Jamieson Wellness Inc. Reports First Quarter 2024 Results
Branded revenue growth of 37.0% in the
“In Q1, we delivered a branded revenue increase of nearly 7%, led by strong demand in the
“Our Canada, International, and
“As the year progresses, we continue to be confident about the opportunities to further grow our brands in
First Quarter Highlights
-
Continued strong consumer demand in
Canada leveraging in-house and in-channel inventory, despite delayed shipments into Q2 as expected due to theWindsor facility labour disruption - Exceptional youtheory revenues, driven by successful product innovation and e-commerce growth
-
In
China , our on the ground capability and demand-generating investments accelerated growth -
International consumption trends remain solid, highlighted by strong performance in
Europe - Released the Company’s first annual Sustainability Impact Report
First Quarter Financial Results Consolidated Summary
All comparisons are with the first quarter of 2023
-
Consolidated revenue was
$128.0 million , a decrease of 6.4% as anticipated, driven by 6.7% growth inJamieson Brands and a 55.7% decline inStrategic Partners as the Company prioritized branded shipments during the labour disruption and closed out a previously discussedStrategic Partners contract -
Gross profit was
$42.8 million , a decrease of$5.7 million ; normalized gross profit decreased by$2.5 million largely driven by lower revenues -
Gross profit margin3 was 33.4%, a decrease of 210 basis points impacted by costs associated with the labour disruption; normalized gross profit margin increased 50 basis points due to a higher mix of
Jamieson Brands sales -
EBITDA1 was
$7.1 million , an anticipated decrease of$12.2 million or 63.0% reflecting the gross margin change and higher investments in theU.S. andChina to drive brand awareness; Adjusted EBITDA1 was$16.1 million , an anticipated decrease of$8.4 million or 34.3%. Adjusted EBITDA includes adjustments mainly related to the labour disruption and investments to drive IT infrastructure improvements. -
Net loss was
$3.7 million , or$10.8 million lower; Adjusted net earnings1 were$3.9 million , or$4.9 million lower, with lower normalized earnings from operations partially offset by lower interest expense -
Loss per share was
$0.09 ; Adjusted diluted earnings per share2 was$0.09
Summary of Segment Results
All comparisons are with the first quarter of 2023
-
Revenue was
$115.3 million , an increase of 6.7% or$7.2 million Canada revenue was$60.9 million , a decrease of 14.7% as anticipated, reflecting the labour disruption as some Q1 shipments shifted into Q2U.S. (youtheory) revenue was$30.4 million , an increase of 37.0% driven by successful innovation and demand generating investmentsChina revenue was$18.7 million , increasing 126.4% which reflects the seasonal impact of direct sales to consumers under the owned-distribution model, while proforma growth on a constant currency basis grew 80.2% driven by the Company’s investment in on the ground capabilities and demand generation-
International revenue was
$5.3 million , a decrease of 17.2% on a constant currency basis as anticipated, mainly due to shipment timing shifts into Q2 around the labour disruption
-
Gross profit was
$41.1 million , a decrease of$2.7 million ; normalized gross profit increased by$0.6 million mainly due to revenue growth - Gross profit margin3 decreased by 480 basis points; normalized gross profit margin was 38.5%, a decrease of 200 basis points due to lower plant utilization and the timing of pricing
-
Adjusted EBITDA1 was
$15.1 million , a decrease of$5.5 million , driven by lower gross profit mainly due to investments in SG&A to drive brand awareness and growth in theU.S. andChina ; Adjusted EBITDA margin2 was 13.1%, a decrease of 600 basis points due to lower gross profit margin as noted above and higher SG&A as a percentage of revenue
-
Revenue was
$12.7 million , a decrease of 55.7% or$15.9 million , as the Company prioritized branded shipments during the labour disruption and completion of the close-out of a customer contract -
Gross profit was
$1.7 million , a decrease of$3.1 million ; gross profit margin3 was 13.0%, a decrease of 350 basis points impacted by customer mix and lower plant utilization -
Adjusted EBITDA1 was
$1.0 million , a decrease of$2.9 million ; Adjusted EBITDA margin2 was 7.7%, a decrease of 580 basis points
Balance Sheet and Cash Flow
-
The Company utilized
$7.3 million in cash from operations compared to$7.9 million generated in Q1 2023 -
Cash from operating activities before working capital considerations of
$4.6 million decreased by$8.4 million compared to Q1 2023 due to lower earnings in the quarter and the impact of the non-cash accretion of preferred shares -
Cash used in working capital increased by
$6.8 million compared to Q1 2023 driven by timing of accounts receivable collections and payables in the quarter -
As at
March 31, 2024 , the Company had approximately$193.9 million in cash and available revolving and swingline facilities and net debt1 of$306.1 million
1 This is a non-IFRS financial measure. See the “Non-IFRS and Other Financial Measures” section of this press release for more information on each non-IFRS financial measure. |
2 This is a non-IFRS ratio. See the “Non-IFRS and Other Financial Measures” section of this press release for more information on each non-IFRS ratio. |
3 This is a supplementary financial measure. See the “Non-IFRS and Other Financial Measures” section of this press release for more information on each supplementary financial measure. |
Maintaining Fiscal 2024 Outlook
The Company is maintaining its outlook for the 2024 fiscal year and continues to anticipate the following:
-
Revenue in a range of
$720.0 to$760.0 million , which represents annual growth of 6.5% to 12.5% -
Adjusted EBITDA in a range of
$138.0 to$144.0 million -
Adjusted diluted earnings per share in a range of
$1.55 to$1.65
For additional details on the Company’s fiscal 2024 outlook, including guidance for the second quarter of 2024, refer to the “Outlook” section in the management’s discussion and analysis of financial condition and results of operations (“MD&A”) for the three months ended
Declaration of First Quarter Dividend
The board of directors of the Company declared a cash dividend for the first quarter of 2024:
-
$0.19 per common share, or approximately$8.0 million in the aggregate -
Paid on
June 14, 2024 to all common shareholders of record at the close of business onMay 31, 2024 -
The Company has designated this dividend as an “eligible dividend” for the purposes of the Income Tax Act (
Canada )
Consolidated Financial Statements and Management’s Discussion and Analysis
The Company’s unaudited condensed consolidated interim financial statements and accompanying notes as at and for the three months ended
Conference Call
Management will host a conference call to discuss the Company’s first quarter 2024 results at
-
By phone: 1-800-717-1738 from
Canada and theU.S. or 1-646-307-1865 from international locations - Online: https://investors.jamiesonwellness.com or https://viavid.webcasts.com/starthere.jsp?ei=1667077&tp_key=cc51fada0b
About
Jamieson Wellness’ head office is located at 1 Adelaide Street East Suite 2200,
Forward-Looking Information
This press release may contain forward-looking information within the meaning of applicable securities legislation. Such information includes, but is not limited to, statements related to the Company’s anticipated results and its outlook for its 2024 revenue, Adjusted EBITDA and Adjusted diluted earnings per share. Words such as “expect”, “anticipate”, “intend”, “may”, “will”, “estimate” and variations of such words and similar expressions are intended to identify such forward-looking information. This information reflects the Company’s current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company’s control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under “Risk Factors” in the Company’s Annual Information Form dated
The Company cautions that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect the Company’s results. Readers are urged to consider the risks, uncertainties and assumptions associated with these statements carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. See “Forward-looking Information” and “Risk Factors” within the MD&A for a discussion of the uncertainties, risks and assumptions associated with these statements.
Selected Consolidated Financial Information In thousands of Canadian dollars, except share and per share amounts |
|||||
Three months ended | |||||
|
|||||
2024 |
|
2023 |
|
||
Revenue |
128,038 |
|
136,725 |
|
|
Cost of sales |
85,253 |
|
88,209 |
|
|
Gross profit |
42,785 |
|
48,516 |
|
|
Gross profit margin |
33.4 |
% |
35.5 |
% |
|
Selling, general and administrative expenses |
39,558 |
|
32,392 |
|
|
Share-based compensation |
1,749 |
|
1,496 |
|
|
Earnings from operations |
1,478 |
|
14,628 |
|
|
Operating margin |
1.2 |
% |
10.7 |
% |
|
Foreign exchange (gain)/ loss |
(771 |
) |
163 |
|
|
Interest expense and other financing costs |
4,873 |
|
6,302 |
|
|
Accretion on preferred shares |
2,219 |
|
- |
|
|
Earnings before income taxes |
(4,843 |
) |
8,163 |
|
|
Provision for (recovery of) income taxes |
(1,124 |
) |
1,098 |
|
|
Net earnings (loss) |
(3,719 |
) |
7,065 |
|
|
Net earnings (loss) attributable to: | |||||
Shareholders |
(4,113 |
) |
7,065 |
|
|
Non-controlling interests |
394 |
|
- |
|
|
(3,719 |
) |
7,065 |
|
||
Adjusted net earnings |
3,915 |
|
8,808 |
|
|
EBITDA |
7,149 |
|
19,306 |
|
|
Adjusted EBITDA |
16,097 |
|
24,508 |
|
|
Adjusted EBITDA margin |
12.6 |
% |
17.9 |
% |
|
Weighted average number of shares | |||||
Basic |
41,479,861 |
|
41,775,989 |
|
|
Diluted |
41,479,861 |
|
42,791,481 |
|
|
Earnings per share attributable to common shareholders: | |||||
Basic, earnings (loss) per share |
(0.09 |
) |
0.17 |
|
|
Diluted, earnings (loss) per share |
(0.09 |
) |
0.17 |
|
|
Adjusted diluted, earnings per share |
0.09 |
|
0.21 |
|
|
Consolidated Statements of Financial Position In thousands of Canadian dollars |
|||
|
|
||
Assets | |||
Current assets | |||
Cash |
34,150 |
36,863 |
|
Accounts receivable |
132,180 |
164,499 |
|
Inventories |
196,353 |
182,456 |
|
Derivatives |
2,852 |
3,707 |
|
Prepaid expenses and other current assets |
4,217 |
5,335 |
|
Income taxes recoverable |
5,339 |
- |
|
375,091 |
392,860 |
||
Non-current assets | |||
Property, plant and equipment |
105,307 |
106,903 |
|
|
278,003 |
274,411 |
|
Intangible assets |
369,542 |
366,521 |
|
Deferred income tax |
3,919 |
2,879 |
|
Total assets |
1,131,862 |
1,143,574 |
|
Liabilities | |||
Current liabilities | |||
Accounts payable and accrued liabilities |
109,114 |
135,520 |
|
Income taxes payable |
1,353 |
2,263 |
|
Current portion of other long-term liabilities |
5,490 |
7,546 |
|
115,957 |
145,329 |
||
Long-term liabilities | |||
Long-term debt |
340,285 |
325,000 |
|
Post-retirement benefits |
1,108 |
1,078 |
|
Deferred income tax |
60,759 |
60,532 |
|
Redeemable preferred shares |
91,628 |
89,409 |
|
Other long-term liabilities |
42,740 |
41,031 |
|
Total liabilities |
652,477 |
662,379 |
|
Equity | |||
Share capital |
312,941 |
312,593 |
|
Warrants |
14,705 |
14,705 |
|
Contributed surplus |
20,784 |
19,089 |
|
Retained earnings |
68,694 |
80,654 |
|
Accumulated other comprehensive income |
17,886 |
11,892 |
|
Total shareholders' equity |
435,010 |
438,933 |
|
Non-controlling interests |
44,375 |
42,262 |
|
Total equity |
479,385 |
481,195 |
|
Total liabilities and equity |
1,131,862 |
1,143,574 |
|
Non-IFRS and Other Financial Measures
This press release makes reference to certain financial measures, including non-IFRS financial measures that are historical, non-IFRS measures that are forward-looking, non-GAAP ratios and supplementary financial measures. Management uses these financial measures for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of ongoing operations and in analyzing the Company’s business performance and trends. These 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 further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. The Company uses the following non‑IFRS financial measures: “EBITDA”, “Adjusted EBITDA” and “Adjusted net earnings”, the most directly comparable financial measure for each that is disclosed in its financial statements being net earnings, “normalized gross profit”, “normalized SG&A”, “normalized earnings from operations”, “cash from operating activities before working capital considerations” and “net debt”, the most directly comparable financial measures for each that is disclosed in its financial statements being gross profit, SG&A, earnings from operations, cash flows from operating activities, and long-term debt, respectively, the following non-IFRS ratios: “Adjusted EBITDA margin”, “Adjusted diluted earnings per share”, “normalized gross profit margin”, “normalized operating margin”, and the following supplementary financial measures: “gross profit margin” and “operating margin” to provide supplemental measures of the Company’s operating performance and thus highlight trends in the Company’s core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management also uses non‑IFRS and supplementary financial measures in order to prepare annual operating budgets and to determine components of management compensation. For an explanation of the composition of each such measure and the usefulness and additional uses of each by management, see the “How we Assess the Performance of our Business” section of the MD&A, which is incorporated by reference. See below for a quantitative reconciliation of each non-IFRS financial measure to its most directly comparable financial measure disclosed in the Company’s financial statements to which the measure relates.
The following tables provide a quantitative reconciliation of net earnings to EBITDA, Adjusted EBITDA, and Adjusted net earnings, as well as gross profit to normalized gross profit, SG&A to normalized SG&A, earnings from operations to normalized earnings from operations and net debt, each of which are non-IFRS financial measures (see the “Non-IFRS and Other Financial Measures” of this press release for further information on each non-IFRS financial measure) for the three months ended
Segment Information In thousands of Canadian dollars, except as otherwise noted |
|||||||||||||
|
|||||||||||||
Three months ended |
|||||||||||||
2024 |
|
2023 |
|
$ Change |
% Change |
||||||||
Revenue |
115,348 |
|
108,110 |
|
7,238 |
|
6.7 |
% |
|||||
Gross profit |
41,130 |
|
43,801 |
|
(2,671 |
) |
(6.1 |
%) |
|||||
|
3,253 |
|
- |
|
3,253 |
|
100.0 |
% |
|||||
Normalized gross profit |
44,383 |
|
43,801 |
|
582 |
|
1.3 |
% |
|||||
Gross profit margin |
35.7 |
% |
40.5 |
% |
- |
|
(4.8 |
%) |
|||||
Normalized gross profit margin |
38.5 |
% |
40.5 |
% |
- |
|
(2.0 |
%) |
|||||
Share-based compensation (1) |
1,749 |
|
1,496 |
|
253 |
|
16.9 |
% |
|||||
Selling, general and administrative expenses |
38,061 |
|
30,663 |
|
7,398 |
|
24.1 |
% |
|||||
Acquisition and divestiture related costs (2) |
- |
|
(2,801 |
) |
2,801 |
|
100.0 |
% |
|||||
IT system implementation (4) |
(2,980 |
) |
(670 |
) |
(2,310 |
) |
(344.8 |
%) |
|||||
Other |
(297 |
) |
(72 |
) |
(225 |
) |
(312.5 |
%) |
|||||
|
(1,440 |
) |
- |
|
(1,440 |
) |
(100.0 |
%) |
|||||
Normalized selling, general and administrative expenses |
33,344 |
|
27,120 |
|
6,224 |
|
22.9 |
% |
|||||
Earnings from operations |
1,320 |
|
11,642 |
|
(10,322 |
) |
(88.7 |
%) |
|||||
Acquisition and divestiture related costs (2) |
- |
|
2,801 |
|
(2,801 |
) |
(100.0 |
%) |
|||||
IT system implementation (3) |
2,980 |
|
670 |
|
2,310 |
|
344.8 |
% |
|||||
|
4,693 |
|
- |
|
4,693 |
|
100.0 |
% |
|||||
Other |
297 |
|
72 |
|
225 |
|
312.5 |
% |
|||||
Normalized earnings from operations |
9,290 |
|
15,185 |
|
(5,895 |
) |
(38.8 |
%) |
|||||
Operating margin |
1.1 |
% |
10.8 |
% |
- |
|
(9.7 |
%) |
|||||
Normalized operating margin |
8.1 |
% |
14.0 |
% |
- |
|
(5.9 |
%) |
|||||
Adjusted EBITDA |
15,124 |
|
20,651 |
|
(5,527 |
) |
(26.8 |
%) |
|||||
Adjusted EBITDA margin |
13.1 |
% |
19.1 |
% |
- |
|
(6.0 |
%) |
|||||
|
|||||||||||||
Three months ended |
|||||||||||||
2024 |
|
2023 |
|
$ Change |
% Change |
||||||||
Revenue |
12,690 |
|
28,615 |
|
(15,925 |
) |
(55.7 |
%) |
|||||
Gross profit |
1,655 |
|
4,715 |
|
(3,060 |
) |
(64.9 |
%) |
|||||
Gross profit margin |
13.0 |
% |
16.5 |
% |
- |
|
(3.5 |
%) |
|||||
Selling, general and administrative expenses |
1,497 |
|
1,729 |
|
(232 |
) |
(13.4 |
%) |
|||||
Earnings from operations |
158 |
|
2,986 |
|
(2,828 |
) |
(94.7 |
%) |
|||||
Operating margin |
1.2 |
% |
10.4 |
% |
- |
|
(9.2 |
%) |
|||||
Adjusted EBITDA |
973 |
|
3,857 |
|
(2,884 |
) |
(74.8 |
%) |
|||||
Adjusted EBITDA margin |
7.7 |
% |
13.5 |
% |
- |
|
(5.8 |
%) |
|||||
Reconciliation of Non-IFRS Financial Measures In thousands of Canadian dollars |
|||||
Three months ended | |||||
|
|||||
2024 |
|
2023 |
|
||
Net earnings (loss): |
(3,719 |
) |
7,065 |
|
|
Add: | |||||
Provision for (recovery of) income taxes |
(1,124 |
) |
1,098 |
|
|
Interest expense and other financing costs |
4,873 |
|
6,302 |
|
|
Accretion on preferred shares |
2,219 |
|
- |
|
|
Depreciation of property, plant, and equipment |
3,516 |
|
3,467 |
|
|
Amortization of intangible assets |
1,384 |
|
1,374 |
|
|
Earnings before interest, taxes, depreciation, and amortization (EBITDA) |
7,149 |
|
19,306 |
|
|
Share-based compensation (1) |
1,749 |
|
1,496 |
|
|
Foreign exchange (gain)/ loss |
(771 |
) |
163 |
|
|
Acquisition and divestiture related costs (2) |
- |
|
2,801 |
|
|
IT system implementation (4) |
2,980 |
|
670 |
|
|
|
4,693 |
|
- |
|
|
Other |
297 |
|
72 |
|
|
Adjusted EBITDA |
16,097 |
|
24,508 |
|
|
Provision for income taxes |
1,124 |
|
(1,098 |
) |
|
Interest expense and other financing costs |
(4,873 |
) |
(6,302 |
) |
|
Depreciation of property, plant, and equipment |
(3,516 |
) |
(3,467 |
) |
|
Amortization of intangible assets |
(1,384 |
) |
(1,374 |
) |
|
Share-based compensation (5) |
(1,627 |
) |
(1,454 |
) |
|
Tax deduction from vesting of certain share-based awards |
- |
|
(1,022 |
) |
|
Tax effect of normalization adjustments |
(1,906 |
) |
(983 |
) |
|
Adjusted net earnings |
3,915 |
|
8,808 |
|
|
Three months ended | |||||
|
|||||
2024 |
|
2023 |
|
||
Gross profit |
42,785 |
|
48,516 |
|
|
|
3,253 |
|
- |
|
|
Normalized gross profit |
46,038 |
|
48,516 |
|
|
Normalized gross profit margin |
36.0 |
% |
35.5 |
% |
|
Selling, general and administrative expenses |
39,558 |
|
32,392 |
|
|
Acquisition and divestiture related costs (2) |
- |
|
(2,801 |
) |
|
IT system implementation (4) |
(2,980 |
) |
(670 |
) |
|
|
(1,440 |
) |
- |
|
|
Other |
(297 |
) |
(72 |
) |
|
Normalized selling, general and administrative expenses |
34,841 |
|
28,849 |
|
|
Earnings from operations |
1,478 |
|
14,628 |
|
|
Acquisition and divestiture related costs (2) |
- |
|
2,801 |
|
|
IT system implementation (4) |
2,980 |
|
670 |
|
|
|
4,693 |
|
- |
|
|
Other |
297 |
|
72 |
|
|
Normalized earnings from operations |
9,448 |
|
18,171 |
|
|
Normalized operating margin |
7.4 |
% |
13.3 |
% |
|
Reconciliation of Net Debt In thousands of Canadian dollars |
|||||
($ in 000's) |
As at |
|
|
As at |
|
2024 |
|
|
2023 |
|
|
Long-term debt |
340,285 |
|
325,000 |
|
|
Cash |
(34,150 |
) |
(36,863 |
) |
|
Net debt |
306,135 |
|
288,137 |
|
(1) |
|
The Company’s share-based compensation expense pertains to its long-term incentive plan (the “LTIP”) (refer to “Share-based compensation”), with stock options, performance-based share units (“PSUs”), time-based restricted share units (“RSUs”), and deferred share units (“DSUs”) expenses, along with associated payroll taxes. |
(2) |
|
Mainly pertains to legal and consulting costs associated with the acquisition of a distributor in |
(3) |
|
These expenses are comprised of third party legal fees, security fees and unavoidable facility expenditures. All expenses are directly related to the facility closure and collective bargaining process with unionized employees at a manufacturing and warehousing facility in |
(4) |
|
Current quarter expense mainly pertains to development costs associated with an IT system implementation to augment system infrastructure. |
(5) |
|
Costs pertaining to LTIP, excluding PSUs granted to certain employees relating to business combinations. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240509168777/en/
Investor and Media Contact Information:
416-960-0052
rwinker@jamiesonlabs.com
Source: