Better Choice Company Inc. (NYSE American: BTTR) (the “Company” or
“Better Choice”), a pet health and wellness company, today reported
its financial results for the fourth quarter and year ended
December 31, 2021.
“The fourth quarter of 2021 was a strong quarter
for Better Choice. In spite of unprecedented supply chain
disruptions felt across the consumer-packaged goods industry, we
were able to deliver 18% quarterly net sales growth year-over-year,
driven by 227% growth in International sales and 6% growth in
E-commerce sales. This quarter, our supply chain and logistics team
did a fantastic job navigating supply chain pressures to satisfy
our growing customer demand and pivoted when needed with one goal
in mind - to keep our product on the shelf for our loyal and
growing consumer base. Most importantly, we believe we have created
a strong foundation for continued growth through our diverse
omni-channel approach, and are excited to provide an update to our
progress to date in 2022 as we begin to realize aggressive top-line
growth,” said Scott Lerner, CEO of Better Choice.
“Since our uplist to the NYSE American in June
2021, we have secured three anchor partnerships for the national
launch of Halo Elevate - Petco, Pet Supplies Plus and Phillips Pet
Food and Supplies - and onboarded two new co-manufacturing partners
for both the Halo Elevate and Halo Holistic brands. In addition to
securing significant incremental production capacity to support
rapid growth, we believe that these new co-manufacturing
partnerships will have a significant, positive impact to gross
margin in the back half of 2022 as we transition incremental
production to these facilities. Thanks to these newly formed
partnerships and strong initial feedback from retailers, we
anticipate that Halo Elevate will be available in more than 1,500
pet specialty stores by the end of April, and in more than 2,000
pet specialty stores by the end of July. Coupled with incremental
linear feet in certain locations, this represents a 37% increase in
pet specialty distribution relative to the expectations we shared
in November 2021,” stated Mr. Lerner.
"Although these positive developments were not
reflected in our 2021 financials, we have already begun to see
their impact in the first quarter of 2022. We estimate that first
quarter 2022 gross sales will exceed 40% growth relative to the
first quarter of 2021, where we delivered $13.4m of gross sales. To
date, our growth in 2022 has been driven by initial sales of Halo
Elevate as well as strong Halo Holistic sales in our E-Commerce and
International channels. I can confidently say today that Better
Choice is well positioned to capitalize on our established platform
within the pet industry, leveraging the growing popularity of our
brands and the tremendous work of our team, both domestically and
internationally. We are pleased with the numerous achievements that
our team has been able to accomplish throughout this pivotal year
and expect to further our efforts to execute against our growth
strategy and create value for all of our shareholders,” continued
Mr. Lerner.
Fourth Quarter and Full Year 2021
Operational Highlights
-
Successfully finalized uplist to the NYSE American Exchange,
raising $40m of gross proceeds and automatically converting $23m of
debt into common equity upon listing.
- Secured anchor
partnerships with Petco, Pet Supplies Plus and Phillips Pet Food
and Supplies for the national launch of Halo Elevate, which
together represent distribution in more than 2,000 pet specialty
stores in 2022.
- Announced a 37%
increase in pet specialty distribution relative to November 2021
estimates, driven by incremental store count and increases to
linear feet allocated on shelf.
- Completed onboarding
process with two new co-manufacturing partnerships for Halo Elevate
and Halo Holistic to increase production capacity and drive a
significant, positive impact to gross margin in the back half of
2022.
- Increased investment
in long-term brand marketing to coincide with our planned pet
specialty re-launch in the first half of 2022.
Financial Highlights for the Fourth Quarter
and Full Year 2021
-
Cash, cash equivalents and restricted cash as of December 31, 2021
of $28.9m
- Fourth Quarter 2021
Gross Sales of $13.6m
- Full Year 2021 Gross
Sales of $56.0m, representing 7.5% year-over-year growth
- Fourth Quarter 2021
Net Sales of $11.0m
- Full Year 2021 Net
Sales of $46.0m
- Fourth Quarter 2021
E-commerce Net Sales of $3.4m, representing 6% quarter-over-quarter
growth
-
Fourth Quarter 2021 International Net Sales of $3.9m, representing
227% quarter-over-quarter growth
-
Fourth Quarter 2021 Loss from Operations of $5.0m
- Full Year 2021 Loss
from Operations of $17.3m
- Fourth Quarter 2021
Net loss available to common stockholders of $5.1m
- Full Year 2021 Net
income available to common stockholders of $3.4m
- Fourth Quarter 2021
Adjusted EBITDA of $(3.0)m
- Full Year 2021
Adjusted EBITDA of $(7.1)m
Conference Call and Webcast
Information
The Company will host a conference call and audio
webcast on Tuesday, March 29, 2022 at 8:30 am (Eastern Time)
to answer questions about the Company's operational and financial
highlights for the fourth quarter of 2021.
Event: |
Better Choice Fourth Quarter and Fiscal Year 2021 Earnings
Call |
Date: |
Tuesday, March 29, 2022 |
Time: |
8:30 a.m. Eastern Time |
Live Call: |
+1-877-407-4018 (U.S. Toll-Free) or +1-201-689-8471
(International) |
Webcast: |
https://viavid.webcasts.com/starthere.jsp?ei=1533499&tp_key=d002260c80 |
For interested individuals unable to join the
conference call, a dial-in replay of the call will be available
until April 12, 2022 and can be accessed by dialing +1-844-512-2921
(U.S. Toll Free) or +1-412-317-6671 (International) and entering
replay pin number: 13727550.
Better Choice Company
Inc.Consolidated Statements of
Operations(Dollars in thousands)
|
Year endedDecember 31, |
|
Three months endedDecember
31, |
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Net sales |
$ |
46,006 |
|
|
$ |
42,590 |
|
|
$ |
10,987 |
|
|
$ |
9,288 |
|
Cost of goods sold |
|
30,638 |
|
|
|
26,485 |
|
|
|
8,231 |
|
|
|
5,922 |
|
Gross profit |
|
15,368 |
|
|
|
16,105 |
|
|
|
2,756 |
|
|
|
3,366 |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
|
28,507 |
|
|
|
34,487 |
|
|
|
7,110 |
|
|
|
4,482 |
|
Share-based compensation |
|
4,140 |
|
|
|
8,940 |
|
|
|
623 |
|
|
|
1,893 |
|
Total operating expenses |
|
32,647 |
|
|
|
43,427 |
|
|
|
7,733 |
|
|
|
6,375 |
|
Loss from operations |
|
(17,279 |
) |
|
|
(27,322 |
) |
|
|
(4,977 |
) |
|
|
(3,009 |
) |
Other income (expense): |
|
|
|
|
|
|
|
Interest expense, net |
|
(3,217 |
) |
|
|
(9,247 |
) |
|
|
(69 |
) |
|
|
(1,979 |
) |
Gain (Loss) on extinguishment of debt |
|
457 |
|
|
|
(88 |
) |
|
|
— |
|
|
|
— |
|
Change in fair value of warrant liabilities |
|
23,463 |
|
|
|
(22,678 |
) |
|
|
— |
|
|
|
(24,796 |
) |
Total other income (expense), net |
|
20,703 |
|
|
|
(32,013 |
) |
|
|
(69 |
) |
|
|
(26,775 |
) |
Net income (loss) before income taxes |
|
3,424 |
|
|
|
(59,335 |
) |
|
|
(5,046 |
) |
|
|
(29,784 |
) |
Income tax expense |
|
37 |
|
|
|
— |
|
|
|
37 |
|
|
|
— |
|
Net income (loss) |
|
3,387 |
|
|
|
(59,335 |
) |
|
|
(5,083 |
) |
|
|
(29,784 |
) |
Preferred dividends |
|
— |
|
|
|
103 |
|
|
|
— |
|
|
|
— |
|
Net income (loss) available to common stockholders |
$ |
3,387 |
|
|
$ |
(59,438 |
) |
|
$ |
(5,083 |
) |
|
$ |
(29,784 |
) |
Better Choice Company
Inc.Consolidated Balance Sheets(Dollars
in thousands, except share amounts)
|
December 31, 2021 |
|
December 31, 2020 |
Assets |
|
|
|
Cash and cash equivalents |
$ |
21,729 |
|
|
$ |
3,926 |
|
Restricted cash |
|
7,213 |
|
|
|
63 |
|
Accounts receivable, net |
|
6,792 |
|
|
|
4,631 |
|
Inventories, net |
|
5,245 |
|
|
|
4,869 |
|
Prepaid expenses and other current assets |
|
2,940 |
|
|
|
4,074 |
|
Total Current Assets |
|
43,919 |
|
|
|
17,563 |
|
Fixed assets, net |
|
369 |
|
|
|
252 |
|
Right-of-use assets, operating leases |
|
56 |
|
|
|
345 |
|
Intangible assets, net |
|
11,586 |
|
|
|
13,115 |
|
Goodwill |
|
18,614 |
|
|
|
18,614 |
|
Other assets |
|
116 |
|
|
|
1,364 |
|
Total Assets |
$ |
74,660 |
|
|
$ |
51,253 |
|
Liabilities & Stockholders’ Equity
(Deficit) |
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$ |
4,553 |
|
|
$ |
3,137 |
|
Accrued and other liabilities |
|
1,879 |
|
|
|
3,400 |
|
Term loans, net |
|
855 |
|
|
|
7,826 |
|
PPP loans |
|
— |
|
|
|
190 |
|
Operating lease liability |
|
54 |
|
|
|
173 |
|
Warrant liability |
|
— |
|
|
|
39,850 |
|
Total Current Liabilities |
|
7,341 |
|
|
|
54,576 |
|
Non-current Liabilities |
|
|
|
Term loans, net |
|
4,559 |
|
|
|
— |
|
Line of credit, net |
|
4,856 |
|
|
|
5,023 |
|
Deferred tax liability |
|
24 |
|
|
|
— |
|
Operating lease liability |
|
5 |
|
|
|
184 |
|
Notes payable, net |
|
— |
|
|
|
18,910 |
|
PPP loans |
|
— |
|
|
|
662 |
|
Total Non-current Liabilities |
|
9,444 |
|
|
|
24,779 |
|
Total Liabilities |
|
16,785 |
|
|
|
79,355 |
|
Stockholders’ Equity (Deficit) |
|
|
|
Common Stock, $0.001 par value, 200,000,000 shares authorized,
29,146,367 & 8,651,400 shares issued and outstanding as of
December 31, 2021 and 2020, respectively |
|
29 |
|
|
|
9 |
|
Series F Preferred Stock, $0.001 par value, 30,000 shares
authorized, 0 shares & 21,754 shares issued and outstanding as
of December 31, 2021 and 2020, respectively |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
317,102 |
|
|
|
232,530 |
|
Accumulated deficit |
|
(259,256 |
) |
|
|
(260,641 |
) |
Total Stockholders’ Equity (Deficit) |
|
57,875 |
|
|
|
(28,102 |
) |
Total Liabilities and Stockholders’ Equity (Deficit) |
$ |
74,660 |
|
|
$ |
51,253 |
|
Non-GAAP Measures
Better Choice Company defines 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 income
(loss): interest expense, income tax expense, depreciation and
amortization, share-based compensation, warrant expense and
dividends, loss on disposal of assets, change in fair value of
warrant liabilities, gain or loss on extinguishment of debt,
acquisition related expenses, purchase accounting adjustments,
equity and debt offering expenses and other non-recurring
expenses.
The Company presents 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 income (loss),
gross margin, and our other GAAP results.
The following table presents a reconciliation of
net income (loss), the closest GAAP financial measure, to EBITDA
and Adjusted EBITDA for each of the periods indicated:
Better Choice Company
Inc.Reconciliation of Net Loss to EBITDA and
Adjusted EBITDA(Dollars in thousands)
|
|
Year EndedDecember 31, |
|
Three Months EndedDecember
31, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Net income (loss) available to common stockholders |
|
$ |
3,387 |
|
|
$ |
(59,438 |
) |
|
$ |
(5,083 |
) |
|
$ |
(29,784 |
) |
Interest expense, net |
|
|
3,217 |
|
|
|
9,247 |
|
|
|
69 |
|
|
|
1,979 |
|
Tax expense |
|
|
37 |
|
|
|
— |
|
|
|
37 |
|
|
|
— |
|
Depreciation and amortization |
|
|
1,664 |
|
|
|
1,748 |
|
|
|
409 |
|
|
|
450 |
|
EBITDA |
|
|
8,305 |
|
|
|
(48,443 |
) |
|
|
(4,568 |
) |
|
|
(27,355 |
) |
Non-cash share-based compensation, warrant expense and dividends
(a) |
|
|
4,186 |
|
|
|
19,175 |
|
|
|
623 |
|
|
|
2,041 |
|
Loss on disposal of assets |
|
|
276 |
|
|
|
153 |
|
|
|
1 |
|
|
|
153 |
|
Non-cash change in fair value of warrant liability and warrant
derivative liability |
|
|
(23,463 |
) |
|
|
22,678 |
|
|
|
— |
|
|
|
24,796 |
|
Gain on extinguishment of debt, net |
|
|
(457 |
) |
|
|
88 |
|
|
|
— |
|
|
|
— |
|
Acquisition related expenses/(income) (b) |
|
|
— |
|
|
|
(150 |
) |
|
|
— |
|
|
|
(1,386 |
) |
Non-cash effect of purchase accounting and inventory write-off on
cost of goods sold (c) |
|
|
— |
|
|
|
1,111 |
|
|
|
— |
|
|
|
217 |
|
Offering relating expenses (d) |
|
|
220 |
|
|
|
1,221 |
|
|
|
— |
|
|
|
234 |
|
Non-recurring strategic branding initiatives (e) |
|
|
524 |
|
|
|
— |
|
|
|
357 |
|
|
|
— |
|
Non-recurring and other expenses (f) |
|
|
3,329 |
|
|
|
2,594 |
|
|
|
557 |
|
|
|
570 |
|
Adjusted EBITDA |
|
$ |
(7,081 |
) |
|
$ |
(1,573 |
) |
|
$ |
(3,031 |
) |
|
$ |
(730 |
) |
(a) Reflects non-cash expenses related to equity compensation
awards. 2021 additionally includes non-cash expenses related to
stock purchase warrants issues for third-party services provided.
2020 includes non-cash dividends, stock purchase warrants
associated with a contract that was subsequently terminated and
stock purchase warrants issued in connection with convertible
notes. 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) Reflects costs incurred related to acquisition and integration
activities that will not recur and operating expenses that will not
recur due to acquisition related synergies. |
(c) Reflects non-cash expense recognized in cost of goods sold
related to the step-up of inventory required under the accounting
rules for business combinations. |
(d) Reflects administrative costs associated with the registration
of common shares and other debt and equity financing
transactions. |
(e) Includes one-time marketing agency and design fees for our
strategic re-branding initiatives. |
(f) For the year ended December 31, 2021, includes non-cash third
party share-based compensation of $2.1 million, non-recurring
severance costs of $0.8 million, non-recurring consulting costs of
$0.4 million, director fees of $0.4 million and $0.2 million of
non-recurring costs related to a co-manufacturer change, partially
offset by a $0.6 million reduction to sales tax liability. For the
year ended December 31, 2020, includes $1.5 million of
non-recurring contract termination costs, $0.4 non-recurring
consulting costs, $0.4 million of non-recurring costs related to a
warehouse facility that was outsourced to a third party logistics
facility in Q4 2020 and $0.3 million of other non-recurring
expenses. |
About Better Choice Company
Inc.
Better Choice Company Inc. is a rapidly growing pet
health and wellness company committed to leading the industry shift
toward pet products and services that help dogs and cats live
healthier, happier and longer lives. We take an alternative,
nutrition-based approach to pet health relative to conventional dog
and cat food offerings and position our portfolio of brands to
benefit from the mainstream trends of growing pet humanization and
consumer focus on health and wellness. We have a demonstrated,
multi-decade track record of success selling trusted pet health and
wellness products and leverage our established digital footprint to
provide pet parents with the knowledge to make informed decisions
about their pet’s health. We sell the majority of our dog food, cat
food and treats under the Halo and TruDog brands, which are
focused, respectively, on providing sustainably sourced kibble and
canned food derived from real whole meat, and minimally processed
raw-diet dog food and treats. 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.Scott Lerner, CEO
Investor Contact:KCSA Strategic
CommunicationsValter Pinto, Managing DirectorT:
212-896-1254Valter@KCSA.com
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