Better Choice Company Inc. (NYSE: BTTR) (the “Company” or “Better
Choice”), a pet health and wellness company, today reported its
financial results for the first quarter ended March 31, 2022.
“We are excited to share our record Q1 2022
financial results. In spite of unprecedented supply chain
disruptions felt across the consumer-packaged goods industry, we
were able to deliver 57% growth in net sales relative to Q1 2021,
driven by 178% growth in International sales and 129% growth in
Brick & Mortar sales. The $19.7m of gross sales generated in
this quarter represents an all-time high for Better Choice,
surpassing the $15.9m generated in Q3 2021 by $3.8m and
representing sequential quarterly growth of $6.1m, or 45% relative
to Q4 2021,” said Scott Lerner, CEO of Better Choice.
“We have created a strong foundation for continued
growth through our diverse sales platforms including Pet Specialty,
E-commerce, Direct-to-Consumer and International. Our goal is to
reach millennial pet parents enabling the purchase of Halo
products, wherever, whenever and however they choose. Our
International business is growing rapidly, and we have already
launched in over 1,500 pet specialty stores including Petco, Pet
Supplies Plus and key independent retailers, and remain on track to
achieve our target of 2,000 pet specialty stores by the end of
2022,” continued Mr. Lerner.
“In addition to delivering record sales growth, we
also realized meaningful sequential gross margin improvement,
achieving a gross margin of 28% in Q1 2022 vs. 25% in Q4 2021. This
improvement in Q1 2022 was driven by several key factors, including
the shift of domestic kibble production to a new co-manufacturer,
the consolidation of production runs across our portfolio and the
optimization of our product mix. In the second half of 2022 we have
a lot of exciting new developments planned, including the continued
distribution of Halo Elevate® nationwide and the rebrand of Halo
Holistic™ and TruDog. Our cash position remains strong, and we are
very excited for the continued growth we expect in the remainder of
2022 and beyond,” finished Mr. Lerner.
First Quarter 2022 Operational
Updates
-
Launched Halo Elevate®, a new super premium natural pet food with
expected distribution of 2,000 pet specialty stores
- Realized $6.9m
International sales in Q1, representing 178% quarter-over-quarter
growth.
- Realized $4.3m
Brick & Mortar sales in Q1, representing 129%
quarter-over-quarter growth.
Financial Results for the First Quarter
2022
- First Quarter 2022
Gross sales of $19.7m
- First Quarter 2022 Net
sales of $17.0m
- First Quarter 2022
Loss from operations of $4.0m
- First Quarter 2022 Net
Loss available to common stockholders of $4.0m
- First Quarter 2022
Adjusted EBITDA loss of $2.0m
Conference Call and Webcast
Information
The Company will host a conference call and audio
webcast on Thursday, May 12, 2022 at 8:30 am (Eastern Time) to
answer questions about the Company's operational and financial
highlights for the first quarter of 2022.
Event: |
Better Choice First Quarter 2022 Earnings Call |
Date: |
Thursday, May 12, 2022 |
Time: |
8:30 a.m. Eastern Time |
Live Call: |
+1-877-300-8521 (U.S. Toll-Free) or +1-412-317-6026
(International) |
Webcast: |
https://viavid.webcasts.com/starthere.jsp?ei=1542683&tp_key=165b3ab3ad |
For interested individuals unable to join the
conference call, a dial-in replay of the call will be available
until May 26, 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: 10166367.
Better Choice Company
Inc.Unaudited Consolidated Statements of
Operations(Dollars in thousands, except share and per
share amounts)
|
Three Months Ended March 31, |
|
|
2022 |
|
|
|
2021 |
|
Net sales |
$ |
17,014 |
|
|
$ |
10,830 |
|
Cost of goods sold |
|
12,307 |
|
|
|
6,554 |
|
Gross profit |
|
4,707 |
|
|
|
4,276 |
|
Operating expenses: |
|
|
|
Selling, general and administrative |
|
7,577 |
|
|
|
6,889 |
|
Share-based compensation |
|
1,091 |
|
|
|
2,525 |
|
Total operating expenses |
|
8,668 |
|
|
|
9,414 |
|
Loss from operations |
|
(3,961 |
) |
|
|
(5,138 |
) |
Other expense: |
|
|
|
Interest expense, net |
|
(76 |
) |
|
|
(835 |
) |
Loss on extinguishment of debt |
|
— |
|
|
|
(394 |
) |
Change in fair value of warrant liabilities |
|
— |
|
|
|
(6,483 |
) |
Total other expense, net |
|
(76 |
) |
|
|
(7,712 |
) |
Net loss before income taxes |
|
(4,037 |
) |
|
|
(12,850 |
) |
Income tax expense |
|
3 |
|
|
|
— |
|
Net loss available to common stockholders |
$ |
(4,040 |
) |
|
$ |
(12,850 |
) |
|
|
|
|
Weighted average number of shares outstanding, basic |
|
29,289,504 |
|
|
|
9,587,509 |
|
Weighted average number of shares outstanding, diluted |
|
29,289,504 |
|
|
|
9,587,509 |
|
Net loss per share available to common stockholders, basic |
$ |
(0.14 |
) |
|
$ |
(1.38 |
) |
Net loss per share available to common stockholders, diluted |
$ |
(0.14 |
) |
|
$ |
(1.38 |
) |
Better Choice Company
Inc.Unaudited Condensed Consolidated Balance
Sheets(Dollars in thousands, except share and per share
amounts)
|
March 31, 2022 |
|
December 31, 2021 |
Assets |
|
|
|
Cash and cash equivalents |
$ |
16,455 |
|
|
$ |
21,729 |
|
Restricted cash |
|
6,963 |
|
|
|
7,213 |
|
Accounts receivable, net |
|
9,716 |
|
|
|
6,792 |
|
Inventories, net |
|
8,284 |
|
|
|
5,245 |
|
Prepaid expenses and other current assets |
|
2,874 |
|
|
|
2,940 |
|
Total Current Assets |
|
44,292 |
|
|
|
43,919 |
|
Fixed assets, net |
|
490 |
|
|
|
369 |
|
Right-of-use assets, operating lease |
|
44 |
|
|
|
56 |
|
Intangible assets, net |
|
11,205 |
|
|
|
11,586 |
|
Goodwill |
|
18,614 |
|
|
|
18,614 |
|
Other assets |
|
101 |
|
|
|
116 |
|
Total Assets |
$ |
74,746 |
|
|
$ |
74,660 |
|
Liabilities & Stockholders’ Equity
(Deficit) |
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$ |
5,726 |
|
|
$ |
4,553 |
|
Accrued and other liabilities |
|
1,448 |
|
|
|
1,879 |
|
Term loan, net |
|
979 |
|
|
|
855 |
|
Operating lease liability |
|
46 |
|
|
|
54 |
|
Total Current Liabilities |
|
8,199 |
|
|
|
7,341 |
|
Non-current Liabilities |
|
|
|
Term loan, net |
|
4,237 |
|
|
|
4,559 |
|
Line of credit, net |
|
7,360 |
|
|
|
4,856 |
|
Deferred tax liability |
|
24 |
|
|
|
24 |
|
Operating lease liability |
|
— |
|
|
|
5 |
|
Total Non-current Liabilities |
|
11,621 |
|
|
|
9,444 |
|
Total Liabilities |
|
19,820 |
|
|
|
16,785 |
|
Stockholders’ Equity (Deficit) |
|
|
|
Common Stock, $0.001 par value, 200,000,000 shares authorized,
29,364,712 and 29,146,367 shares issued and outstanding as of
March 31, 2022 and December 31, 2021, respectively |
|
29 |
|
|
|
29 |
|
Series F Preferred Stock, $0.001 par value, 30,000 shares
authorized, 0 shares issued and outstanding as of March 31,
2022 and December 31, 2021, respectively |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
318,193 |
|
|
|
317,102 |
|
Accumulated deficit |
|
(263,296 |
) |
|
|
(259,256 |
) |
Total Stockholders’ Equity (Deficit) |
|
54,926 |
|
|
|
57,875 |
|
Total Liabilities and Stockholders’ Equity (Deficit) |
$ |
74,746 |
|
|
$ |
74,660 |
|
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 loss:
interest expense, tax expense, depreciation and amortization,
share-based compensation, warrant expense, loss on disposal of
assets, change in fair value of warrant liabilities, gain or loss
on extinguishment of debt, 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 loss, 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:
Better Choice Company
Inc.Reconciliation of Net Loss to EBITDA and
Adjusted EBITDA(Dollars in thousands)
|
Three Months Ended March 31, |
|
|
2022 |
|
|
|
2021 |
|
Net loss available to common stockholders |
$ |
(4,040 |
) |
|
$ |
(12,850 |
) |
Interest expense, net |
|
76 |
|
|
|
835 |
|
Tax expense |
|
3 |
|
|
|
— |
|
Depreciation and amortization |
|
409 |
|
|
|
411 |
|
EBITDA |
|
(3,552 |
) |
|
|
(11,604 |
) |
Non-cash share-based compensation and warrant expense (a) |
|
1,091 |
|
|
|
2,590 |
|
Loss on disposal of assets |
|
2 |
|
|
|
56 |
|
Non-cash change in fair value of warrant liability and warrant
derivative liability |
|
— |
|
|
|
6,483 |
|
Loss on extinguishment of debt |
|
— |
|
|
|
394 |
|
Offering relating expenses (b) |
|
— |
|
|
|
196 |
|
Non-recurring strategic branding initiatives (c) |
|
306 |
|
|
|
— |
|
Non-recurring and other expenses (d) |
|
135 |
|
|
|
856 |
|
Adjusted EBITDA |
$ |
(2,018 |
) |
|
$ |
(1,029 |
) |
(a) Reflects non-cash expenses related to equity compensation
awards. 2021 additionally includes non-cash expenses related to
stock purchase warrants issued for third-party services provided.
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 administrative costs associated with the registration
of common shares and other debt and equity financing
transactions. |
(c) Includes one-time marketing agency and design fees for our
strategic re-branding initiatives. |
(d) For the three months ended March 31, 2022, includes
non-recurring severance costs and non-recurring professional fees.
For the three months ended March 31, 2021, includes non-recurring
severance costs of $0.7 million, non-cash third party share-based
compensation of $0.3 million, non-recurring consulting costs of
$0.2 million and director fees of $0.1 million, partially offset by
a $0.5 million reduction to sales tax liability. |
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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