(21,256,884) |
(17,382,835) |
||
Basic and diluted (loss) per |
(0.14) |
(0.15) |
(0.20) |
(0.17) |
||
|
|
|
|
|
|
|
(1) Non-GAAP Financial Measure. Refer to section "Non-GAAP Financial Measures" below for additional information. |
The following table highlights Adjusted EBITDA and a reconciliation of the Company's reported results to its adjusted measures:
|
Three months ended |
Year ended |
||||
|
2023 |
2022 |
2023 |
2022 |
||
|
$ |
$ |
$ |
$ |
||
|
|
|
|
|
||
Net (loss) income |
(17,521,847) |
(15,503,569) |
(21,256,884) |
(17,382,835) |
||
Add back: |
|
|
|
|
||
Finance costs |
734,394 |
1,089,026 |
3,514,518 |
4,000,927 |
||
Income taxes |
(941,230) |
(1,006,215) |
(2,261,694) |
(1,304,008) |
||
Amortization |
801,349 |
1,207,652 |
4,065,364 |
4,736,989 |
||
EBITDA |
(16,927,334) |
(14,213,106) |
(15,938,696) |
(9,948,927) |
||
Share-based compensation |
60,890 |
32,137 |
204,621 |
344,144 |
||
Transaction cost |
30,461 |
143,156 |
298,005 |
597,374 |
||
Foreign exchange and other losses |
635,509 |
798,722 |
638,056 |
(1,566,824) |
||
Impairment of goodwill |
16,683,066 |
11,071,467 |
16,683,066 |
11,071,467 |
||
Fair value change in contingent |
- |
(537,620) |
(303,233) |
(2,287,298) |
||
Net loss (income) from discontinued |
- |
2,987,524 |
(440,536) |
2,918,949 |
||
Adjusted EBITDA |
482,592 |
282,280 |
1,141,283 |
1,128,885 |
The following table highlights Gross Merchandise Sales ("GMS") and a reconciliation of the Company's reported results to its adjusted measures:
|
Three months ended |
Year ended |
||||
|
2023 |
2022 |
2023 |
2022 |
||
|
$ |
$ |
$ |
$ |
||
Revenue |
6,214,438 |
7,988,792 |
23,829,057 |
31,698,856 |
||
Adjusted for: |
|
|
|
|
||
Merchant costs deducted from |
13,373,016 |
15,955,832 |
52,606,286 |
57,372,806 |
||
Sales added to deferred revenue |
1,874,073 |
2,167,661 |
6,528,274 |
6,703,245 |
||
Deferred and other adjustments |
(1,462,693) |
(1,857,160) |
(6,568,152) |
(7,407,303) |
||
Advertising revenue |
(145,339) |
(7,213) |
(233,803) |
(48,904) |
||
GMS |
19,853,495 |
24,247,912 |
76,161,662 |
88,318,700 |
About EMERGE
EMERGE (TSXV: ECOM) is a premium e-commerce brand portfolio in Canada and the
To learn more visit https://www.emerge-commerce.com/
Follow EMERGE:
LinkedIn | Twitter | Instagram | Facebook
Cautionary notice
Neither
Non-GAAP Measures
This press release makes reference to certain non-GAAP measures. These non-GAAP measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing a further understanding of results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the financial information of the Company reported under IFRS. Gross Merchandise Sales ("GMS"), EBITDA, and Adjusted EBITDA should not be construed as alternatives to revenue or net income/loss determined in accordance with IFRS. GMS, EBITDA and Adjusted EBITDA do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers.
GMS as defined by management is the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of discounts and refunds. Management believes GMS provides a useful measure for the dollar volume of e-commerce transactions made through our platforms and an indicator for our business performance.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA as defined by management means earnings before interest and financing costs, income taxes, depreciation and amortization, transaction costs, foreign exchange gains/losses, discontinued operations, unrealized gains/losses on contingent consideration and share-based compensation. Management believes that Adjusted EBITDA is a useful measure because it provides information about the operating and financial performance of EMERGE and its ability to generate ongoing operating cash flow to fund future working capital needs and fund future capital expenditures or acquisitions.
A reconciliation of the adjusted measures is included in the Company's management discussion & analysis for the twelve months ended
Notice regarding forward-looking statements
This press release may contain certain forward-looking information and statements ("forward-looking information") within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including without limitation statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements. The Company undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of the Company, its securities, or financial or operating results (as applicable). Although the Company believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including the risk factors discussed in the Company's MD&A, Prospectus Supplement and Annual Information Form and are available through SEDAR at www.sedar.com. The forward-looking information contained in this press release are expressly qualified by this cautionary statement and are made as of the date hereof. The Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
On Behalf of the Board
Director, President and CEO
SOURCE