VANCOUVER, BC, Nov. 30, 2021 /CNW/ - good natured Products Inc.
(the "Company" or "good natured®") (TSXV:
GDNP), a North American leader in plant-based products and
packaging, today announced its financial results for the three
months ("Q3 2021") and nine months ended September 30, 2021 ("YTD 2021").
The Company's Q3 2021 year-over-year revenue growth of
almost 300% benefited from robust market demand, a full fiscal
quarter of contribution from the recent acquisition of Ex-Tech
Plastics Inc., and the addition of a range of new customer
accounts, including initial shipments to a large US food producer
estimated to deliver approximately USD $13
million in its first year, as announced on October 13, 2021. Q3 2021 also saw the
Company's recurring B2B customer base expand to over 850 active
accounts, more than doubling compared to 400 B2B customers
on September 30, 2020.
"The team delivered record setting revenue growth for Q3 2021
and just under 240% growth for the first nine months of the year,"
stated Paul Antoniadis, CEO of good
natured®. "We did see some temporary changes in
our Q3 2021 product and customer revenue mix with the recent
addition of Ex-Tech, whose business is more heavily weighted to
National customers and Industrial products with somewhat lower
margin rates. The integration of a first full quarter of Ex-Tech's
financials, combined with sustained increases in inflationary
costs, resulted in our variable gross margin rate dipping to the
low end of our targeted range at just under 29% for Q3 2021.
Variable gross margins for YTD 2021 are holding above 33%, which
remains at the upper end of our targeted range. Based on our growth
strategy and business model, we anticipate short-term, quarterly
shifts in variable gross margin as part of that process and focus
on delivering the optimal range on an annual basis. We've also
rolled out several price adjustments and shipping surcharges to
offset rapidly rising raw material and logistics costs being felt
throughout the industry."
Key Highlights:
- Revenues for Q3 2021 increased 286% to a record $18.0 million compared to $4.7 million for the three months ended
September 30, 2020. Revenue for YTD
2021 increased 236% to $38.3 million
compared to $11.4 million for the
nine months ended September 30,
2020.
- Variable gross margin, a non-GAAP measure, for Q3 2021
increased 196% to $5.2 million and
28.8% of sales, compared to $1.75
million and 37.6% of sales for the three months ended
September 30, 2020. Variable gross
margin for YTD 2021 increased 183% to $12.7
million and 33.2% of sales, compared to $4.5 million and 39.4% of sales for the nine
months ended September 30, 2020.
- Gross margin increased 129% to $4.0
million for Q3 2021 and 130% to $10.3
million for YTD 2021, As a percentage of sales, gross margin
for Q3 2021 and YTD 2021 was 22.3% and 26.9% respectively.
- Selling, general and administrative expenses excluding
acquisition activity and one-time charges, a non-GAAP measure, for
Q3 2021 and YTD 2021 were $4.8
million and $11.2 million
compared to $2.0 million and
$4.9 million for the three and nine
months ended September 30, 2020,
representing an increase of 141% and 132% respectively.
- Selling, general and administrative expenses for Q3 2021 and
YTD 2021, including acquisition activity and one-time charges, were
$5.4 million and $12.9 million compared to $2.1 million and $5.5
million for the three and nine months ended September 30, 2020, representing an increase of
154% and 136% respectively.
- The Company's Adjusted EBITDA, a non-GAAP measure, for Q3 2021
and YTD 2021 showed a loss of $0.6
million for both periods, compared to a loss of $0.3 million and $0.7
million for the three and nine months ended September 30, 2020 respectively. YTD 2021
Adjusted EBITDA improved 11% compared to the nine-month period
ended September 30, 2020.
- In Q3 2021, the Company incurred a net loss of $2.9 million compared to a net loss of
$1.7 million in the three months
ended September 30, 2020. Net loss
for YTD 2021 was $8.5 million
compared to a net loss of $4.0
million in the nine months ended September 30, 2020.
- Net working capital increased to $12.4
million at the end of Q3 2021, compared to $3.8 million at September
30, 2020, an increase of 225%.
Subsequent to quarter end, on October
28th, 2021, the Company closed a convertible debenture
offering for gross proceeds of $17.25
million and a $35.8 million
senior credit facility with National Bank, for total debt financing
of $53 million dollars, which
includes an uncommitted $10 million
credit facility at the discretion of National Bank. The new funding
increases working capital, decreases the blended average interest
rate paid on long term debt and materially reduces principal
payments over the next three years.
Paul further added: "I would like to thank our good
natured® team, our partners and our customers for
contributing to this record-setting revenue growth – what a
fantastic achievement! It's energizing to see the resilience,
entrepreneurial spirit and commitment to making a positive
environmental impact despite this inflationary period and global
supply chain disruptions. This gives me great confidence that by
maintaining our focus on providing our customers good service and
timely solutions to ensure they've got the products they need when
they need them, the Company will gain market share and strengthen
its long-term market position as a leader for plant-based products
and packaging in North
America."
The Company's Q3 2021 unaudited financial statements and
Management's Discussion and Analysis (MD&A) are available on
SEDAR at sedar.com.
Q3 2021 Results Conference Call
The Company will host
a conference call to discuss its financial results for Q3 2021,
hosted by Paul Antoniadis, Executive Chair & CEO, and
Kevin Leong, Chief Financial
Officer, on November 30, 2021 at
11:00 AM Eastern / 8:00 AM Pacific time.
Date: November 30, 2021
Time: 11:00 AM EST / 8:00 AM PST
Toll-Free: 1-833-900-2239 International: +1 (236) 712-2470
Conference ID: 8626349
Participants are asked to dial in 10 minutes prior to the start
of the call.
A replay of the call will be available approximately two hours
after its completion through to December 20,
2021. The replay will be available by dialing 1-800-585-8367
or +1 (416) 621-4642.
The good natured® corporate profile can be
found at: investor.goodnaturedproducts.com
About good natured Products Inc.
good
natured® is passionately pursuing its goal of
becoming North America's leading
earth-friendly product company by offering the broadest assortment
of eco-friendly options made from plants instead of petroleum.
We're all about making it easy and affordable for business owners
and consumers to switch to better everyday products® made from
renewable materials and free from chemicals of concern.
Part of the sustainable consumer goods market, good
natured® offers over 400 products and services
through wholesale and retail channels, including our own e-commerce
stores. From plant-based home organization products to compostable
food containers, bioplastic industrial supplies and medical
packaging, we're focused on delivering a great customer experience
to make more plant-based products readily accessible to more people
as the path to deliver meaningful environmental and social
impact.
For more information: goodnaturedproducts.com
On behalf of the Company:
Paul Antoniadis – Executive Chair & CEO
Contact: 1-604-566-8466
Investor Contact:
Spencer Churchill
Investor Relations
1-877-286-0617 ext. 113
invest@goodnaturedproducts.com
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibilities for the adequacy or
accuracy of this release.
Non-GAAP financial measures
We have included in this press release a discussion of the
Company's variable gross margin, SG&A excluding acquisition
costs, and adjusted EBITDA, all non-GAAP measures, for Q3 FY21,
nine-months ended September 30, 2021,
Q3 FY20 and nine-months ended September
2020 to provide, what management believes, is a meaningful
comparison of the Company's performance in Q3 FY21 and nine-months
ended September 2021. In this news
release, variable gross margin is gross margin excluding fixed
production costs such as depreciation, repairs and maintenance,
utilities and similar overhead items, SG&A excluding
acquisition costs and adjusted EBITDA is earnings before interest
and finance costs, taxes, depreciation and amortization, other
non–cash items and one–time gains and
losses. Variable gross margin, SG&A excluding acquisition costs
and Adjusted EBITDA do not have standardized meanings, and
therefore may not be comparable to similar measures presented by
other issuers. The use of variable gross margin by management
allows for evaluation of the core aspects of the Company's profit
margin as certain fixed items, such as depreciation, repairs and
maintenance, and utilities are excluded. The use of SG&A
excluding acquisition costs allows for an evaluation of Company's
expenses disregarding the expenses associated with the Company's
voluntary execution of Its growth through acquisition strategy. The
use of the adjusted EBITDA by management allows for evaluation of
the Company's principal business activities as certain
non–core items such as interest and finance costs,
taxes, depreciation and amortization, and other
non–cash items and one–time gains and
losses are removed.
The following table provides a reconciliation of net loss to
adjusted EBITDA for the periods ended:
|
Three months
ended
|
Nine months
ended
|
|
|
Sep. 2021
|
|
Sep. 2020
|
|
Sep. 2021
|
|
Sep. 2020
|
Income (loss) for the
period:
|
$
|
(2,923)
|
$
|
(1,713)
|
$
|
(8,524)
|
$
|
(4,032)
|
Share-based
compensation
|
|
781
|
|
91
|
|
1,756
|
|
163
|
Depreciation
|
|
306
|
|
141
|
|
818
|
|
292
|
Depreciation in COGS
and SG&A
|
|
289
|
|
-
|
|
642
|
|
-
|
Financing
costs
|
|
974
|
|
917
|
|
2,934
|
|
2,677
|
Foreign exchange loss
(gain)
|
|
(480)
|
|
51
|
|
58
|
|
(413)
|
Loss on convertible
debenture redemption
|
|
-
|
|
31
|
|
212
|
|
162
|
Gain on interest-free
loan
|
|
(14)
|
|
(1)
|
|
(43)
|
|
(67)
|
Acquisition related
activity and one-time charges
|
|
626
|
|
145
|
|
1,686
|
|
615
|
Deferred income
taxes
|
|
(146)
|
|
-
|
|
(146)
|
|
(80)
|
Adjusted
EBITDA
|
$
|
(587)
|
$
|
(334)
|
$
|
(607)
|
$
|
(682)
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation of gross margin
to variable gross margin for the periods ended:
|
Three months
ended
|
Nine months
ended
|
|
|
Sep. 2021
|
|
Sep. 2020
|
|
Sep. 2021
|
|
Sep. 2020
|
Revenue
|
$
|
18,005
|
$
|
4,659
|
$
|
38,276
|
$
|
11,387
|
Cost of
revenue
|
|
|
|
|
|
|
|
|
Variable cost of product
|
|
(12,826)
|
|
(2,910)
|
|
(25,584)
|
|
(6,901)
|
Variable gross
margin
|
|
5,179
|
|
1,749
|
|
12,692
|
|
4,486
|
Fixed factory overhead
|
|
(894)
|
|
-
|
|
(1,797)
|
|
-
|
Depreciation
|
|
(271)
|
|
-
|
|
(586)
|
|
-
|
Gross
margin
|
$
|
4,014
|
$
|
1,749
|
$
|
10,309
|
$
|
4,486
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation of selling,
general and administrative expense:
|
Three months
ended
|
Nine months
ended
|
|
|
Sep. 2021
|
|
Sep. 2020
|
|
Sep. 2021
|
|
Sep. 2020
|
Wages
|
$
|
2,028
|
$
|
609
|
$
|
4,183
|
$
|
1,552
|
Selling & G&A
costs
|
|
1,097
|
|
409
|
|
2,516
|
|
979
|
Supply chain &
fulfillment SG&A costs
|
|
1,672
|
|
969
|
|
4,534
|
|
2,319
|
Outsource supply
chain & fulfillment
|
|
139
|
|
519
|
|
1,160
|
|
1,258
|
Freight &
fulfillment
|
|
1,368
|
|
390
|
|
2,869
|
|
906
|
Warehousing
|
|
165
|
|
60
|
|
505
|
|
155
|
Acquisition
related activity & one-time charges
|
|
626
|
|
145
|
|
1,686
|
|
615
|
SG&A
|
$
|
5,423
|
$
|
2,132
|
$
|
12,919
|
$
|
5,465
|
SG&A excluding
acquisition activity
|
$
|
4,797
|
$
|
1,987
|
$
|
11,233
|
$
|
4,851
|
|
|
|
|
|
|
|
|
|
Cautionary Statement Regarding Forward-Looking
Information
This news release contains forward-looking information within
the meaning of securities laws including statements related to
Company plans and focuses for 2021, the upcoming results conference
call and management's outlook for 2021. By their nature,
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results,
performance or achievements, or other future events, to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements.
When relying on the Company's forward-looking statements and
information to make decisions, investors and others should
carefully consider the foregoing factors and other uncertainties
and potential events. The Company has assumed that the material
factors referred to in the previous paragraph will not cause such
forward-looking statements and information to differ materially
from actual results or events. However, there can be no assurance
that such assumptions will reflect the actual outcome of such items
or factors.
Other than as required under securities laws, we do not
undertake to update this information at any particular
time.
Forward-looking information contained in this news release is
based on our current estimates, expectations and projections
regarding, among other things, sales volume and pricing which we
believe are reasonable as of the current date. The reader should
not place undue importance on forward-looking information and
should not rely upon this information as of any other date. All
forward-looking information contained in this news release is
expressly qualified in its entirety by this cautionary
statement.
GOOD NATURED
PRODUCTS INC.
|
|
|
Consolidated
Statements of Financial Position
|
|
|
|
|
(In
thousands of Canadian dollars) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-Sep
|
|
31-Dec
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
8,720
|
$
|
8,114
|
|
Trade and other
receivables
|
|
10,255
|
|
5,557
|
|
Inventory (Note
4)
|
|
17,017
|
|
6,294
|
|
Prepaid
expenses
|
|
315
|
|
671
|
|
|
|
36,307
|
|
20,636
|
|
|
|
|
|
|
Non-current
assets:
|
|
|
|
|
|
Property and equipment
(note 5)
|
|
29,007
|
|
15,416
|
|
Customer relationships
(note 6)
|
|
5,848
|
|
5,709
|
|
Intangible assets
(note 6)
|
|
3,341
|
|
3,389
|
|
Goodwill (note
6)
|
|
7,651
|
|
6,824
|
|
|
|
|
|
|
|
|
$
|
82,154
|
$
|
51,974
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
15,015
|
$
|
8,882
|
|
Credit line (note
7)
|
|
4,624
|
|
3,073
|
|
Current portion of
long-term debt (note 8)
|
|
4,274
|
|
3,129
|
|
|
|
23,913
|
|
15,084
|
|
|
|
|
|
|
Non-Current
liabilities:
|
|
|
|
|
|
Long-term debt (note
8)
|
|
30,879
|
|
29,702
|
|
Contingent
consideration liability (note 3)
|
|
1,856
|
|
1,756
|
|
Deferred income tax
liabilities
|
|
3,474
|
|
3,620
|
|
|
|
36,209
|
|
35,078
|
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
Common share
capital
|
|
56,145
|
|
28,883
|
|
Contributed
surplus
|
|
4,441
|
|
2,736
|
|
Foreign currency
translation reserve
|
|
21
|
|
244
|
|
Deficit
|
|
(38,575)
|
|
(30,051)
|
|
|
|
22,032
|
|
1,812
|
|
|
|
|
|
|
Total Liabilities and
Shareholders' Equity
|
$
|
82,154
|
|
51,974
|
GOOD NATURED
PRODUCTS INC.
|
|
|
|
|
Consolidated
Statements of Net Loss and Comprehensive Loss
|
|
|
|
|
(In thousands of
Canadian dollars, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
Sept. 30
|
|
Nine months ended
Sept. 30
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
revenue
|
$
|
18,005
|
$
|
4,659
|
$
|
38,276
|
$
|
11,387
|
Cost of product
revenue (note 11)
|
|
(13,991)
|
|
(2,910)
|
|
(27,967)
|
|
(6,901)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin
|
|
4,014
|
|
1,749
|
|
10,309
|
|
4,486
|
|
|
|
|
|
|
|
|
|
|
Other (Expenses)
Income:
|
|
|
|
|
|
|
|
|
Product
development
|
|
(94)
|
|
(97)
|
|
(325)
|
|
(318)
|
Selling,
general, and administrative
|
|
|
|
|
|
|
|
|
|
(note 12)
|
|
(5,423)
|
|
(2,132)
|
|
(12,919)
|
|
(5,466)
|
Share-based
compensation (note 9(b,d))
|
(781)
|
|
(91)
|
|
(1,756)
|
|
(164)
|
Depreciation and
amortization
|
|
(306)
|
|
(141)
|
|
(818)
|
|
(292)
|
Financing
costs
|
|
(974)
|
|
(917)
|
|
(2,934)
|
|
(2,676)
|
Foreign exchange
(loss) gain
|
|
481
|
|
(52)
|
|
(58)
|
|
413
|
Loss on debenture
redemption
|
|
|
|
|
|
|
|
|
|
and debt
conversion
|
|
-
|
|
(31)
|
|
(212)
|
|
(163)
|
Gain on interest free
loan (note 8(f))
|
|
14
|
|
(1)
|
|
43
|
|
66
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(3,069)
|
|
(1,713)
|
|
(8,670)
|
|
(4,114)
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax
recovery
|
|
146
|
|
-
|
|
146
|
|
80
|
|
|
|
|
|
|
|
|
|
Net loss for the
period
|
|
(2,923)
|
|
(1,713)
|
|
(8,524)
|
|
(4,034)
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
loss, net of tax
|
|
|
|
|
|
|
|
|
Items that may be
reclassified subsequently to profit or loss:
|
|
|
|
|
|
|
|
|
Unrealized currency
gain (loss) on
|
|
|
|
|
|
|
|
|
|
translation of foreign
operations
|
$
|
(466)
|
$
|
200
|
$
|
(223)
|
$
|
(200)
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
for the period
|
|
(3,389)
|
|
(1,513)
|
|
(8,747)
|
|
(4,234)
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss
per share
|
$
|
(0.02)
|
$
|
(0.01)
|
$
|
(0.03)
|
$
|
(0.02)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding –
|
|
|
|
|
|
|
|
|
basic and diluted
shares outstanding
|
216,713
|
|
113,443
|
|
208,482
|
|
110,536
|
|
|
|
|
|
|
|
|
|
|
|
GOOD NATURED
PRODUCTS INC.
|
|
|
Consolidated
Statements of Cash Flow
|
|
|
|
|
(In
thousands of Canadian dollars) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Nine months ended
Sept. 30
|
|
|
|
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|
2021
|
|
2020
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|
|
|
|
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|
Cash provided by (used
in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations:
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(8,524)
|
$
|
(4,033)
|
Items not involving
cash:
|
|
|
|
-
|
|
|
Depreciation and
amortization
|
|
|
|
1,113
|
|
292
|
Unrealized foreign
exchange loss
|
|
|
(483)
|
|
(313)
|
Amortization of right
of use assets
|
|
|
278
|
|
38
|
Share based
compensation (note 9 (b))
|
|
1,756
|
|
164
|
Loss on debenture
redemption and conversion (note 9 (b))
|
212
|
|
163
|
Gain on interest free
loan (note 8 (a))
|
|
(43)
|
|
(66)
|
Financing
costs
|
|
|
|
2,934
|
|
2,677
|
Deferred income
tax
|
|
|
|
(146)
|
|
(80)
|
|
|
|
|
|
(2,903)
|
|
(1,158)
|
|
|
|
|
-
|
|
|
|
Changes in non-cash
operating working capital:
|
|
|
|
|
Trade and other
receivables
|
|
|
|
459
|
|
(1,660)
|
Inventory
|
|
|
|
(8,229)
|
|
(2,435)
|
Prepaid
expenses
|
|
|
|
578
|
|
(95)
|
Accounts payable and
accrued liabilities
|
|
458
|
|
1,278
|
Finance costs
paid
|
|
|
|
(2,441)
|
|
(2,118)
|
Cash used in
operating activities
|
|
|
|
(12,077)
|
|
(6,188)
|
|
|
|
|
|
|
|
|
Financing:
|
|
|
|
|
|
|
Issuance of common
shares, net of costs
|
|
21,026
|
|
3,028
|
Exercise of warrants
for common shares
|
|
2,062
|
|
57
|
Exercise of options
for common shares
|
|
131
|
|
-
|
Credit Line advance
(note 7)
|
|
|
|
1,585
|
|
1,464
|
Proceeds from
convertible debenture, net of
|
|
|
|
|
of issuance
costs (note 8 (b))
|
|
|
|
-
|
|
1,056
|
Redemption of
convertible debentures
|
|
-
|
|
(4,369)
|
Proceeds from
long-term debt, net of issuance costs (note 8(c))
|
10,102
|
|
9,046
|
Repayment of other
long-term debt (note 8(a,d))
|
|
(4,120)
|
|
(126)
|
Cash provided by
financing activities
|
|
|
|
30,786
|
|
10,156
|
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
Business Acquisitions
exclude cash acquired
|
|
(15,438)
|
|
(8,402)
|
Purchase of
equipment
|
|
|
|
(2,523)
|
|
(189)
|
Other
assets
|
|
|
|
(192)
|
|
(169)
|
Cash used in
investing activities
|
|
|
|
(18,153)
|
|
(8,760)
|
|
|
|
|
|
|
|
|
Effect of foreign
exchange rate changes on cash
|
|
50
|
|
175
|
|
|
|
|
|
|
|
|
Increase (decrease)
in cash
|
|
|
|
606
|
|
(4,617)
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
8,114
|
|
8,455
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
|
8,720
|
|
3,838
|
SOURCE Good Natured Products