Roots Reports Strong First Quarter Fiscal 2025 Results
"Our first-quarter results, marking the third consecutive quarter of year-over-year growth in sales, gross margin, and adjusted EBITDA, speaks to the growing resonance of the Roots brand and the discipline with which we are executing our strategic priorities,” said
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Sales were
$40.0 million , a 6.7% increase compared to$37.5 million in Q1 2024.-
DTC sales were
$34.6 million , a 10.2% increase compared to$31.4 million in Q1 2024 - DTC comparable sales growth was 14.1%
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DTC sales were
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Gross margin was 61.5%, up 250bps compared to 59.0% in Q1 2024
- DTC gross margin of 62.9%, up 80bps compared to 62.1% in Q1 2024
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Net loss totaled
($7.9) million , improving from($8.9) million in Q1 2024-
Excluding the impacts from cash settled instruments under our share-based compensation plan, net loss would have been
($7.4) million , improving 16.5% compared to($8.9) million in Q1 2024
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Excluding the impacts from cash settled instruments under our share-based compensation plan, net loss would have been
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Adjusted EBITDAamounted to
($7.1) million , a 10.7% improvement from($8.0) million in Q1 2024-
Excluding the impacts from cash settled instruments under our share-based compensation plan, Adjusted EBITDA would have been
($6.6) million , improving 16.8% compared to($8.0) million in Q1 2024
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Excluding the impacts from cash settled instruments under our share-based compensation plan, Adjusted EBITDA would have been
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Net debt reduced 6.7% year-over-year to
$29.6 million -
Repurchased 115,300 shares for
$0.3 million under the normal course issue bid that launched in Q1 2025
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SELECT FINANCIAL INFORMATION (in ‘000s of CAD$, except where noted) |
First quarter ended |
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Change |
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Total sales |
39,980 |
37,461 |
+6.7% |
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Direct-to-Consumer (“DTC”) sales |
34,608 |
31,405 |
+10.2% |
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Partners & Other (“P&O”) sales |
5,372 |
6,056 |
(11.3%) |
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Gross profit |
24,572 |
22,101 |
+11.2% |
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Gross margin |
61.5% |
59.0% |
+250 bps1 |
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Selling, General and Administrative (“SG&A”) expenses |
33,289 |
31,982 |
+4.1% |
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Net loss |
(7,911) |
(8,895) |
+11.1% |
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Net loss per share |
( |
( |
+9.1% |
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Adjusted EBITDA2 |
(7,106) |
(7,959) |
+10.7% |
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Free Cash Flow3 |
(21,806) |
(14,613) |
(49.2%) |
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Net Debt4 |
29,576 |
31,704 |
(6.7%) |
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1 Basis points (“bps”). |
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2 Adjusted EBITDA is a non-IFRS measure that adjusts for the impact of certain items that are non-recurring or unusual in nature to remove difficulty in comparing underlying financial performance between periods. See “Non-IFRS Measures and Industry Metrics”. |
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3 Free cash flow is a supplementary financial measure that reflects cash flow generated from ongoing operations, calculated as our cash from operating activities less cash used in investing activities and the payment of principal on lease liabilities net of lease incentives. See “Non-IFRS Measures and Industry Metrics”. |
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4 Net debt is a supplementary financial measure that reflects our liquidity, refer to the “Reconciliation of long-term debt to net debt and leverage ratio” table for the calculation. See “Non-IFRS Measures and Industry Metrics”. |
“Our first quarter results reflect our ongoing commitment to balance top-line growth with cost discipline to improve long-term profitability and operating leverage,” said
FIRST QUARTER OVERVIEW
Total sales were
P&O sales (wholesale Roots branded products, licensing to select manufacturing partners and the sale of certain custom products) amounted to
Gross profit reached
SG&A expenses totaled
Net loss totaled
Adjusted EBITDA amounted to
FINANCIAL POSITION
Inventory was
Free cash flow was
NORMAL COURSE ISSUER BID
Under its Normal Course Issuer Bid (“NCIB”) program, Roots repurchased 115,300 common shares of the Company (“Shares”) for a total consideration of
AMENDMENT TO THE COMPANY’S CREDIT AGREEMENT
On
CONFERENCE CALL AND WEBCAST INFORMATION
Roots will hold a conference call to review its first quarter 2025 results on
A live audio webcast of the conference call will be available on the Events and Presentations section of the Company’s investor website at https://investors.roots.com or by following the link here. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. An archived replay of the webcast will be available on the Company’s website for one year.
NON-IFRS MEASURES AND INDUSTRY METRICS
This press release makes reference to certain non-IFRS measures including certain metrics specific to the industry in which we operate. These measures are not recognized measures under International Financial Reporting Standards as issued by the
We believe these non-IFRS measures and industry metrics provide useful information to both management and investors in measuring our financial performance and condition and highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. For further information regarding these non-IFRS measures, please refer to “Cautionary Note-Regarding Non-IFRS Measures and Industry Metrics” in our management’s discussion and analysis for Q1 2025, which is incorporated by reference herein and is available on SEDAR+ at www.sedarplus.ca or the Company’s Investor Relations website at https://investors.roots.com.
The table below provides a reconciliation of net loss to EBITDA and Adjusted EBITDA for the periods presented:
|
CAD $000s |
Q1 2025 |
Q1 2024 |
|
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Net loss |
(7,911) |
(8,895) |
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Add the impact of: |
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Interest expense (a) |
2,015 |
2,127 |
|
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Income taxes recovery (a) |
(2,821) |
(3,113) |
|
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Depreciation and amortization (a) |
6,865 |
7,241 |
|
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EBITDA |
(1,852) |
(2,640) |
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Adjust for the impact of: |
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SG&A: Rent expense excluded from net loss due to IFRS 16 (a) |
(5,379) |
(5,589) |
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SG&A: Purchase accounting adjustments (b) |
(4) |
(6) |
|
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SG&A: Stock option expense (c) |
75 |
91 |
|
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SG&A: Changes in key personnel (d) |
54 |
189 |
|
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SG&A: Non-recurring legal fees (e) |
– |
(4) |
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Adjusted EBITDA(f) |
(7,106) |
(7,959) |
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_______________ |
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Notes: |
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(a) |
The impact of IFRS 16 in Q1 2025 and Q1 2024 was: (i) a decrease to selling, general, and admin (“SG&A”) expenses of |
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(b) |
As a result of the Acquisition, the Company recognized an intangible asset for lease arrangements in the amount of |
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(c) |
Represents non-cash share-based compensation expense in respect of our Legacy Equity Incentive Plan, Legacy Employee Option Plan, and Omnibus Equity Incentive Plan. |
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(d) |
Represents expenses incurred in respect of the Company’s efforts to recruit for vacancies in key management positions and severance costs associated with employee separations relating to such positions. |
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(e) |
Represents non-recurring legal costs that are outside the scope of normal operations. |
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(f) |
Adjusted EBITDA excludes the impact of IFRS 16. If the impact of IFRS 16 was included for Q1 2025 and Q1 2024, Adjusted EBITDA would have been |
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Reconciliation of long-term debt to net debt and leverage ratio:
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As at |
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CAD $000s |
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Long-term debt(1) |
$ |
35,490 |
$ |
44,119 |
$ |
41,370 |
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Less: cash |
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(5,914) |
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(12,414) |
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(34,021) |
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Net debt |
$ |
29,576 |
$ |
31,705 |
$ |
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Trailing 12-month Adjusted EBITDA |
|
22,158 |
|
17,744 |
|
21,305 |
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Leverage ratio |
1.3x |
1.8x |
0.3x |
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__________ |
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Notes: |
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(1) |
Total long-term debt of |
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ABOUT ROOTS
Established in 1973, Roots is a global lifestyle brand. Starting from a small cabin in northern
FORWARD-LOOKING INFORMATION
Certain information in this press release contains forward-looking information. This information is based on management’s reasonable assumptions and beliefs in light of the information currently available to us and is made as of the date of this press release. Actual results and the timing of events may differ materially from those anticipated in the forward-looking information as a result of various factors. Information regarding our expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate is forward-looking information. Statements containing forward-looking information are not facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances. Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements.
See “Forward-Looking Information” and “Risk Factors” in the Company’s current Annual Information Form for a discussion of the uncertainties, risks and assumptions associated with these statements. Readers are urged to consider the uncertainties, risks and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. We have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law.
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Roots Investor Relations
Investors@roots.com
1-844-762-2343
For media or partnership inquiries:
Director of PR
nlegate@roots.com
647-828-5128
Source: Roots
