Groupe LSL Pharma Inc. (TSXV: LSL) – (“the Company” or “LSL Pharma
Group”), a Canadian integrated pharmaceutical company, announced
its financial results for the second quarter ended June 30, 2023.
The Company’s Management's Discussion and Analysis and unaudited
consolidated financial statements are available on SEDAR. Unless
otherwise specified, all amounts are in Canadian dollars.
“We are pleased with these results that show a
constant progression in demand for our products,” said François
Roberge, President and Chief Executive Officer of LSL Pharma Group.
“The strong revenue growth is even more impressive considering
production downtime related to the move of LSL Laboratory’s (“LSL”)
activities into a new facility in La Pocatière during the quarter.
Production is ramping up in line with our expectations, which
should result in revenue growth exceeding 15% from existing clients
over the next several years. Steri-Med also had a solid performance
during the quarter and optimization efforts of its current
infrastructure will double its production capacity by the end of
2023, while the addition of new equipment towards the end of 2024
should further double capacity.”
SELECTED FINANCIAL INFORMATION(in thousands of
CAD$, except per share amounts) |
Second quarter ended |
Six-month period ended |
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
June 30, 2022 |
|
Revenues |
2,034 |
|
1,418 |
|
4,058 |
|
3,283 |
|
Gross profit |
692 |
|
(332) |
|
1,079 |
|
(977) |
|
Adjusted EBITDA1 |
(260) |
|
(1,364) |
|
(263) |
|
(2,947) |
|
Net loss |
(3,101) |
|
(1,339) |
|
(7,234) |
|
(3,579) |
|
Net loss per share |
(0.04) |
|
(0.02) |
|
(0.09) |
|
(0.05) |
|
Weighted average shares outstanding (‘000s) |
82,434 |
|
65,465 |
|
78,150 |
|
64,150 |
|
SECOND QUARTER RESULTS
For the three-month period ended June 30, 2023,
LSL Pharma Group generated revenues of $2.0 million, up 43,5% from
$1.4 million in the same period a year earlier. The increase
reflects successful initiatives to stimulate sales and carried out
in prior periods, partially offset by scheduled downtime due to the
transition to the new LSL manufacturing facility in La Pocatière,
Québec.
Adjusted EBITDA, which excludes items that
affect comparability, amounted to a loss of $260,000, compared with
a loss of $1.4 million last year. The improvement is attributable
to a higher gross profit, reaching $692,000 as opposed to a loss of
$332,000 last year, while selling and administrative expenses
remained relatively stable despite the strong revenue increase.
Net loss for the quarter was $3.1 million, or
$0.04 per share, compared to a net loss of $1.3 million, or $0.02
per share, in the previous year.
SIX MONTH RESULTS
For the first six months of fiscal year 2023,
LSL Pharma Group generated revenues of $4.1 million, representing a
23.6% increase from $3.3 million for the same period last year.
Gross profit reached $1.1 million, compared to a loss of $1.0
million a year earlier. Adjusted EBITDA amounted to a loss of
$263,000, marking an improvement from a $2.9 million loss in the
prior year. Net loss totaled $7.2 million, or $0.09 per share,
compared to a loss of $3.6 million, or $0.05 per share, a year
earlier.
FINANCIAL SITUATION
Reflecting private placements completed in the
first quarter of the year, shareholders’ equity amounted to $10.5
million as at June 30, 2023, versus $5.6 million at the beginning
of the year. The Company used a portion of the aggregate net
proceeds of $8.4 million to reduce its debt, which stood at $7.2
million, net of cash and cash equivalents, as at June 30, 2023,
down from $9.3 million at the beginning of the year.
Working capital also improved, from ($7.0)
million as at December 31, 2022, to ($3.7) million as at June 30,
2023. The improvement is attributable to higher inventories related
to production increase at Steri-Med since the beginning of the year
to meet growing demand for LSL Pharma Group’s products, to a cash
balance following private placements, and to the reduction of
various financial liabilities.
SUBSEQUENT EVENT
On August 2, 2023, the Company entered into a
new $1.5 million short-term credit facility with a Canadian
chartered bank. The Company subsequently repaid the entire amount
due under other financial liabilities. The new short-term financing
is secured by a first-ranking hypothec on accounts receivable and
inventories.
DEPARTURE OF CHIEF FINANCIAL
OFFICER
LSL Pharma Group announces the departure of
Sylvain Richer, Chief Financial Officer, for personal reasons and
to seek new opportunities, effective August 31, 2023. The Company
has begun a process to find a successor. Until then, François
Roberge will assume the interim and Mr. Richer will remain
available to ensure a smooth transition.
OUTLOOK
“The production capacity increase will allow LSL
Pharma Group to speed up its product and market developments.
First, since the beginning of 2023, the Steri-Med division team has
initiated the certification process to market new sterile products
that should be launched at the end of 2024 and in 2025. Moreover,
progress in our discussions with large U.S.-based clients suggests
potential inroads into that important market, possibly in 2025.
Meanwhile, the LSL division plans to expand its offering of natural
health products before the end of 2024 and remains active in order
to capture business opportunities in the United States and Europe.
Finally, we continue to evaluate strategic acquisitions that would
allow us to further expand our product portfolio,” added Mr.
Roberge.
NON-IFRS FINANCIAL MEASURES
The non-IFRS measures included in this document
are not recognized measures under IFRS and do not have a
standardized meaning prescribed by IFRS and may not be comparable
to similar measures presented by other issuers. When used, these
measures are defined in such terms as to allow the reconciliation
to the closest IFRS measure. These measures are provided as
additional information to complement those IFRS measures by
providing further understanding of the Company’s results of
operations from its perspective. Accordingly, they should not be
considered in isolation nor as a substitute for analysis of LPG’s
financial information reported under IFRS. Despite the importance
of these measures to management in goal setting and performance
measurement, the Company stresses that these are non-IFRS measures
that may have limits in their usefulness to investors.
The Company uses non-IFRS measures, such as
EBITDA and Adjusted EBITDA to provide investors with a supplemental
measure of its operating performance and thus highlight trends in
its core business that may not otherwise be apparent when relying
solely on IFRS financial measures. The Company also believes that
securities analysts, investors, and other interested parties
frequently use non-IFRS measures in the valuation of issuers. LPG
also uses non-IFRS measures to facilitate operating performance
comparisons from period to period, prepare annual operating
budgets, and to assess its ability to meet future debt service,
capital expenditure and working capital requirements. The
definition and reconciliation of EBITDA and Adjusted EBITDA used
and presented by the Company to the most directly comparable IFRS
measures are detailed below.
EBITDA is defined as net profit
or loss adjusted for income tax expense, depreciation of property,
plant and equipment, amortization of intangible assets, interest on
short and long-term debts and other financing costs such as foreign
exchange gain or losses, interest income and other. Management uses
EBITDA to assess the Company’s operating performance.
Adjusted EBITDA is defined as
EBITDA adjusted for special recruitment costs and employee
severances, special professional fees, share based compensation and
other warrants or option issuance costs, moving expenses and other
expenses related to the listing of the Company on the TSX Venture.
The Company uses Adjusted EBITDA as a key metric in assessing our
business performance when we compare results to budgets, forecasts,
and prior years. Management believes Adjusted EBITDA is a more
accurate measure of cash flow generation than, for example, cash
flow from operations, as it removes cash flow fluctuations caused
by unusual changes in working capital.
Reconciliation of net loss to EBITDA and Adjusted
EBITDA (in thousands of CAD$) |
Second quarter ended |
Six-month period ended |
June 30, 2023 |
|
June 30, 2022 |
|
June 30, 2023 |
|
June 30, 2022 |
|
Net loss |
(3,101) |
|
(1,339) |
|
(7,234) |
|
(3,579) |
|
Net financial expenses |
389 |
|
(309) |
|
842 |
|
67 |
|
Depreciation |
289 |
|
284 |
|
538 |
|
565 |
|
EBITDA |
(2,423) |
|
(1,364) |
|
(5,854) |
|
(2,947) |
|
Cost related to the reverse takeover |
1 |
|
- |
|
2,488 |
|
- |
|
Moving costs |
99 |
|
- |
|
132 |
|
- |
|
Share-based compensation expense |
2,063 |
|
- |
|
2,971 |
|
- |
|
Adjusted EBITDA |
(260) |
|
(1,364) |
|
(263) |
|
(2,947) |
|
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This news release may contain forward-looking
information as defined under applicable Canadian securities laws.
Forward-looking information can generally be identified by the use
of forward-looking terminology such as "may", "will", "expect",
"intend", "estimate", "continue" or similar terminology.
Forward-looking information is based on a number of assumptions and
is subject to various known and unknown risks and uncertainties,
many of which are beyond the Company's ability to control or
predict, that could cause actual results or performance to differ
materially from those expressed or implied by such forward-looking
information. These risks and uncertainties include, but are not
limited to, those identified in the Corporation’s filings with
Canadian securities regulatory authorities such as legislative or
regulatory developments, intensifying competition, technological
change and general economic conditions. All forward-looking
statements presented herein should be considered in conjunction
with such filings.
Readers should not put undue reliance on
forward-looking statements. No assurances can be given that any of
the events anticipated by the forward-looking statements will
transpire or occur, or if any of them do occur, the actual results,
performance or achievements of the Company could differ materially
from the results expressed in, or implied by, any forward-looking
statements. All forward-looking information in this news release
speaks as of the date of this news release. The Company does not
undertake to update any such forward-looking information whether as
a result of new information, future events or otherwise except as
required by law.
ABOUT LSL PHARMA GROUP
INC.
LSL Pharma Group is a Canadian integrated
pharmaceutical company specializing in the development,
manufacturing and distribution of high-quality natural health
products and dietary supplements in solid dosage forms, as well as
high quality sterile ophthalmic pharmaceutical products. For more
information, please visit www.laboratoirelsl.com and
www.sterimedpharma.com.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
CONTACT:François Roberge,
President and Chief Executive Officer Telephone: 514-664-7700Email:
investors@groupelslpharma.com
1 Adjusted EBITDA is a non-IFRS measure. Refer to the Non-IFRS
Financial Measures section for definitions and reconciliations.
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