2021/QTR1 revenue + 390% YOY and +124% over
2020/QTR4, driven by significant new Health and Wellness
Innovations consumer products and growth of Cannabis
revenue
Sets Q2 revenue guidance of $28 to $32 million,
representing estimate year-over-year growth of 330% to 391%
LAVAL, QC, Aug. 11, 2020 /PRNewswire/ - Neptune
Wellness Solutions Inc. ("Neptune" or the "Company") (NASDAQ: NEPT)
(TSX: NEPT), a diversified and fully integrated health and wellness
company focused on plant-based, sustainable and purpose-driven
lifestyle brands, today announced its financial and operating
results for the three-month period ended June 30, 2020. All amounts are in thousands of
Canadian dollars except if specified otherwise.
First Quarter 2021 Financial Highlights:
- Total revenues for the three-month period ended June 30, 2020 amounted to $21,363, representing a sequential increase of
$11,833, or 124%, over the fourth
quarter ended March 31, 2020 and an
increase of $17,002, or 390%,
compared to $4,361 for the
three-month period ended June 30,
2019.
- Gross profit for the three-month period ended June 30, 2020 amounted to $3,256, representing a sequential increase of
$4,353 over the fourth quarter ended
March 31, 2020 and an increase of
$3,969 over the three-month period
ended June 30, 2019. Gross margin
improved to 15.2% compared to negative gross margins in both of the
comparative periods, reflecting improved margins as a result of
volume growth in cannabis.
- Net loss for the three-month period ended June 30, 2020 amounted to $11,427 compared to a net loss of $6,452 for the three-month period ended
June 30, 2019.
- Adjusted EBITDA1 improved by $227 for the three-month period ended
June 30, 2020 to a loss of
$3,356 compared to the three-month
period ended June 30, 2019. The
increase in Adjusted EBITDA1 is mainly attributable to
the increase in gross profit, partially offset by an increase in
SG&A expenses.
- Neptune establishes second quarter fiscal 2021 revenue guidance
of between $28,000 and $32,000, representing a sequential growth of
approximately 31% to 50% compared to the previous quarter or
approximately 330% to 391% growth over the prior year period.
______________________________
|
1 See
"Caution Regarding Non-IFRS Financial Measures" and "Reconciliation
of Segment income (loss) before corporate expenses to Adjusted
Segment EBITDA and net loss to Adjusted EBITDA" which
follow.
|
Recent Corporate Highlights:
- June 15, 2020, Neptune announced
the launch of Neptune Halo, an
electronic pulse oximeter device that is a key tool in the battle
against COVID-19 and an expansion of its Health and Wellness
Innovations portfolio.
- June 22, 2020, Neptune announced
a new line of plant-based hand sanitizers to launch in club store
channel. Developed by Neptune Health & Wellness Innovations, in
partnership with International Flavors & Fragrances (NYSE:
IFF), the expanded product line consists of six new scented
varieties.
- June 29, 2020, Neptune announced
it has been authorized by Health Canada to sell cannabis products
to provinces and territories. This sales license includes edibles,
extracts and topicals, to name a few. This authorization adds to
previously held processing license and will expand Neptune's
cannabis operations to include proprietary branded products.
Additionally, the authorization enhances the capabilities of the
Company's white label offerings, providing incremental value and
service offerings to its B2B customers.
- July 15, 2020, Neptune announced
the appointment of Eric
Gharakhanian, Ph.D. as Director of Product Development,
Health & Wellness Innovations. Dr. Gharakhanian joins Neptune
from The Clorox Company where he served as Product Development
Specialist, responsible for developing and maintaining cleaning
products and brands within the Company's homecare portfolio.
- July 21, 2020, Neptune announced
the nominations of Jane Pemberton
and Frank Rochon for election to the
Company's Board of Directors by the Company's shareholders at its
Annual General Meeting to be held on August
12, 2020.
Management Commentary
Michael
Cammarata, Chief Executive Officer of Neptune, stated: "Our
transformation to a diversified and fully integrated health and
wellness company has yielded significant results. We have built the
team, the partnerships and developed a pipeline of innovation
across the health and wellness landscape to drive further growth
over the coming quarters and years. Our pace of new product and
category development has accelerated, and we are fully leveraging
our assets to drive profit accretive growth with limited
incremental capital investment. Each of our new product launches
are designed to drive higher margins and higher returns on
investment to maximize returns and support incremental growth
opportunities. We are seeing improved gross margins while
accelerating growth, and as volumes continue to build, we expect
further enhancements to our profit profile. During the first
quarter, both our Health and Wellness Innovations and Cannabis
activities delivered significant growth, driven by strong
partnerships and our ability to quickly execute on emerging
opportunities. We are anticipating strong growth in the second
quarter and expect the accelerated growth to continue."
Dr. Toni Rinow, Chief Financial
Officer of Neptune, commented: "We have made significant
investments over the last year, including expanding capacity and
building a world-class team. We are now leveraging these
investments, resulting in accelerated growth and improving margins.
We anticipate both to continue and our guidance for second quarter
revenue to nearly quadruple once again on a year-over-year basis.
In addition to being focused on innovation to drive revenue, it is
part of our core financial strategy of closely monitoring the
profitability of our new business development to enhance margins
and capitalize on asset-light innovations. We have improved our
cash position to support growth and are working on additional,
non-dilutive, sources of capital to support continued growth. We
are seeing strong momentum with our recent hand sanitizer
introduction into the club channel, which began early in the second
quarter, but are also seeing continued growth in cannabis with
existing key partners and new business."
First Quarter 2021 Financial Results
Total revenues
for the three-month period ended June 30,
2020 increased 390% to $21,363
compared $4,361 in the prior year
period. The increase in revenue was primarily a result of new
health & wellness products, namely the initial launch of hand
sanitizers and the Neptune Air contact-less thermometers, and
cannabis related products reflecting the completion of the
Company's Phase 2 expansion that became operational early the
quarter.
Consolidated gross profit for the three-month period ended
June 30, 2020 amounted $3,256 compared to $(712) for the three-month period ended
June 30, 2019, an increase of
$3,968. The increase in gross profit
for the three-month period ended June 30,
2020 compared to the three-month period ended June 30, 2019 was directly related to the
increase in sales volumes. The consolidated gross margin increased
from (16%) for the three-month period ended June 30, 2019 to 15% for the three-month ended
June 30, 2020.
Neptune reported a net loss of $11,427 for the three-month period ended
June 30, 2020, compared to a net loss
of $6,452 in the prior year period.
The increase in the net loss for the three-month period ended
June 30, 2020 is attributable to the
increases in selling, general and administrative expenses and net
finance costs to support future growth, partly offset by the
increase in gross profit.
For the three-month period ended June 30,
2020, adjusted EBITDA1 was a loss of $3,356 compared with a loss of $3,583 in the prior year period.
Outlook
For the second quarter of fiscal 2021, the
Company anticipates revenue of between $28,000 and $32,000, reflecting accelerated growth across
several of the Company's activities.
Operational and COVID-19 Update
During the first
quarter of fiscal 2021, Neptune's Phase 2 expansion at its
Sherbrooke facility became
operational, significantly expanding capacity and allowing for
increased sales volumes. The Company is now shipping to all of its
key B2B cannabis extraction clients, as well as recent new business
wins. In June, Neptune was authorized by Health Canada to sell
cannabis products to provinces and territories, including edibles,
vapes, extracts, topicals and beverage products. The Company also
received authorization for additional cold storage capacity at the
Sherbrooke facility. Additionally,
Neptune completed the conversion of its extraction operations to a
cold ethanol process, which reduced processing time and provides
for greater efficiency.
Relating to COVID-19, Neptune's operations continue to be deemed
essential and thus its facility in both Canada and the
United States continued to operate without any material
disruption, reflecting existing high operating standards and a
rapid response to the pandemic. While the global health crisis had
negative impacts on certain aspects of the business, including the
pace of retailers accepting new products and other disruptions, the
Company remains able to continue to service its customers.
Conference Call
Details
|
Date:
|
Tuesday, August 11,
2020
|
|
|
Time:
|
4:30 PM Eastern
Daylight Time
|
|
|
Call:
|
1 (888) 231-8191
(Canada and U.S.)
|
|
1 (647) 427-7450
(International)
|
|
|
Conference ID:
4484044
|
There will also be a simultaneous, live webcast available on the
Investors section of Neptune's website under Investor Events and
Presentations at www.neptunecorp.com or directly at
https://produceredition.webcasts.com/starthere.jsp?ei=1349495&tp_key=5a45d36733.
The webcast will be archived for approximately 30 days.
About Neptune Wellness Solutions Inc.
Neptune Wellness Solutions is a diversified and fully integrated
health and wellness company. With a mission to redefine health and
wellness, Neptune is focused on building a broad portfolio of high
quality, affordable consumer products in response to long-term
secular trends and market demand for plant-based, sustainable and
purpose-driven lifestyle brands. The Company utilizes a highly
flexible, cost efficient manufacturing and supply chain
infrastructure that can be scaled up and down or into adjacent
product categories to identify new innovation opportunities,
quickly adapt to consumer preferences and demand, and bring new
products to market through its mass retail partners and e-commerce
channels. Leveraging decades of expertise in extraction and product
formulation, Neptune is a leading provider of turnkey product
development and supply chain solutions to business customers across
several health and wellness verticals, including legal cannabis and
hemp, nutraceuticals and white label consumer packaged goods. The
Company has a strong position in cannabis and hemp with research,
development and commercialization focused on the use of
cannabinoids in household products to make them safer, healthier
and more effective. Neptune's corporate headquarters is located in
Laval, Quebec, with a
50,000-square-foot production facility located in Sherbrooke, Quebec and a 24,000 square-foot
facility located in North
Carolina. For additional information, please visit:
https://neptunecorp.com/.
Caution Regarding Non-IFRS Financial Measures
The Corporation uses one adjusted financial measure, Adjusted
Earnings Before Interest, Taxes, Depreciation and Amortization
(Adjusted EBITDA) to assess its operating performance. This
non-IFRS financial measure is comprised of adjustments that are
derived from the Corporation's financial statements and are
presented in a consistent manner. The Corporation uses this measure
for the purposes of evaluating its historical and prospective
financial performance, as well as its performance relative to
competitors. This measure also helps the Corporation to plan and
forecast for future periods as well as to make operational and
strategic decisions. The Corporation believes that providing this
information to investors, in addition to IFRS measures, allows them
to see the Corporation's results through the eyes of management,
and to better understand its historical and future financial
performance.
Securities regulations require that companies caution readers
that earnings and other measures adjusted to a basis other than
IFRS do not have standardized meanings and are unlikely to be
comparable to similar measures used by other companies.
Accordingly, they should not be considered in isolation. The
Corporation uses Adjusted EBITDA to measure its performance from
one period to the next without the variation caused by certain
adjustments that could potentially distort the analysis of trends
in our operating performance, and because the Corporation believes
it provides meaningful information on the Corporation's financial
condition and operating results. Neptune's method for calculating
Adjusted EBITDA may differ from that used by other
corporations.
Neptune obtains its Adjusted EBITDA measurement by adding to
net income (loss), net finance costs, depreciation and amortization
and income tax expense and by subtracting income tax recovery and
net finance income. Other items such as stock-based compensation,
litigation provisions, acquisition costs, change in fair value of
contingent consideration, impairment loss on goodwill and severance
and related costs that do not impact core operating performance of
the Corporation are also added back as they may vary significantly
from one period to another. Adjusting for these items does not
imply they are non-recurring.
Forward Looking Statements
Statements in this press release that are not statements of
historical or current fact constitute "forward-looking statements"
within the meaning of the U.S. securities laws and Canadian
securities laws. Such forward-looking statements involve known and
unknown risks, uncertainties, and other unknown factors that could
cause the actual results of Neptune to be materially different from
historical results or from any future results expressed or implied
by such forward-looking statements. In addition to statements which
explicitly describe such risks and uncertainties, readers are urged
to consider statements labeled with the terms "believes", "belief",
"expects", "intends", "projects", "anticipates", "will", "should"
or "plans" to be uncertain and forward-looking. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this press
release.
The forward-looking statements contained in this press
release are expressly qualified in their entirety by this
cautionary statement and the "Cautionary Note Regarding
Forward-Looking Information" section contained in Neptune's latest
Annual Information Form (the "AIF"), which also forms part of
Neptune's latest annual report on Form 40-F, and which is available
on SEDAR at www.sedar.com, on EDGAR at
https://www.sec.gov/edgar.shtml and on the investor section of
Neptune's website at www.neptunecorp.com. All forward-looking
statements in this press release are made as of the date of this
press release. Neptune does not undertake to update any such
forward-looking statements whether as a result of new information,
future events or otherwise, except as required by law. The
forward-looking statements contained herein are also subject
generally to other risks and uncertainties that are described from
time to time in Neptune public securities filings with the
Securities and Exchange Commission and the Canadian securities
commissions. Additional information about these assumptions and
risks and uncertainties is contained in the AIF under "Risk
Factors".
Neither NASDAQ nor the Toronto Stock Exchange accepts
responsibility for the adequacy or accuracy of this
release.
NEPTUNE WELLNESS SOLUTIONS INC.
Condensed Consolidated
Interim Statements of Earnings and Comprehensive Loss
(Unaudited)
For the three-month
periods ended June 30, 2020 and 2019
|
|
|
June 30,
2020
|
June 30,
2019
|
Revenue from
sales
|
$
|
21,022,488
|
$
|
3,989,498
|
Royalty
revenues
|
|
316,528
|
|
341,863
|
Other
revenues
|
|
24,236
|
|
29,647
|
Total
revenues
|
|
21,363,252
|
|
4,361,008
|
|
|
|
|
|
Cost of
sales
|
|
(18,106,827)
|
|
(5,073,183)
|
Gross
profit
|
|
3,256,425
|
|
(712,175)
|
|
|
|
|
|
Research and
development expenses, net of tax credits and grants
|
|
|
|
|
of $18,500 (2019 -
$20,052)
|
|
(434,952)
|
|
(342,336)
|
Selling, general and
administrative expenses
|
|
(12,854,882)
|
|
(5,329,864)
|
Loss from operating
activities
|
|
(10,033,409)
|
|
(6,384,375)
|
|
|
|
|
|
Finance
income
|
|
17,643
|
|
18,837
|
Finance
costs
|
|
(1,474,835)
|
|
(137,557)
|
|
|
(1,457,192)
|
|
(118,720)
|
Loss before income
taxes
|
|
(11,490,601)
|
|
(6,503,095)
|
|
|
|
|
|
Income tax
recovery
|
|
63,190
|
|
50,947
|
Net loss
|
|
(11,427,411)
|
|
(6,452,148)
|
|
|
|
|
|
Other comprehensive
loss
|
|
|
|
|
Unrealized gains
(losses) on investment
|
|
110,001
|
|
(198,883)
|
Net change in
unrealized foreign currency losses on translation of net
investments
|
|
|
|
|
in foreign
operations
|
|
(1,551,479)
|
|
—
|
Total other
comprehensive loss
|
|
(1,441,478)
|
|
(198,883)
|
|
|
|
|
|
Total comprehensive
loss
|
$
|
(12,868,889)
|
$
|
(6,651,031)
|
|
|
|
|
|
Basic and diluted
loss per share
|
$
|
(0.13)
|
$
|
(0.08)
|
|
|
|
|
|
Basic and diluted
weighted average number of common shares
|
|
102,580,784
|
|
80,754,086
|
NEPTUNE WELLNESS SOLUTIONS INC.
Condensed Consolidated
Interim Statements of Financial Position
(Unaudited)
As at June 30, 2020
and March 31, 2020
|
|
June 30,
|
March 31,
|
|
2020
|
2020
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
25,503,436
|
$
|
16,577,076
|
Short-term
investment
|
|
24,000
|
|
36,000
|
Trade and other
receivables
|
|
13,369,372
|
|
10,793,571
|
Prepaid
expenses
|
|
8,622,049
|
|
2,296,003
|
Inventories
|
|
11,032,978
|
|
9,092,538
|
|
|
58,551,835
|
|
38,795,188
|
|
|
|
|
|
Property, plant and
equipment
|
|
62,848,161
|
|
60,028,574
|
Right-of-use
assets
|
|
1,264,353
|
|
1,386,254
|
Intangible
assets
|
|
23,137,687
|
|
25,518,287
|
Goodwill
|
|
40,983,573
|
|
42,333,174
|
Tax credits
recoverable
|
|
184,470
|
|
184,470
|
Other
asset
|
|
640,000
|
|
530,000
|
Total
assets
|
$
|
187,610,079
|
$
|
168,775,947
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Trade and other
payables
|
$
|
17,607,886
|
$
|
12,451,669
|
Lease
liabilities
|
|
450,199
|
|
450,125
|
Loans and
borrowings
|
|
3,206,830
|
|
3,180,927
|
Deferred
revenues
|
|
270,767
|
|
17,601
|
Provisions
|
|
1,329,596
|
|
1,115,703
|
|
|
22,865,278
|
|
17,216,025
|
|
|
|
|
|
Lease
liabilities
|
|
1,015,183
|
|
1,141,314
|
Long-term
payables
|
|
544,393
|
|
555,440
|
Deferred tax
liabilities
|
|
4,630,531
|
|
5,015,106
|
Other
liability
|
|
2,036,399
|
|
1,217,769
|
Total
liabilities
|
|
31,091,784
|
|
25,145,654
|
|
|
|
|
|
Equity:
|
|
|
|
|
Share
capital
|
|
238,047,782
|
|
213,876,454
|
Warrants
|
|
19,472,542
|
|
18,597,776
|
Contributed
surplus
|
|
69,884,110
|
|
69,173,313
|
Accumulated other
comprehensive income
|
|
4,075,898
|
|
5,517,376
|
Deficit
|
|
(174,962,037)
|
|
(163,534,626)
|
Total
equity
|
|
156,518,295
|
|
143,630,293
|
|
|
|
|
|
Total liabilities and
equity
|
$
|
187,610,079
|
$
|
168,775,947
|
ADJUSTED EBITDA RECONCILIATION
Although the concept of Adjusted EBIDTA is not a financial or
accounting measure defined under IFRS and it may not be comparable
to other issuers, it is widely used by companies. Neptune obtains
its Adjusted EBITDA measurement by adding to net income (loss), net
finance costs and depreciation and amortization and by subtracting
income tax recovery. Other items such as stock-based compensation,
litigation provisions, acquisition costs and severance and related
costs that do not impact core operating performance of the
Corporation are also added back as they may vary significantly from
one period to another. Adjusting for these items does not imply
they are non-recurring.
Adjusted EBITDA1 reconciliation
|
Three-month
period
ended June
30, 2020
|
Three-month period ended June
30, 2019
|
|
$
|
$
|
Net loss
|
(11,427,411)
|
(6,452,148)
|
Add
(deduct):
|
|
|
Depreciation and
amortization
|
2,758,761
|
1,083,675
|
Net finance
costs
|
1,457,192
|
118,720
|
Stock-based
compensation
|
3,497,564
|
856,926
|
Litigation
provisions
|
213,893
|
80,958
|
Acquisition
costs
|
–
|
367,000
|
Severance and related
costs
|
207,061
|
412,488
|
Income tax
recovery
|
(63,190)
|
(50,947)
|
Adjusted
EBITDA1
|
(3,356,130)
|
(3,583,328)
|
_
|
1 The
Adjusted EBITDA is not a standard measure endorsed by IFRS
requirements.
|
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SOURCE Neptune Wellness Solutions Inc.