Better Choice Company, Inc. (“Better Choice” or the “Company”)
(NYSE American: BTTR), a pet health and wellness company, today
announced its results for the third quarter ended
September 30, 2023 (“Q3 2023”).
THIRD QUARTER 2023 FINANCIAL HIGHLIGHTS
- Revenue increased 24% from second
quarter 2023, and 11% year-over-year (“YOY") to $13.1 million
- Operating loss improved 59% YOY to
$(2.6) million
- Operating margin improved 3,403 basis
points YOY to (-20%)
- Net loss improved 75% YOY to $(1.6)
million
- Earnings (loss) per share (“EPS”)
improved 77% YOY to ($0.05)
- Adjusted EBITDA
improved 95% YOY to $(0.1) million1
- Adjusted EBITDA
margin improved 2,311 basis points YOY to (-1%)1
NINE MONTHS 2023 FINANCIAL HIGHLIGHTS
- Gross margin increased 429 basis points
YOY to 34%
- Operating loss improved 42% YOY to
$(8.5) million
- Net loss improved 46% YOY to $(8.1)
million
- EPS improved 48% YOY to ($0.26)
- Adjusted EBITDA
improved 47% YOY to $(3.8) million1
- Adjusted EBITDA
margin improved 406 basis points YOY to (-11%)1
THIRD QUARTER 2023 OPERATIONAL UPDATE
Better Choice generated $13.1 million in net sales over Q3 2023,
with approximately 75% driven by its Halo Holistic® product line.
Point-of-sale2 growth and strength of digital presence drove 24%
revenue growth from the second quarter of 2023. The Halo Holistic®
plant-based vegan products continue to take share across the
E-Commerce platform, with the highest organic traffic in the
plant-based segment on Chewy. As projected, the Company secured
continuity of dry kibble supply through a successful transition to
its newest co-manufacturing partner, Alphia, Inc.
“The third quarter was highlighted by our
organic digital growth,” commented newly appointed CEO of Better
Choice, Kent Cunningham.“ The year-to-date gross margin improvement
was fueled by strategic pricing initiatives, and a 3% YOY
improvement of average equivalized unit conversion and input costs
in the first nine months of 2023. We are focused on keeping product
quality and continuous improvement initiatives at the forefront to
fuel our future growth trajectory. Our further continued focus on
financial and operational discipline is reflected in the 95%
Adjusted EBITDA growth during the quarter. We look to close out the
remainder of 2023 with a solid footing to build digital momentum
and enhanced brand awareness in 2024.”
_______________1 Adjusted EBITDA is a non-GAAP
measure. Reconciliation of Adjusted EBITDA and to net income
(loss), the most directly comparable GAAP financial measure, is set
forth in the reconciliation table accompanying this release.2
Point-of-sale growth is a non-GAAP measure.
Better Choice Company
Inc.Unaudited Condensed Consolidated Statements of
Operations(Dollars in thousands, except share and per
share amounts)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net sales |
$ |
13,117 |
|
|
$ |
11,865 |
|
|
$ |
32,890 |
|
|
$ |
45,394 |
|
Cost of goods sold |
|
8,681 |
|
|
|
7,700 |
|
|
|
21,625 |
|
|
|
31,795 |
|
Gross profit |
|
4,436 |
|
|
|
4,165 |
|
|
|
11,265 |
|
|
|
13,599 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
|
7,052 |
|
|
|
10,569 |
|
|
|
19,721 |
|
|
|
28,225 |
|
Total operating expenses |
|
7,052 |
|
|
|
10,569 |
|
|
|
19,721 |
|
|
|
28,225 |
|
Loss from operations |
|
(2,616 |
) |
|
|
(6,404 |
) |
|
|
(8,456 |
) |
|
|
(14,626 |
) |
Other
expenses: |
|
|
|
|
|
|
|
Interest expense, net |
|
(344 |
) |
|
|
(142 |
) |
|
|
(952 |
) |
|
|
(324 |
) |
Change in fair value of warrant liability |
|
1,339 |
|
|
|
— |
|
|
|
1,339 |
|
|
|
— |
|
Total other expense, net |
|
995 |
|
|
|
(142 |
) |
|
|
387 |
|
|
|
(324 |
) |
Net loss before income
taxes |
|
(1,621 |
) |
|
|
(6,546 |
) |
|
|
(8,069 |
) |
|
|
(14,950 |
) |
Income tax expense |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
4 |
|
Net loss available to common
stockholders |
$ |
(1,621 |
) |
|
$ |
(6,547 |
) |
|
$ |
(8,069 |
) |
|
$ |
(14,954 |
) |
Weighted average number of
shares outstanding, basic |
|
30,975,556 |
|
|
|
29,364,712 |
|
|
|
30,679,905 |
|
|
|
29,339,918 |
|
Weighted average number of
shares outstanding, diluted |
|
30,975,566 |
|
|
|
29,364,712 |
|
|
|
30,679,905 |
|
|
|
29,339,918 |
|
Net loss per share available
to common stockholders, basic |
$ |
(0.05 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.51 |
) |
Net loss per share available
to common stockholders, diluted |
$ |
(0.05 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.51 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Better Choice Company
Inc.Unaudited Condensed Consolidated Balance
Sheets(Dollars in thousands, except share and per share
amounts)
|
September 30, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Cash and cash equivalents |
$ |
3,800 |
|
|
$ |
3,173 |
|
Restricted cash |
|
— |
|
|
|
6,300 |
|
Accounts receivable, net |
|
8,582 |
|
|
|
6,744 |
|
Inventories, net |
|
7,541 |
|
|
|
10,257 |
|
Prepaid expenses and other
current assets |
|
992 |
|
|
|
1,051 |
|
Total Current Assets |
|
20,915 |
|
|
|
27,525 |
|
Fixed assets, net |
|
258 |
|
|
|
375 |
|
Right-of-use assets, operating
leases |
|
134 |
|
|
|
173 |
|
Intangible assets, net |
|
8,914 |
|
|
|
10,059 |
|
Other assets |
|
828 |
|
|
|
544 |
|
Total Assets |
$ |
31,049 |
|
|
$ |
38,676 |
|
Liabilities &
Stockholders’ Equity |
|
|
|
Current
Liabilities |
|
|
|
Accounts payable |
$ |
7,807 |
|
|
$ |
2,932 |
|
Accrued and other
liabilities |
|
2,525 |
|
|
|
2,596 |
|
Line of credit |
|
1,917 |
|
|
|
Warrants liabilities |
|
869 |
|
|
|
Operating lease liability |
|
56 |
|
|
|
52 |
|
Total Current Liabilities |
|
13,174 |
|
|
|
5,580 |
|
Non-current
Liabilities |
|
|
|
Line of credit, net |
|
— |
|
|
|
11,444 |
|
Term loan, net |
|
2,714 |
|
|
|
Operating lease liability |
|
82 |
|
|
|
124 |
|
Total Non-current
Liabilities |
|
2,796 |
|
|
|
11,568 |
|
Total Liabilities |
|
15,970 |
|
|
|
17,148 |
|
Stockholders’
Equity |
|
|
|
Common
Stock, $0.001 par value, 200,000,000 shares authorized, 32,077,148
& 29,430,267 shares issued and outstanding as of September 30,
2023, and December 31, 2022, respectively |
|
32 |
|
|
|
29 |
|
Additional paid-in
capital |
|
321,688 |
|
|
|
320,071 |
|
Accumulated deficit |
|
(306,641 |
) |
|
|
(298,572 |
) |
Total Stockholders’
Equity |
|
15,079 |
|
|
|
21,528 |
|
Total Liabilities and
Stockholders’ Equity |
$ |
31,049 |
|
|
$ |
38,676 |
|
|
|
|
|
|
|
|
|
Better Choice Company
Inc.Non-GAAP Measures
Adjusted EBITDA
We define Adjusted EBITDA as EBITDA further
adjusted to eliminate the impact of certain items that we do not
consider indicative of our core operations. Adjusted EBITDA is
determined by adding the following items to net (loss) income:
interest expense, tax expense, depreciation and amortization,
share-based compensation, loss on disposal of assets, strategic
branding initiatives and product launch expenses, co-manufacturing
partner transition, and other non-recurring expenses.
We present Adjusted EBITDA as it is a key
measure used by our management and board of directors to evaluate
our operating performance, generate future operating plans and make
strategic decisions regarding the allocation of capital. We believe
that the disclosure of Adjusted EBITDA is useful to investors as
this non-GAAP measure forms the basis of how our management team
reviews and considers our operating results. By disclosing this
non-GAAP measure, we believe that we create for investors a greater
understanding of and an enhanced level of transparency into the
means by which our management team operates our company. We also
believe this measure can assist investors in comparing our
performance to that of other companies on a consistent basis
without regard to certain items that do not directly affect our
ongoing operating performance or cash flows.
Adjusted EBITDA does not represent cash flows
from operations as defined by GAAP. Adjusted EBITDA has limitations
as a financial measure and you should not consider it in isolation,
or as a substitute for, or superior to, financial measures
calculated in accordance with GAAP. Because of these limitations,
you should consider Adjusted EBITDA alongside other financial
performance measures, including various cash flow metrics, net
(loss) income, gross margin, and our other GAAP results.
The following table presents a reconciliation of net loss, the
closest GAAP financial measure, to EBITDA and Adjusted EBITDA for
each of the periods indicated (in thousands):
Reconciliation of Net Loss to EBITDA and
Adjusted EBITDA(Dollars in thousands)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net loss available to common
stockholders |
$ |
(1,621 |
) |
|
$ |
(6,547 |
) |
|
$ |
(8,069 |
) |
|
$ |
(14,954 |
) |
Interest
expense, net |
|
344 |
|
|
|
142 |
|
|
|
952 |
|
|
|
324 |
|
Income
tax expense |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
4 |
|
Depreciation and amortization |
|
416 |
|
|
|
426 |
|
|
|
1,262 |
|
|
|
1,265 |
|
EBITDA |
|
(861 |
) |
|
|
(5,978 |
) |
|
|
(5,855 |
) |
|
|
(13,361 |
) |
Non-cash
share-based compensation (a) |
|
473 |
|
|
|
562 |
|
|
|
1,618 |
|
|
|
2.454 |
|
Loss on
disposal of assets |
|
— |
|
|
|
23 |
|
|
|
11 |
|
|
|
26 |
|
Strategic branding initiatives and product launches (b) |
|
41 |
|
|
|
277 |
|
|
|
73 |
|
|
|
948 |
|
Co-manufacturing partner transition (c) |
|
— |
|
|
|
— |
|
|
|
6 |
|
|
|
— |
|
Other
single occurrence expenses (d) |
|
208 |
|
|
|
2,205 |
|
|
|
397 |
|
|
|
2,390 |
|
Launch
expensed (e) |
|
— |
|
|
|
43 |
|
|
|
— |
|
|
|
523 |
|
Adjusted EBITDA |
$ |
(139 |
) |
|
$ |
(2,868 |
) |
|
$ |
(3,750 |
) |
|
$ |
(7,020 |
) |
(a) Non-cash
expenses related to equity compensation awards. Share-based
compensation is an important part of the Company's compensation
strategy and without our equity compensation plans, it is probable
that salaries and other compensation related costs would be
higher. |
(b) Single
occurrence expenses related to marketing agency and design,
strategic re-branding initiatives, Elevate® launch, product
innovation and reformulations. |
(c) Single
occurrence expenses related to the transition of our dry kibble
co-manufacturing supplier. |
(d) Single
occurrence expenses related to legal settlements, employee
severance, executive recruitment, and other non-recurring
professional fees. |
(e) Reflects
non-recurring launch expenses related to the Elevate® launch. |
|
About Better Choice Company Inc.
Better Choice Company Inc. is a pet health and
wellness company focused on providing pet products and services
that help dogs and cats live healthier, happier and longer lives.
We offer a broad portfolio of pet health and wellness products for
dogs and cats sold under our Halo brand across multiple forms,
including kibble, canned food, freeze-dried raw food and treats,
vegan dog food and treats, oral care products, toppers and other
chews and supplements. We have a demonstrated, multi-decade track
record of success and are well positioned to benefit from the
mainstream trends of growing pet humanization and consumer focus on
health and wellness. Halo’s core products are made with
high-quality, thoughtfully sourced ingredients for natural,
science-based nutrition. Each innovative recipe is formulated with
leading veterinary and nutrition experts to deliver optimal health.
For more information, please visit
https://www.betterchoicecompany.com.
Forward Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. The words “believe,” “may,” “estimate,”
“continue,” “anticipate,” “intend,” “should,” “plan,” “could,”
“target,” “potential,” “is likely,” “will,” “expect” and similar
expressions, as they relate to us, are intended to identify
forward-looking statements. The Company has based these
forward-looking statements largely on our current expectations and
projections about future events and financial trends that we
believe may affect our financial condition, results of operations,
business strategy and financial needs. Some or all of the results
anticipated by these forward-looking statements may not be
achieved. Further information on the Company’s risk factors is
contained in our filings with the SEC. Any forward-looking
statement made by us herein speaks only as of the date on which it
is made. Factors or events that could cause our actual results to
differ may emerge from time to time, and it is not possible for us
to predict all of them. The Company undertakes no obligation to
publicly update any forward-looking statement, whether as a result
of new information, future developments or otherwise, except as may
be required by law.
Company Contact:Better Choice Company Inc.Kent
Cunningham, CEO
Investor Contact:KCSA Strategic
CommunicationsValter Pinto, Managing DirectorT:
212-896-1254Valter@KCSA.com
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