Goodfood Market Corp. (“Goodfood” or “the Company”) (TSX:FOOD), the
leader in the Canadian meal-kit industry, today announced strong
financial results for the third quarter ended May 31, 2018.
Active subscribers reached 76,000 as at May 31,
2018, up from 23,000 as at May 31, 2017. During the third quarter,
Goodfood added 15,000 net new subscribers, an increase of 25% from
February 28, 2018.
“We are extremely pleased with the launch of our
activities in Western Canada, particularly in Alberta and British
Columbia, where results to date are ahead of our expectations. We
are also continuing to expand our meal solutions offering,
increasing flexibility and customization for our customers with the
launch of additional Easy-Prep recipes and “L’artisan” our premium
recipe collection. I am also very excited by some of our new
products in development that will be launched for our members in
the very near future!”, said Jonathan Ferrari, Chief Executive
Officer of Goodfood.
“The team has done a great job driving
operational efficiencies as reflected in the significant
improvement of 530 basis points in gross margin and our first
quarter of positive cash flow from operations as a public company.
We also strengthened our financial position through a public
offering for gross proceeds of $10 million, allowing us to
accelerate our growth in Western Canada, invest in automation for
further gross margin improvement and to continue to expand our
product portfolio for the benefit of our members”, added Neil
Cuggy, President and Chief Operating Officer of Goodfood.
Financial Highlights |
(Unaudited all amounts are in Canadian
dollars) |
|
For the periods ended May 31, 2018 and 2017 |
|
Q3 2018 |
|
Q3 2017 |
|
Change |
|
YTD 2018 |
|
YTD 2017 |
|
Change |
|
RevenueGrowth % |
22,222,501 |
|
6,428,446 |
|
15,794,055246% |
|
49,131,030 |
|
12,307,861 |
|
36,823,169299% |
|
Gross ProfitGross margin % |
5,183,01823.3% |
|
1,362,87421.2% |
|
3,820,1442.1 pts |
|
10,067,14220.5% |
|
2,585,47121.0% |
|
7,481,671 (0.5) pts |
|
Gross Merchandise Sales1 |
26,166,081 |
|
7,536,017 |
|
18,630,064247% |
|
58,281,376 |
|
14,372,234 |
|
43,909,142306% |
|
Adjusted Gross ProfitAdjusted Gross margin %1 |
9,126,59834.9% |
|
2,470,44532.8% |
|
6,656,1532.1 pts |
|
19,217,48833.0% |
|
4,649,84432.4% |
|
14,567,644 0.6 pts |
|
Net Loss |
(1,564,039) |
|
(1,216,635) |
|
(347,404) |
|
(6,478,476) |
|
(6,095,937) |
|
(382,539) |
|
Adjusted net loss 1 |
(1,564,039) |
|
(860,830) |
|
(703,209) |
|
(6,365,379) |
|
(1,490,414) |
|
(4,874,965) |
|
1 See the non-IFRS financial measures section below |
Revenue and Gross Merchandise Sales
The gross merchandise sales run-rate reached
$110 million at the end of the third quarter of 2018. Revenue for
the third quarter grew 246% to $22.2 million compared to $6.4
million for the corresponding period of 2017 and increased 42% when
compared to $15.7 million for the second quarter of 2018. Gross
merchandise sales for the third quarter, which reflects the total
retail value of merchandise sold by Goodfood before taking into
account all incentives and credits, totaled $26.2 million compared
to $7.5 million for the corresponding period of 2017 and $18.8
million for the second quarter of 2018.
Revenue for the nine-month period of 2018 grew
299% to $49.1 million compared to $12.3 million in the
corresponding period of 2017. The increase in revenue for the third
quarter and for the nine-month period of 2018 compared to the
corresponding periods of 2017 is primarily driven by the continued
growth in the number of active subscribers. Gross merchandise sales
for the nine-month period of 2018 increased to $58.3 million
compared to $14.4 million for the corresponding period of 2017.
Gross Margin and Adjusted Gross
Margin
The gross margin for the third quarter improved
to 23.3% compared to 21.2% for the corresponding period of 2017.
The increase in gross margin primarily resulted from lower unit
costs for packaging, food and shipping due to increased
efficiencies and purchasing power, which was partially offset by
additional costs related to the start-up of the Western Canada
operations. Gross margin in the third quarter of 2018 increased
significantly from 18.0% to 23.3% compared to the second quarter of
2018. The Company saw a significant improvement in Eastern Canada
gross margin again partially off-set by the start-up costs related
to Western Canada. The company expects that fixed costs as a
percentage of revenue will decrease over time with the Company’s
continued growth and continued efforts to improve operational
efficiences.
Adjusted gross margin was 34.9% and 33.0% for
the third quarter and nine-month period of 2018 respectively,
compared to 32.8% and 32.4% for the corresponding periods of 2017.
Adjusted gross margin in the third quarter of 2018, improved to
34.9% compared to 31.8% in the second quarter of 2018.
Adjusted Net Loss and Adjusted Net Loss
per Share
Adjusted net loss for the third quarter was $1.6
million, or $0.03 per share (basic and diluted), compared to an
adjusted net loss of $0.9 million, or $0.03 per share (basic and
diluted) for the corresponding period of 2017. The increase in
adjusted net loss was mainly due to planned investments in
administrative expenses and an increased marketing budget to
support continued subscriber growth.
Adjusted net loss for the nine-month period of
2018 was $6.4 million, or $0.13 per share (basic and diluted),
compared to an adjusted net loss of $1.5 million, or $0.06 per
share (basic and diluted) for Fiscal 2017. The increase in adjusted
net loss was mainly due to planned investments in administrative
expenses and an increased marketing budget to support continued
subscriber growth.
Public Offering
On May 7, 2018, the Company completed a public
offering and issued 4,000,000 common shares for gross proceeds of
$10,000,000. The Company will use the proceeds to accelerate its
growth in Western Canada, to invest in automation, to launch new
meal solutions, and for working capital and general corporate
purposes.Outlook
The meal-kit subscription service industry is
one of the fastest growing industries in the world and remains
relatively new in Canada. As a result, Goodfood believes that there
are significant opportunities to rapidly grow its subscriber base
by continuing to invest in highly targeted marketing campaigns,
capacity expansion and in operating a national platform. As the
Company grows its subscriber base, it is confident that it will
achieve further economies of scale which will lead to enhanced
profitability. With the recent launch of the Western Canadian
production facility, Management expects the Company to further
expand its client base.
Third Quarter Fiscal 2018 Results
Conference Call:
Details of the Conference Call:
When: July 11, 2018 at 4:30 p.m. E.T Dial in number:
647-788-4922 or 877-223-4471
Conference call replay available until July 25, 2018416-621-4642
or 1-800-585-8367
To access the webcast and view the slide presentation, click on
this link: http://www.gowebcasting.com/9318.
The conference ID is 8599945.
A full version of the Company’s Third Quarter
2018 Management’s Discussion and Analysis (MD&A) and unaudited
Interim Financial Statements will be posted on http://www.sedar.com
later today.
Non-IFRS Financial Measures
Certain financial and non-financial measures
included in this news release do not have a standardized meaning
under IFRS and therefore may not be comparable to similar measures
presented by other companies. The Company includes these
measures because it believes they provide to certain investors a
meaningful way of assessing financial performance. For a more
complete description of these measures and a reconciliation of
Goodfood's non-IFRS financial measures to financial results, please
see Goodfood's Management's Discussion and Analysis for the
three-month and nine-month periods ended May 31, 2018.
Goodfood's definition of the non-IFRS terms are as follows:
- Gross merchandise sales measures the total retail value of all
goods sold by the Company before taking into account all incentives
and credits.
- Gross merchandise sales run-rate is defined as gross
merchandise sales for the four-week period ended as at the date
indicated multiplied by thirteen. Management believes that gross
merchandise sales run-rate is a useful measure of financial
performance because it is indicative of gross merchandise sales on
an annual basis for the Company's current level of active
subscribers.
- Adjusted gross profit is calculated as gross merchandise sales
less cost of goods sold.
- Adjusted gross margin is calculated as adjusted gross profit
divided by gross merchandise sales.
- EBITDA is defined as net income or loss before net finance
expenses, depreciation and amortization expense and income tax
expense.
- Adjusted net loss is defined as net loss adjusted for items
that Management believes do not necessarily arise as part of the
Company’s normal day-to-day operations to better analyze trends in
performance and financial results. These adjustments result in a
truer economic representation of the underlying business on a
comparative basis.
Active Subscribers
An Active subscriber is defined as an account
that is scheduled to receive a delivery or has elected to skip
delivery in the subsequent weekly delivery cycle. Active
subscribers exclude cancelled accounts. While Active subscribers is
not an IFRS or Non-IFRS Financial Measure, and therefore, does not
appear in and cannot be reconciled to a specific line item in our
financial statements, we believe that Active subscribers is a
useful metric for investors because it is indicative of future
revenues. The Company reports the number of Active subscribers at
the beginning and end of the period, rounded to the nearest
thousand.
About Goodfood
Goodfood is Canada’s leading meal kit company,
delivering fresh ingredients that make it easy for subscribers to
prepare delicious meals at home every week. Goodfood’s objective is
to take the hassle out of cooking, leaving subscribers with the fun
part - cooking, sharing with family and eating. Subscribers select
their favorite recipes from a variety of original dishes online.
The Company prepares a personalized box of fresh ingredients and
delivers it to the subscriber's doorstep with easy step-by-step
instructions. Headquartered in Montréal, Canada, Goodfood had
76,000 active subscribers as at May 31, 2018.
www.makegoodfood.ca
Except where otherwise indicated, all amounts in
this press release are expressed in Canadian dollars.
For further
information:Philippe Adam, Chief Financial Officer 1(855)
515-5191IR@makegoodfood.ca
Forward-Looking
Information
This release contains information that may be
considered “forward-looking information” within the meaning of
applicable Canadian securities legislation. Such forward-looking
information includes, but is not limited to, information with
respect to our objectives and the strategies to achieve these
objectives, as well as information with respect to our beliefs,
plans, expectations, anticipations, estimates and intentions.
Forward-looking information is identified by the use of terms and
phrases such as “may”, “would”, “should”, “could”, “expect”,
“intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”,
or “continue”, the negative of these terms and similar terminology,
including references to assumptions, although not all
forward-looking information contains these terms and phrases.
Forward-looking information is provided for the purposes of
assisting the reader in understanding the Company and its business,
operations, prospects and risks at a point in time in the context
of historical and possible future developments and therefore the
reader is cautioned that such information may not be appropriate
for other purposes. Forward-looking information is based upon a
number of assumptions and is subject to a number of risks and
uncertainties, many of which are beyond our control, which could
cause actual results to differ materially from those that are
disclosed in or implied by such forward-looking information. These
risks and uncertainties include, but are not limited to, the
following risk factors which are discussed in greater detail under
“Risk Factors” in the Company’s Annual Information Form for the
year ended August 31, 2017 available on SEDAR at www.sedar.com:
limited operating history, negative operating cash flow, food
industry, quality control and health concerns, regulatory
compliance, regulation of the industry, public safety issues,
product recalls, damage to Goodfood’s reputation, transportation
disruptions, product liability, ownership and protection of
intellectual property, evolving industry, reliance on a single
facility, unionization activities, reliance on management, factors
which may prevent realization of growth targets, competition,
availability and quality of raw materials, limited number of
products, environmental and employee health and safety regulations,
online security breaches and disruption, reliance on data centers,
open source license compliance, future capital requirements,
operating risk and insurance coverage, management of growth,
conflicts of interest, litigation, and catastrophic events.
Although the forward-looking information contained herein is based
upon what we believe are reasonable assumptions, readers are
cautioned against placing undue reliance on this information since
actual results may vary from the forward-looking information.
Certain assumptions were made in preparing the forward-looking
information concerning availability of capital resources, business
performance, market conditions, and customer demand.
Consequently, all of the forward-looking information contained
herein is qualified by the foregoing cautionary statements, and
there can be no guarantee that the results or developments that we
anticipate will be realized or, even if substantially realized,
that they will have the expected consequences or effects on our
business, financial condition or results of operation. In addition,
any statements as to financial results (including without
limitation, revenue, sales, margin and profitability in general or
with respect to any aspect of the Company`s business) is made as at
the time in question. There can be no assurance that past results
will be repeated and future results may vary materiallyUnless
otherwise noted or the context otherwise indicates, any
forward-looking information contained herein is provided as of the
date hereof, and we do not undertake to update or amend such
forward-looking information whether as a result of new information,
future events or otherwise, except as may be required by applicable
law.
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