Goodfood Market Corp. (“Goodfood” or “the Company”) (TSX: FOOD), a
leading home meal solutions company in Canada, today announced
strong financial results for the fourth quarter and fiscal year
ended August 31, 2018.
Active subscribers reached 89,000 as at August
31, 2018, up from 31,000 as at August 31, 2017. During the fourth
quarter, Goodfood added 13,000 net new subscribers, an increase of
17% from the end of the third quarter of 2018.
“Fiscal 2018 was another landmark year for
Goodfood”, said Jonathan Ferrari, Chief Executive Officer of
Goodfood. “Not only did we deliver strong growth in active
subscribers and solid financial performance, including positive
cash flow, we also established a presence in Western Canada,
launching our national platform. Results were above expectations
and we are now delivering more than 1 million meals per month to
Canadian consumers from coast-to-coast”.
“We ended the year on a high note and entered Q1
2019 with very strong momentum. Goodfood is uniquely positioned to
gain significant market share in key segments of the home meal
solutions industry by leveraging our ability to deliver food across
the country and capitalize on consumer tastes and preferences. As
we continue to expand product offering, we intend to roll out
solutions for all three meals of the day, with options that address
all levels of engagements, from ready-to-cook to ready-to-eat
during Fiscal 2019,” added Jonathan Ferrari.
Financial Highlights(Audited
except for non-IFRS financial measures, all amounts are in Canadian
dollars)
For the three-month period and year ended August 31,
2018 and 2017 |
|
Q4 2018 |
Q4 2017 |
Change |
FY 2018 |
FY 2017 |
Change |
Revenue |
21,370,727 |
7,488,379 |
13,882,348 |
70,501,757 |
19,796,240 |
50,705,517 |
Growth % |
|
|
185 % |
|
|
256 % |
Gross profit |
4,592,664 |
1,004,266 |
3,588,398 |
14,659,806 |
3,589,737 |
11,070,069 |
Gross margin % |
21.5% |
13.4% |
8.1 pts |
20.8% |
18.1% |
2.7 pts |
Gross merchandise sales1 |
25,811,521 |
8,709,128 |
17,102,393 |
84,092,897 |
23,081,362 |
61,011,535 |
|
|
|
196% |
|
|
264% |
Adjusted gross profit |
9,033,458 |
2,225,015 |
6,808,443 |
28,250,946 |
6,874,859 |
21,376,087 |
Adjusted gross margin %1 |
35.0% |
25.5% |
9.5 pts |
33.6% |
29.8% |
3.8 pts |
Net loss |
(2,956,112) |
(3,770,110) |
813,998 |
(9,434,588) |
(9,866,047) |
431,459 |
Adjusted net loss 1 |
(2,956,112) |
(2,312,279) |
(643,833) |
(9,321,491) |
(3,802,693) |
(5,518,798) |
Cash provided by (used in) operating activities |
991,316 |
(1,826,575) |
2,817,891 |
277,895 |
(1,885,294) |
2,163,189 |
1 See the non-IFRS financial measures section
below
Revenue and Gross Merchandise
SalesRevenue for the fourth quarter grew 185% to $21.4
million compared to $7.5 million for the corresponding period of
2017 and decreased slightly from $22.2 million in the third quarter
of 2018. The slight sequential decrease in revenue is attributable
to the seasonality of the business with the summer vacation period
always being slower as our subscribers tend to order less
frequently. Furthermore, the majority of the net new additions in
subscribers occurred towards the end of August and as a result had
limited impact on revenue and gross merchandise sales for the
quarter. Gross merchandise sales for the fourth quarter, which
reflects the total retail value of merchandise sold by Goodfood
before taking into account all incentives and credits, totaled
$25.8 million compared to $8.7 million for the corresponding period
of 2017 and $26.2 million for the third quarter of 2018. The
gross merchandise sales run-rate was $107.3 million at the end of
the fourth quarter of 2018.
Revenue for Fiscal 2018 grew 256% to $70.5
million compared to $19.8 million for Fiscal 2017. The increase in
revenue for the fourth quarter and for Fiscal 2018 compared to the
corresponding periods of 2017 is primarily driven by the continued
growth in the number of Active subscribers and the launch of
operations in Western Canada. Gross merchandise sales for Fiscal
2018 increased to $84.1 million compared to $23.1 million for
Fiscal 2017.
Gross Margin and Adjusted Gross
MarginThe gross margin for the fourth quarter of 2018
improved to 21.5% compared to 13.4% for the corresponding period of
2017. The increase in gross margin primarily resulted from lower
production labor costs as a percentage of revenue and unit costs
for packaging, food and shipping due to increased production
efficiencies and purchasing power as well as automation and was
partially offset by additional costs related to the commencement of
our Western Canada operations. The company expects that fixed costs
as a percentage of revenue will decrease gradually with the
Company’s continued growth. Gross margin in the fourth quarter of
2018 was 21.5%, a slight decrease from 23.3% in the third quarter
2018, as a result of additional packaging cost to account for
warmer weather and a slight sequential decrease in revenue
resulting form the seasonality of the business.
Adjusted gross margin was a record 35.0% and
33.6%, respectively for the fourth quarter and for Fiscal 2018,
compared to 25.5% and 29.8% for the corresponding periods of 2017.
Adjusted gross margin in the fourth quarter of 2018, improved
slightly to 35.0% compared to 34.9% in the third quarter of
2018.
Adjusted Net Loss and Adjusted Net Loss
per ShareAdjusted net loss for the fourth quarter was $3.0
million, or $0.06 per share (basic and diluted), compared to an
adjusted net loss of $2.3 million, or $0.05 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 to support continued subscriber growth and
an increased marketing budget, partially offset by higher gross
profit. Adjusted net loss excludes reverse acquisition Mira VII
expenses of $1.5 million recorded in the fourth quarter of Fiscal
2017.
Adjusted net loss for Fiscal 2018 was $9.3
million, or 0.19 per share (basic and diluted), compared to an
adjusted net loss of $3.8 million, or $0.12 per share (basic and
diluted) for Fiscal 2017. The increase in adjusted net loss was
mainly due to planned investments in administrative expenses to
support continued subscriber growth and an increased marketing
budget, partially offset by higher gross profit. Adjusted net loss
excludes a loss on the disposal of fixed assets of $0.1 million
recorded in 2018 and a loss on the remeasurement of convertible
notes of $4.3 million and reverse acquisition Mira VII expenses of
$1.8 million recorded in the corresponding period of 2017.
Cash Provided by Operating
ActivitiesCash provided by operating activities reached
$1.0 million for the fourth quarter and $300,000 for the year,
compared to cash used in operating activities of $1.8 million and
$1.9 million for the corresponding period of 2017. The positive
variance in net cash used in operating activities is primarily due
to a favorable change in working capital and to the lease
inducement for the Western Canada facility of $1,000,000 reimbursed
by the landlord in the fourth quarter of Fiscal 2018.
Subsequent Events
Expansion of Eastern Canada
FacilityOn September 24, 2018, the Company signed an
amendment to the lease of its Eastern Canada facility, to renew and
extend the term of the initial premises and lease an additional
72,000 square feet, for a total of 155,000 square feet, doubling
the facility’s production capacity. The lease has an initial term
ending in October 2023 and renewal options for some further fifteen
years. The leases are classified as operating leases with an
additional estimated commitment of $3,433,000.
Debt FinancingIn November 2018,
the Company obtained a commitment from Desjardins Capital Markets
for secured three-year term loan of $10 million, a $2.5 million
revolving credit facility and $1.0 million in other short-term
financing. The term loan and the revolving credit facility are
bearing variable interest at bankers’ acceptance rate plus 2.50%.
The term loan will be repayable in quarterly instalments of
$125,000 beginning on December 4, 2020 with a bullet repayment of
the balance at the end of the three-year term. The proceeds from
the financing will be used to fund expansion capital expenditures,
invest in automation, refinance the Company’s long-term debt ($2.0
million) and for general corporate purposes.
Fourth Quarter Fiscal 2018 Results
Conference Call:
Details of the Conference
Call:
When: November 22, 2018 at 5:00 p.m. E.TDial in
number: 647-788-4922 or 877-223-4471
Conference call replay available until December
6, 20181 800 585-8367 or 416-621-4642
To access the webcast and view the slide
presentation, click on this
link:http://www.gowebcasting.com/9797
The conference ID is 3679066.
A full version of the Company’s Fiscal 2018
Management’s Discussion and Analysis (MD&A) and audited
Financial Statements for the year-ended August 31, 2018 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 August 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 a leading home meal solutions
company in Canada, 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 dishes from a variety of
originally developed recipes 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 Montreal, Canada, Goodfood had 89,000 active
subscribers as of August 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, 2018 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, 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 materially. Unless 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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