EMERGE Reports First Quarter 2024 Results
- Q1 Gross Merchandise Sales1 ("GMS") of
$7.65M compared to$7.61M in Q1 2023 - Q1 Revenue of
$5.0M compared to$5.3M in Q1 2023 - Q1 Gross Profit increased to
$2.1M compared to$2.0M in Q1 2023 - Q1 Gross Margin improved to 43% compared to 38% in Q1 2023
- Q1 Adjusted EBITDA1 improved to
$(99K) compared to$(526K) in Q1 2023 - Net Income from Continuing Operations improved to
$9K compared to Net Loss of$(2.4M) in Q1 2023
This marks EMERGE's first financial report which classifies WholesalePet ("WSP") as discontinued operations, with prior period results also restated to reflect the reclassification. EMERGE completed its sale of WSP in
Q1 2024 Financial Highlights
-
Q1 GMS of
$7.65M compared to$7.61M in Q1 2023 -
Q1 Revenue of
$5.0M compared to$5.3M in Q1 2023. Excluding Carnivore Club, a brand that is actively eliminating loss-making revenue, EMERGE revenue would be in line with Q1 2023 -
Q1 Gross Profit increased to
$2.1M compared to$2.0M in Q1 2023 - Q1 Gross Margin improved to 43% compared to 38% in Q1 2023
-
Q1 Adjusted EBITDA improved to
$(99K) compared to$(526K) in Q1 2023 -
Net Income improved to
$486K compared to Net Loss of$(2.1M) , largely driven by the sale of WholesalePet ("WSP") -
Net Income from Continuing Operations improved to positive
$9K compared to a Net Loss of$(2.4M) -
Cash on hand at
March 31, 2024 was$2.6 million
Cost Reductions
Following the sale of various non-core businesses over the last year, EMERGE is executing additional cost savings largely in relation to operating a more focused set of brands.
"We have taken measures to reduce our overhead expenses given our more streamlined operations that are now exclusively centered on our grocery and golf verticals. These cost reductions were partly reflected in our much improved profitability in Q1, with additional savings being actioned in Q2 as well," continued Halazon.
Brand-Level Commentary
truLOCAL, our premium meat subscription service, and EMERGE's largest business by revenue, continues to see strong net customer inflows, a leading indicator of future (deferred) revenue, increased Average Order Value ("AOV"), and reduced overhead expenses. The direct-to-consumer ("D2C") subscription business is showing encouraging signs year-to-date, with 'new initiative' revenue lines in the works as well to accelerate organic growth.
The golf division, which includes UnderPar and JustGolfStuff, continue to drive improved topline, margins and more efficient marketing spend.
Excluding Carnivore Club, EMERGE's Q1 2024 revenue would have been approximately in line with Q1 2023.
Q1 2024 Business Highlights
Sale of WSP
In
EMERGE now retains 4 brands across 2 main verticals, Grocery and Golf, in
EMERGE utilized
On
Notable Events Subsequent to March 31, 2024
Convertible Note Amendment Resulting in
On
Outlook
EMERGE is seeing robust sales trends through Q2 to date, and continues to execute towards a return to organic revenue growth plan in 2024, with a substantially improved profitability profile and reduced overall debt levels.
Top Priorities
The Company's top priorities in the near-term are to i) drive organic growth, ii) extract further operational efficiencies, and iii) opportunistically explore avenues to further pay down debt and reduce interest expense
Conference Call
Management will host a conference call on
Alternatively, the conference call can be accessed online at: https://app.webinar.net/27o4Rx6jY8k
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 months ended
|
|
Three months ended |
||
|
|
|
2024 $ |
2023 $ |
Gross Merchandise Sales1 |
|
|
7,645,258 |
7,608,218 |
Total revenue |
|
|
5,009,051 |
5,325,695 |
Adjusted EBITDA1 |
|
|
(99,306) |
(525,675) |
Net (loss) income |
|
|
485,808 |
(2,129,713) |
Basic and diluted (loss) per share |
|
|
0.00 |
(0.02) |
1 Non-GAAP Financial Measure. Refer to section "Non-GAAP Financial Measures" 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 |
||
|
|
|
2024 $ |
2023 $ |
Net (loss) income |
|
|
485,808 |
(2,129,713) |
Add back: |
|
|
|
|
Finance costs |
|
|
498,837 |
1,058,975 |
Income taxes |
|
|
(170,483) |
(228,060) |
Amortization |
|
|
59,657 |
794,304 |
EBITDA |
|
|
873,819 |
(504,494) |
Share-based compensation |
|
|
25,272 |
77,205 |
Transaction cost |
|
|
101,358 |
146,515 |
Foreign exchange and other losses (gains) |
|
|
(623,389) |
34,464 |
Fair value change in contingent consideration |
|
|
- |
- |
Net loss (income) from discontinued operations |
|
|
(476,366) |
(279,365) |
Adjusted EBITDA |
|
|
(99,306) |
(525,675) |
The following table highlights GMS and a reconciliation of the Company's reported results to its adjusted measures:
|
|
Three months ended |
||
|
|
|
2024 $ |
2023 $ |
Revenue |
|
|
5,009,051 |
5,325,695 |
Adjusted for: |
|
|
|
|
Merchant costs deducted from net revenue |
|
|
2,840,365 |
2,626,945 |
Sales added to deferred revenue and value of orders |
|
|
1,954,445 |
1,593,715 |
Deferred and other adjustments to revenue |
|
|
(1,994,282) |
(1,928,954) |
Advertising revenue |
|
|
(164,321) |
(9,183) |
GMS |
|
|
7,645,258 |
7,608,218 |
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
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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