MAV MAV Beauty Brands Inc

• Total revenue of $29.1 million versus $29.6 million in Q2 2020
• Adjusted EBITDA of $3.8 million versus $8.1 million in Q2 2020
• Net income of $4.1 million; Adjusted Net Income of $0.7 million

VAUGHAN, ON, Aug. 12, 2021 /CNW/ - MAV Beauty Brands Inc. ("MAV Beauty Brands" or the "Company"), a global personal care company, today announced its financial results for the three and six months ended June 30, 2021. Unless otherwise indicated, all amounts are expressed in U.S. dollars. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures (see "Non-IFRS Measures" below).

"While we are disappointed with our top and bottom-line second quarter results, the Board believes there are many reasons to be optimistic about the future", said Chris Elshaw, Chairman of the Board. "We have a portfolio of four distinctive brands with good equity that can be built on over time. In addition, we also benefit from the operational scale of our platform. Earlier this week we announced, consistent with our continued investment in people, that Serge Jureidini will be joining us as President & CEO on August 17^th, and Laurel MacKay-Lee will be joining us as CFO on August 30^th."

Mr. Elshaw added: "With Serge and Laurel, in addition to the dedicated team of people we already have in place, we are committed to building upon MAV's past successes with more consistent business execution and ultimately, reported results."

Selected Financial Highlights⁽¹⁾⁽²⁾ 

Q2 2021 Business and Financial Review 

Q2 2021 revenue decreased by 1.8% to $29.1 million, compared to $29.6 million in Q2 2020. For the Canada/US region, revenue decreased by 3.8% to $27.0 million, compared to $28.1 million in Q2 2020. The year-over-year decrease mainly reflects net distribution decreases across a number of brands. For the International region, revenue increased by 34.7% to $2.1 million, compared to $1.6 million in Q2 2021, reflecting gradually improving operating conditions as more markets fully reopen, benefiting both shipments and consumer sales.

Gross profit decreased 19.6% to $11.7 million in Q2 2021, compared to $14.5 million in Q2 2020. Gross profit margin was 40.1% in Q2 2021, compared to 49.0% in Q2 2020 (51.3% excluding the impact of the purchase accounting adjustment for The Mane Choice acquisition). The decline in gross profit and gross profit margin for Q2 2021 was mainly driven by the Company's decision to streamline its product collections to create a more efficient assortment of products. In Q2 2021, this resulted in increased inventory-related provisions, and clearance of non-core, lower-margin products.

EBITDA increased to $8.3 million in Q2 2021, compared to $4.8 million in Q2 2020. The increase in EBITDA was primarily attributable to a decrease in integration, restructuring, and other costs offset by a decrease in gross profit.

Adjusted EBITDA decreased to $3.8 million in Q2 2021, from $8.1 million in Q2 2020, mainly due to lower gross profit margin, higher selling and administrative costs, and lower revenues.

In Q2 2021, the Company reported net income of $4.1 million, up from net income of $1.6 million in Q2 2020 while Adjusted Net Income decreased to $0.7 million, compared with Adjusted Net Income of $4.0 million in Q2 2020, due to the factors discussed above. Adjusted Earnings Per Share (Diluted) was $0.02 per share in Q2 2021, compared with $0.10 per share in Q2 2020, reflecting the factors discussed above (see "Non-IFRS Measures" below).

Adjusted Free Cash Flow was $2.3 million in Q2 2021, compared to $7.1 million in Q2 2020 (see "Non-IFRS Measures" below). The Company used the Free Cash Flow to repay $2.5 million of debt during the quarter. At quarter end, net debt was $123.2 million, and cash was $17.8 million. 

Q2 2021 Financial Statements and Management's Discussion and Analysis

The Company's unaudited consolidated financial statements for the three- and six-month periods ended June 30, 2021 and Management's Discussion and Analysis are available under the Company's profile on SEDAR at www.sedar.com and on MAV Beauty Brands' investor relations website at investors.mavbeautybrands.com.

Conference Call & Webcast

MAV Beauty Brands will host a conference call to discuss its Fiscal 2021 second quarter financial results at 8:30 a.m. EDT on August 12, 2021. To participate in the call, dial 647-792-1240 or 800-437-2398 using the conference ID 4914841. The audio webcast can be accessed at investors.mavbeautybrands.comhttps://bit.ly/2mutHer. Listeners should access the webcast or call 10-15 minutes before the start time to ensure they are connected.

About MAV Beauty Brands (TSX:MAV)

MAV Beauty Brands is a global personal care platform focused on acquiring great independent brands and helping these brands to scale and win market share. We have built an operating platform to build brands through expanded distribution, innovation, and marketing. Today, we have a diversified portfolio of four complementary personal care brands – Marc Anthony, Renpure, Cake Beauty and The Mane Choice – offering premium quality hair care, body care and beauty products. These products are sold in over 25 countries around the world and in more than 100 of the world's largest retailers.

Non–IFRS Measures 

This press release makes reference to certain non–IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non–IFRS measures including "Adjusted Earnings Per Share (diluted)", "Adjusted EBITDA", "Adjusted Free Cash Flow", "Adjusted Net Income", "EBITDA", and "Free Cash Flow". These non–IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors and other interested parties frequently use non–IFRS measures in the evaluation of issuers. Our management also uses non–IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and to determine components of management compensation. Definitions and reconciliations of non-IFRS measures to the relevant reported measures can be found in our Management's Discussion and Analysis. Such reconciliations can also be found in this press release under the headings "Q2 2021 Compared to Q2 2020".

"Adjusted Earnings Per Share (Diluted)" is computed similarly to basic earnings per share except that the weighted average number of shares outstanding is increased to include additional shares for the assumed conversion of preference shares, proportionate voting shares, and exchangeable shares and exercise of stock options, if dilutive. The average number of shares is calculated by assuming that outstanding conversions were exercised and that the proceeds from such exercises were used to acquire common shares at the average market price during the reporting period.

"Adjusted EBITDA" represents, for the applicable period, EBITDA before certain expenses, costs, charges or benefits incurred in such period which in management's view are not indicative of continuing operations, including: (i) integration, restructuring, and other costs; (ii) purchase accounting adjustments; (iii) share–based compensation; and (iv) unrealized foreign exchange (gain) loss.

"Adjusted Free Cash Flow" is calculated as free cash flow adjusted to add back acquisition related costs which are included in cash provided by operating activities. We believe Adjusted free cash flow is a useful measure to assess the Company's ability to repay debt, finance strategic business acquisitions and investments, pay dividends and repurchase shares. It also facilitates period-to-period comparisons.

"Adjusted Net Income" represents, for the applicable period, net income (loss) as adjusted to add back or deduct, as applicable, certain expenses, costs, charges or benefits incurred in such period which in management's view are not indicative of continuing operations, including: (i) integration, restructuring, and other costs; (ii)  purchase accounting adjustments; (iii) share–based compensation; (iv) unrealized foreign exchange loss (gain); and (v) tax impacts of the aforementioned adjustments (based on annual effective tax rate).

"EBITDA" represents net income (loss) for the period before: (i) income tax expense (recovery); (ii) interest and accretion; and (iii) amortization and depreciation.

''Free Cash Flow'' represents, for the applicable period, cash provided by operating activities less cash used to purchase property and equipment. Free cash flow is a key metric that measures the Company's ability to repay debt, finance strategic business acquisitions and investments, pay dividends and repurchase shares.

''Net debt'' is calculated as long-term debt before unamortized deferred financing costs less cash as reported in the consolidated statements of financial position

Forward-Looking Information

Certain information in this press release, including the Board's optimism regarding new executive leadership, the Company's portfolio of brands and operational scale, and the reopening of markets internationally and the associated benefits to shipments and consumer sales, constitutes forward-looking information. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events.

Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by MAV Beauty Brands as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in greater detail in the "Risk Factors" section of the Company's Annual Information Form dated  March 30, 2021 for the year ended December 31, 2020 and the Company's other periodic filings made available at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect MAV Beauty Brands; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this press release are made as of the date of this press release, and MAV Beauty Brands expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.

Q2 2021 Compared to Q2 2020

SOURCE MAV Beauty Brands