Better Choice Company Reports Fourth Quarter and Full Year 2022 Financial Results
March 28 2023 - 07:20AM
GlobeNewswire Inc.
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, 2022.
Lionel F. Conacher, Interim CEO of Better
Choice, stated, “During the fourth quarter, net sales were sales
were $9.3 million resulting in full year 2022 net sales of $54.7
million, a 19% increase versus the prior year. Our International
channel delivered year-over-year net sales growth of 48% and Brick
& Mortar net sales grew 72% in 2022 versus the prior year
fueled by the Halo Elevate launch. Driven by channel partner
dynamics and brand migration in our online businesses, E-commerce
net sales for 2022 were down 3% versus the prior year and DTC
declined 30%. Looking to 2023, we continue to be focused on the
execution of our growth plans and reduction of quarterly cash
burn."
Year-to-Date 2022 Financial Highlights
- Gross Sales of
$65.7 million.
- Net Sales of $54.7 million.
- International net sales of $21.9
million.
- E-commerce net sales of $14.6
million.
- Brick & Mortar net sales of $11.6
million.
- Direct to Consumer net sales of $6.6
million.
- Gross margin of 27.9%, reflecting
impact of one-time rationalization of inventory. Excluding
inventory reserve expense, gross margin was 31.3%.
- Loss from operations of $38.8
million.
- Adjusted EBITDA loss of $(11.8)
million.
- Net loss available to common
stockholders of $(39.3) million.
Fourth Quarter 2022 Financial Highlights
- Gross Sales of $12.0 million.
- Net Sales of $9.3 million.
- International net sales of $2.2
million.
- E-commerce net
sales of $3.5 million.
- Brick & Mortar net sales of $2.0
million.
- Direct to Consumer
net sales of $1.6 million.
- Gross margin of 17.9%, reflecting
impact of one-time rationalization of inventory. Excluding
inventory reserve expense, gross margin was 31.9%.
- Loss from
Operations of $24.2 million.
- Adjusted EBITDA
loss of $(4.8) million.
- Net loss available to common
stockholders of $24.4 million.
Better Choice Company
Inc.Consolidated Statements of
Operations(Dollars in thousands)
|
|
Three months endedDecember
31, |
|
Year ended December 31, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net sales |
|
$ |
9,266 |
|
|
$ |
10,987 |
|
|
$ |
54,660 |
|
|
$ |
46,006 |
|
Cost of goods sold |
|
|
7,604 |
|
|
|
8,231 |
|
|
|
39,399 |
|
|
|
30,638 |
|
Gross profit |
|
|
1,662 |
|
|
|
2,756 |
|
|
|
15,261 |
|
|
|
15,368 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
6,690 |
|
|
|
7,110 |
|
|
|
32,461 |
|
|
|
28,507 |
|
Share-based compensation |
|
|
515 |
|
|
|
623 |
|
|
|
2,969 |
|
|
|
4,140 |
|
Impairment of goodwill |
|
|
18,614 |
|
|
|
— |
|
|
|
18,614 |
|
|
|
— |
|
Total operating expenses |
|
|
25,819 |
|
|
|
7,733 |
|
|
|
54,044 |
|
|
|
32,647 |
|
Loss from operations |
|
|
(24,157 |
) |
|
|
(4,977 |
) |
|
|
(38,783 |
) |
|
|
(17,279 |
) |
Other (expense)
income: |
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(227 |
) |
|
|
(69 |
) |
|
|
(551 |
) |
|
|
(3,217 |
) |
Gain on extinguishment of debt, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
457 |
|
Change in fair value of warrant liabilities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
23,463 |
|
Total other (expense) income,
net |
|
|
(227 |
) |
|
|
(69 |
) |
|
|
(551 |
) |
|
|
20,703 |
|
Net (loss) income before
income taxes |
|
|
(24,384 |
) |
|
|
(5,046 |
) |
|
|
(39,334 |
) |
|
|
3,424 |
|
Income tax (benefit) expense |
|
|
(22 |
) |
|
|
37 |
|
|
|
(18 |
) |
|
|
37 |
|
Net (loss) income available to
common stockholders |
|
$ |
(24,362 |
) |
|
$ |
(5,083 |
) |
|
$ |
(39,316 |
) |
|
$ |
3,387 |
|
|
|
Better Choice Company
Inc.Consolidated Balance Sheets(Dollars
in thousands, except share amounts)
|
December 31, 2022 |
|
December 31, 2021 |
Assets |
|
|
|
Cash and cash equivalents |
$ |
3,173 |
|
|
$ |
21,729 |
|
Restricted cash |
|
6,300 |
|
|
|
7,213 |
|
Accounts receivable, net |
|
6,744 |
|
|
|
6,792 |
|
Inventories, net |
|
10,257 |
|
|
|
5,245 |
|
Prepaid expenses and other
current assets |
|
1,051 |
|
|
|
2,940 |
|
Total Current Assets |
|
27,525 |
|
|
|
43,919 |
|
Fixed assets, net |
|
375 |
|
|
|
369 |
|
Right-of-use assets, operating
leases |
|
173 |
|
|
|
56 |
|
Intangible assets, net |
|
10,059 |
|
|
|
11,586 |
|
Goodwill |
|
— |
|
|
|
18,614 |
|
Other assets |
|
544 |
|
|
|
116 |
|
Total Assets |
$ |
38,676 |
|
|
$ |
74,660 |
|
Liabilities &
Stockholders’ Equity |
|
|
|
Current
Liabilities |
|
|
|
Accounts payable |
$ |
2,932 |
|
|
$ |
4,553 |
|
Accrued and other
liabilities |
|
2,596 |
|
|
|
1,879 |
|
Term loan, net |
|
— |
|
|
|
855 |
|
Operating lease liability |
|
52 |
|
|
|
54 |
|
Total Current Liabilities |
|
5,580 |
|
|
|
7,341 |
|
Non-current
Liabilities |
|
|
|
Line of credit, net |
|
11,444 |
|
|
|
4,856 |
|
Term loan, net |
|
— |
|
|
|
4,559 |
|
Deferred tax liability |
|
— |
|
|
|
24 |
|
Operating lease liability |
|
124 |
|
|
|
5 |
|
Total Non-current
Liabilities |
|
11,568 |
|
|
|
9,444 |
|
Total Liabilities |
|
17,148 |
|
|
|
16,785 |
|
Stockholders’
Equity |
|
|
|
Common Stock, $0.001 par value, 200,000,000 shares authorized,
29,430,267 & 29,146,367 shares issued and outstanding as of
December 31, 2022 and 2021, respectively |
|
29 |
|
|
|
29 |
|
Additional paid-in
capital |
|
320,071 |
|
|
|
317,102 |
|
Accumulated deficit |
|
(298,572 |
) |
|
|
(259,256 |
) |
Total Stockholders’
Equity |
|
21,528 |
|
|
|
57,875 |
|
Total Liabilities and
Stockholders’ Equity |
$ |
38,676 |
|
|
$ |
74,660 |
|
|
|
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, warrant expense, impairment of goodwill,
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.
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) income, the closest GAAP financial measure, to EBITDA
and Adjusted EBITDA for each of the periods indicated (in
thousands):
Reconciliation of Net (Loss) Income to
EBITDA and Adjusted EBITDA
|
|
Three Months EndedDecember
31, |
|
Year EndedDecember 31, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net (loss) income available to
common stockholders |
|
$ |
(24,362 |
) |
|
$ |
(5,083 |
) |
|
$ |
(39,316 |
) |
|
$ |
3,387 |
|
Interest expense, net |
|
|
227 |
|
|
|
69 |
|
|
|
551 |
|
|
|
3,217 |
|
Income tax (benefit) expense |
|
|
(22 |
) |
|
|
37 |
|
|
|
(18 |
) |
|
|
37 |
|
Depreciation and
amortization |
|
|
425 |
|
|
|
409 |
|
|
|
1,690 |
|
|
|
1,664 |
|
EBITDA |
|
|
(23,732 |
) |
|
|
(4,568 |
) |
|
|
(37,093 |
) |
|
|
8,305 |
|
Non-cash share-based compensation
and warrant expense (a) |
|
|
515 |
|
|
|
623 |
|
|
|
2,969 |
|
|
|
4,186 |
|
Impairment of goodwill |
|
|
18,614 |
|
|
|
— |
|
|
|
18,614 |
|
|
|
— |
|
Loss on disposal of assets |
|
|
3 |
|
|
|
1 |
|
|
|
29 |
|
|
|
276 |
|
Non-cash change in fair value of
warrant liability and warrant derivative liability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(23,463 |
) |
Gain on extinguishment of debt,
net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(457 |
) |
Offering relating expenses
(b) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
220 |
|
Non-recurring strategic branding
initiatives (c) |
|
|
— |
|
|
|
357 |
|
|
|
948 |
|
|
|
524 |
|
Launch expenses (d) |
|
|
(480 |
) |
|
|
— |
|
|
|
98 |
|
|
|
— |
|
Non-recurring and other expenses
(e) |
|
|
264 |
|
|
|
557 |
|
|
|
2,654 |
|
|
|
3,329 |
|
Adjusted
EBITDA |
|
$ |
(4,816 |
) |
|
$ |
(3,030 |
) |
|
$ |
(11,781 |
) |
|
$ |
(7,080 |
) |
|
(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.
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 as well as
other charges related to our strategic re-branding
initiatives. |
(d) Reflects non-recurring launch expenses related to the Elevate®
launch. |
(e) For the three months ended December 31, 2022, includes
non-recurring severance costs of $0.1 million, non-recurring
executive recruitment costs of $0.1 million and other non-recurring
charges of $0.1 million. The year ended December 31, 2022 includes
non-recurring severance costs of $0.3 million, non-cash third party
share-based compensation of $2.1 million issued in 2020 as part of
a multi-year contract, non-recurring professional fees of $0.1
million, non-recurring executive recruitment costs of $0.1 million
and other non-recurring charges of $0.1 million, partially offset
by $0.1 million of non-recurring customer refunds related to prior
year periods included in cost of goods sold. The three months ended
December 31, 2021 includes non-cash third party share-based
compensation of $0.2 million, non-recurring severance costs of $0.1
million, director costs of $0.1 million and non-recurring costs
related to a co-manufacturer change of $0.2 million, partially
offset by a $0.1 million reduction to sales tax liability. 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. |
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 foods, treats, toppers, dental products, 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. Our products consist of kibble and canned dog and cat
food, freeze-dried raw dog food and treats, vegan dog food and
treats, oral care products and supplements. 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.Lionel F. Conacher, Interim CEO
Investor Contact:KCSA Strategic
CommunicationsValter Pinto, Managing DirectorT:
212-896-1254Valter@KCSA.com
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