$16.9 Million Represents the Company’s Best
Sales Quarter Ever and Year-over-Year Growth of 20%
Management Further Details Gross Margin
Enhancement Strategy
Total Operating Expenses Decreased by More Than
19%
(All amounts are unaudited and in U.S.
dollars)
The Alkaline Water Company Inc. (NASDAQ and CSE: WTER) (the
“Company”), the country’s largest independent alkaline water
company and the Clean Beverage® company, today reported financial
results for the quarter ending June 30, 2022. The Company reported
record revenue of $16.9 million, representing the best quarterly
revenue in company history and 20% year-over-year growth. The
Company filed the corresponding Form 10-Q with the SEC on August
15, 2022, also available here: ir.thealkalinewaterco.com
First Quarter Fiscal 2023 Financial
Highlights (all amounts in U.S. dollars)
(unaudited):
- Record revenue of $16.9 million, +20% year-over-year
compared to $14.1 million
- Gross Profit was $3.5 million
- Total Operating Expenses were $9.8 million, a 19% YoY
improvement
- Total Operating Loss was $6.3 million, a ~14% YoY
improvement
- Net Loss Per Share of ($0.06) compared to ($0.08) in Q1 Fiscal
2022
- Cash Position on June 30, 2022 was approximately $3
million
Complete results for the Company’s First Quarter Fiscal Year
2023 have been filed on EDGAR at www.sec.gov and on SEDAR under the
Company’s profile on www.sedar.com.
“Momentum from last year has continued through the first quarter
of fiscal year 2023, resulting in record sales for our company,”
said Frank Lazaran, President and CEO of The Alkaline Water
Company. “Our record revenue of $16.9 million for the quarter
ending June 30, 2022 represents 20% year-over-year growth. This
strong sales pace, which continued with record July growth of
approximately 30% year-over-year, puts us firmly on track to
achieve our fiscal year revenue guidance while focusing on our new
Pathway to Profitability.
“Our Pathway to Profitability review began in June and was just
recently completed after sixty days, yet we can already see the
impact of our cost-savings initiatives that were in place for less
than thirty days in the first quarter. We halted virtually all
non-essential General and Administrative spending in Q1, which
resulted in a 42% year-over-year decrease in G&A
expenses. Total operating expenses decreased by over $2.3
million, a 19% year-over-year improvement.
“We’re pleased to report record revenue and early improvement to
operating expenses so early in the execution of our new corporate
strategy but we’re even more optimistic about our future. We look
forward to showing our shareholders the full benefits of our
Pathway to Profitability strategy as we continue to reduce
operating expenses and ramp up margin enhancements over the next
few quarters.”
Pathway to
Profitability:
The Company provided more details on its margin enhancement
initiatives as part of its Pathway to Profitability strategy.
Margin enhancement is part of an overall strategy to generate
approximately $15 million in savings compared to fiscal year
2022, once all changes are fully implemented.
The Company intends to improve gross margin through a variety of
measures including:
- Packaging Changes: The Company will use less packaging
materials and more cost-efficient options when possible. Using
different boxes and completely eliminating cardboard when practical
will result in savings across millions of packages per year.
- Production Optimization: Some of the Company’s
co-packing partners have expanded their capabilities to include
processes like blowing bottles on site. By taking advantage of
these improvements, the Company can realize cost savings across
tens of millions of bottles every year.
- Pricing and Promotional Optimization: Considering
economic headwinds, the Company will be more proactive in staying
ahead of cost increases passed on to them in the production process
and maintaining pace with category price movements. The Company
will also be more strategic in their allocation of promotional
dollars.
- Decreasing Shipping and Handling Miles: The Company’s
strong network of strategically located co-packers and raw material
manufacturers has decreased distance between production nodes. This
has reduced shipping and handling costs in the production process,
in some cases by as much as half when compared to previous years.
Since the beginning of the first quarter alone, the company has
added three new raw material providers to become a more efficient
company. Besides helping improve gross margin and increasing
production capacity for our continued sales growth, the production
network’s geographic footprint also reduces sales expenses
associated with outgoing freight. The Company is now within a few
hundred miles of many of the key distribution centers of its major
clients. Furthermore, as part of its cost-savings measures
associated with freight, the Company is working to minimize the
number of less-than-full truckloads that it ships.
First Quarter Fiscal Year 2023 Key
Business and Operational Highlights
- Alkaline88® outpaces Value-Added Water category growth*
- Alkaline88’s year-over-year growth is more than three times
greater than that of the overall category.
- Alkaline88 was one of three top-ten brands to experience
year-over-year unit growth.
*According to xAOC Nielsen data for the
13-weeks ending 7/16/22.
- Strong new store and SKU expansion since start of Fiscal
Year 2023.
- Alkaline88 added over 8,400 new stores to its retail
footprint.
- Alkaline88 expanded SKU offerings in over 14,000 existing
client locations.
- Launched Alkaline88 1-Gallon 4-pack in Sam’s Club
- The 1-Gallon “Club Pack” is now available in 590 Sam’s Clubs
around the country.
- Alkaline88 began new direct-store-delivery (DSD)
partnership
- Alkaline88 entered a partnership with Heidelberg to cover
distribution in Ohio and northern Kentucky.
- Alkaline88 began operations with a new co-packer
- Century Springs near Milwaukee is the first co-packer to
produce Alkaline88 in the Midwest, supporting the brand’s growth in
the region.
“In Fiscal Year 2023, shareholders will see improvement to the
bottom line as Alkaline88 continues to grow,” continued Mr.
Lazaran. “New clients, SKU expansion, and organic growth are the
tried-and-true drivers that we believe will keep Alkaline88 a
growth leader in the value-added water category. We see significant
upside in all sales channels, especially grocery, club, specialty
retail, and convenience, and our target list for the rest of fiscal
2023 includes over 30,000 prospective doors. While our Sales and
Marketing teams are hard at work selling more Deliciously Smooth™
Alkaline88 to consumers across the country, the entire Company will
continue to execute on our Pathway to Profitability strategy to
increase value for our shareholders.”
First Quarter Fiscal Year 2023
Conference Call
The Company will host a conference call Tuesday August 16th, at
8:30 AM Eastern Time.
Conference Call Details: Date: August 16th, 2022 Time:
8:30AM Eastern Time (ET) Dial-in Number for U.S. and Canadian
Callers: 877-407-3088 Dial-in Number for International Callers
(Outside of the U.S. and Canada): 201-389-0927 Conference ID
Number: 13732197
Participating on the call will be the Company’s President and
CEO, Frank Lazaran, and Chief Financial Officer, David Guarino, who
will discuss operational and financial highlights for the first
quarter and the outlook for the rest of fiscal year 2023. They will
be joined for the question-and-answer portion of the call by the
Company’s Chief Marketing Officer, Tom Hutchison, and Frank
Chessman, Executive Director of Sales and Operations.
To join the live conference call, please dial into the
above-referenced telephone numbers five to ten minutes prior to the
scheduled call time.
A replay will be available for one week starting on August 16th,
2022, at approximately 12:30 PM (ET). To access the replay, please
dial 877-660-6853 in the U.S. or Canada and 201-612-7415 for
international callers and use Access ID: 13732197
About The Alkaline Water Company:
The Alkaline Water Company is the Clean Beverage® company making
a difference in the water you drink and the world we share.
Founded in 2012, The Alkaline Water Company (NASDAQ and CSE:
WTER) is headquartered in Scottsdale, Arizona. Its flagship
product, Alkaline88®, is a leading premier alkaline water brand
available in bulk and single-serve sizes along with eco-friendly
aluminum packaging options. With its innovative, state-of-the-art
proprietary electrolysis process, Alkaline88® delivers perfect 8.8
pH alkaline drinking water with trace minerals and electrolytes and
boasts our trademarked “Clean Beverage” label. In 2021, The
Alkaline Water Company was pleased to welcome Shaquille O’Neal to
its board of advisors and to serve as the celebrity brand
ambassador for Alkaline88®.
To purchase The Alkaline Water Company’s products online, visit
us at www.alkaline88.com.
To learn more about The Alkaline Water Company, please visit
www.thealkalinewaterco.com or connect with us on Facebook, Twitter,
Instagram, or LinkedIn.
Notice Regarding Forward-Looking Statements
This news release contains “forward-looking statements.”
Statements in this news release that are not purely historical are
forward-looking statements and include any statements regarding
beliefs, plans, expectations or intentions regarding the future.
Such forward-looking statements include, among other things, the
following: the statements relating to the Company’s gross margin
enhancement strategy; that the strong sales pace, which continued
with record July growth of approximately 30% year-over-year, puts
the Company firmly on track to achieve the Company’s fiscal year
revenue guidance while focusing on the Company’s new pathway to
profitability; the statements relating to the pathway to
profitability; the Company is even more optimistic about its
future; that the Company looks forward to showing its shareholders
the full benefits of its Pathway to Profitability strategy as the
Company continues to reduce operating expenses and ramp up margin
enhancements over the next few quarters; the statements relating to
the Company’s overall strategy to generate approximately $15
million in savings compared to fiscal year 2022, once all changes
are fully implemented; that the Company intends to improve gross
margin through a variety of measures including (i) packaging
changes; (ii) production optimization; (iii) pricing and
promotional optimization; and (iv) decreasing shipping and handling
miles and the statements about their details; that in Fiscal Year
2023, shareholders will see improvement to the bottom line as
Alkaline88 continues to grow; that the Company believes new
clients, SKU expansion, and organic growth will keep Alkaline88 a
growth leader in the value-added water category; that the Company
sees significant upside in all sales channels, especially grocery,
club, specialty retail, and convenience; that the Company’s target
list of for the rest of fiscal 2023 includes over 30,000
prospective doors; and that the entire Company will continue to
execute on its Pathway to Profitability strategy to increase value
for its shareholders.
The material assumptions supporting these forward-looking
statements include, among others, that the Company’s cost-saving
and margin enhancement measures will be fully implemented and, once
implemented, they will be effective to reduce the Company’s annual
expense and enhance the Company’s margin to the extent anticipated
by the Company; that the Company’s burn rate to trend downward and,
eventually, settle between 25 and 50% less than it is right now as
a result of the Company’s proactive reduction in its monthly burn
rate; that the demand for the Company’s products will continue to
significantly grow; that the past production capacity of the
Company’s co-packing facilities can be maintained or increased;
that there will be increased production capacity through
implementation of new production facilities, new co-packers and new
technology; that there will be an increase in number of products
available for sale to retailers and consumers; that there will be
an expansion in geographical areas by national retailers carrying
the Company’s products; that there will be an expansion into new
national and regional grocery retailers; that there will be an
expansion into new e-commerce, home delivery, convenience, and
healthy food channels; that there will not be interruptions on
production of the Company’s products; that there will not be a
recall of products due to unintended contamination or other adverse
events relating to the Company’s products; and that the Company
will be able to obtain additional capital to meet the Company’s
growing demand and satisfy the capital expenditure requirements
needed to increase production and support sales activity. In
addition, the Company’s fiscal year 2023 revenue guidance is based
on the Company’s expectation that the Company’s topline to be
driven by the momentum the Company is carrying forward as one of
the fastest-growing top-ten brands in one of the fastest growing
beverage categories; and the Company’s belief that the Company will
continue to see continued organic growth within the Company’s
existing retail clients and distribution expansion to new clients
throughout the country. Actual results could differ from those
projected in any forward-looking statements due to numerous
factors. Such factors include, among others, governmental
regulations being implemented regarding the production and sale of
alkaline water or any other products, including products containing
hemp/CBD; the fact that consumers may not embrace and purchase any
of the Company’s CBD-infused products; the fact that the Company
may not be permitted by the FDA or other regulatory authority to
market or sell any of its CBD-infused products; additional
competitors selling alkaline water and enhanced water products in
bulk containers reducing the Company’s sales; the fact that the
Company does not own or operate any of its production facilities
and that co-packers may not renew current agreements and/or not
satisfy increased production quotas; the fact that the Company has
a limited number of suppliers of its unique bulk bottles; the
potential for supply-chain interruption due to factors beyond the
Company’s control; the fact that there may be a recall of products
due to unintended contamination; the inherent uncertainties
associated with operating as an early stage company; changes in
customer demand and the fact that consumers may not embrace
enhanced water products as expected or at all; the extent to which
the Company is successful in gaining new long-term relationships
with new retailers and retaining existing relationships with
retailers; the Company’s ability to raise the additional funding
that it will need to continue to pursue its business, planned
capital expansion and sales activity; and competition in the
industry in which the Company operates and market conditions. These
forward-looking statements are made as of the date of this news
release, and the Company assumes no obligation to update the
forward-looking statements, or to update the reasons why actual
results could differ from those projected in the forward-looking
statements, except as required by applicable law, including the
securities laws of the United States and Canada. Although the
Company believes that any beliefs, plans, expectations and
intentions contained in this news release are reasonable, there can
be no assurance that any such beliefs, plans, expectations or
intentions will prove to be accurate. Readers should consult all of
the information set forth herein and should also refer to the risk
factors disclosure outlined in the reports and other documents the
Company files with the SEC, available at www.sec.gov, and on the
SEDAR, available at www.sedar.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220815005591/en/
The Alkaline Water Company Inc. Jeff Wright Director of
Investor Relations 866-242-0240
investors@thealkalinewaterco.com
Media Jessica Starman 888-461-2233
jessica@elev8newmedia.com
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