TORONTO, June 30, 2020 /CNW/ - Mimi's Rock Corp.
(TSXV: MIMI) (the "Company"), an online dietary supplement and
wellness company, today announced its financial results for the
three months ended March 31,
2020.
Highlights
- Q1 2020 Revenues of $10.4M –
highest quarterly revenue to date
- Q1 2020 Adjusted EBITDA of $1.23M
Recent Developments
- On June 8, 2020, the Company
announced several new products recently added to the Dr Tobias
portfolio. Based on the demands of customers and in light of the
focus on immunity support, the Company launched a number of new
products focused on supporting the immune system. These products
include Vitamin C, Elderberry Immune with Echinacea, Zinc and
Vitamin C, as well as a 50mg Zinc product. The new additions
complement the brands' existing established portfolio of immune
supporting products.
"Our first quarter 2020 results reflect the incredible efforts
of our team, as we were able to re-establish the trajectory of the
Dr Tobias brand's growth " said David
Kohler, CEO. "We identified and addressed a number of
considerable challenges towards the end of 2019 and I'm pleased
with the rapidity and efficiency with which we were able to course
correct. We have also been able to integrate the operations
of the newly acquired skin care businesses and I am optimistic that
the combination of these businesses with our core brands will allow
us to drive even better performance over the balance of the
year."
Results of Operations for the Three Months Ended March 31, 2020
For the three months ended March 31,
2020, the Company earned net income of $281,515, compared to net income of $391,917 for the three months ended March 31, 2019. EBITDA for the three months
ended March 31, 2020 was $1,099,367, compared to $1,097,913 for the same period in 2019.
Adjusted EBITDA, which adds back (deducts) non-cash stock-based
compensation, investment income, acquisition costs and listing
expenses, was $1,228,070 for the
three months ended March 31, 2020,
compared to $1,318,520 for the same
three month period in 2019.
Revenues and Gross Margin
Revenues were $10,435,311 for the
three months ended March 31, 2020,
compared to revenues of $10,166,227
for the three month period ended March
31, 2019. Revenues reported in the current period
primarily represent sales from the Company's DTI GmbH ("DTI")
business as well as sales from All Natural and Maritime Naturals,
acquired in December 2019. Revenues in the comparative 2019
period primarily represent revenues from the DTI business only.
While the Company's sales do not experience significant
seasonality, there is some fluctuation on a quarterly basis due to
natural demand fluctuation as well as promotional impacts. In
addition, the DTI business experienced significant changes in the
market in mid- to late-2019 which put downward pressure on revenue
with heavier advertising spend. The first quarter of 2020 saw
a return to previous sales and revenue levels, with sales
increasing on a weekly basis throughout the quarter. Revenues
from the newly acquired skin care businesses, All Natural and
Maritime Naturals, was in-line with expectations and historical
performance. The Company expects these revenues to continue
to grow throughout 2020 as the businesses are integrated within the
existing platform.
Revenues to date have been generated almost entirely through the
Company's online sales channels in the
United States, Canada and
Europe. Revenue growth in future quarters is expected to come
from expansion into additional geographic territories as well as
the launch of new complementary products.
Gross margin for the three months ended March 31, 2020 was $7,253,442 (69.5%) compared to $7,124,896 (70.1%) for the three month period
ended March 31, 2019. Costs of
goods sold for the 2020 period includes an adjustment of
$109,636 relating to recognition of
fair value adjustments made on acquisition of All Natural and
Maritime Naturals. Without consideration to this adjustment, gross
margin for the period would have been 68.5%, an improvement over
the 2019 period due to better pricing from suppliers as well as
overall process efficiencies.
Selling and Marketing Expense
The Company incurred selling and marketing expenses of
$4,748,087, or approximately 45.5% of
revenue, for the three months ended March
31, 2020, compared to $4,502,744, or 44.3% of revenue, for the three
months ended March 31,
2019. The Company continues to adapt and further its
brand strategy. Online advertising in the period was
increased with a focus on brand awareness and customer loyalty.
Sales from its own e-commerce site, drtobias.com, as well through
additional online retail outlets continued to grow; however, a
majority of revenue continues to be generated on the Amazon
platform.
Advertising spend in the first quarter of 2020 was lower than in
recent periods but higher relative to sales than the first quarter
of 2019. Management spent considerable time and effort
to understand challenges which presented in the DTI business in
late 2019 and a recalibrated advertising strategy was able to
provide support for an increase in sales volumes across most Dr
Tobias products. In addition, the Company was able to
maintain sales growth such that current levels are comparable to
those a year ago, despite operating challenges presented by
COVID-19. Short term promotions on new product launches
will enable the business to continue to drive growth. The
Company continues to better understand its customer base, metrics
and drivers in order to optimize advertising spend compared to
revenue.
Selling and marketing expenses for the period consist primarily
of fulfillment costs related to delivering products to customers,
direct online advertising placements, costs related to marketing
the Dr Tobias brand and other promotional and awareness
initiatives. The Company will continue to actively monitor
its selling and marketing expenses, particularly direct advertising
expenses and expects that these will begin to stabilize in relation
to sales revenues going forward.
General and Administrative Expense
General and administrative expenses for the three months ended
March 31, 2020 were $1,277,285, compared to $1,303,632 for the same period in 2019.
General and administrative expenses consist primarily of salaries
and benefits, professional fees, occupancy costs and
insurance. General and administrative expenses are
relatively comparable to the same period in 2019. Staff and
operational costs are relatively stable and expected to remain so
going forward.
Share based Compensation Expense
Share based compensation expense relates to awards under the
Company's incentive stock option plan and is based on the estimated
number of awards that will eventually vest using the Black-Scholes
option pricing model. Share based compensation expense for
the three months ended March 31, 2020
was $71,182 compared to $212,372 for the three months ended March 31, 2019. Share based compensation
expense in 2019 was considerably higher due to initial vesting of
employee grants.
Foreign Exchange Gains and Losses
Foreign exchange losses of $57,521
were recorded in the three months ended March 31, 2020, compared to $21,535 for the three months ended March 31, 2019, primarily due to the movements in
the value of the US dollar relative to the Euro between the time
that expenses were incurred and the time that they were
settled.
Interest Expense and Financing Costs
Interest and financing costs of $244,738 were incurred during the three months
ended March 31, 2020, compared to
$467,471 for the three months ended
March 31, 2019. Interest and
financing expenses have decreased significantly in the first
quarter of 2020 compared to the same period in 2019 primarily due
to renegotiations of the senior debt facility as well as lower
interest rates and non-cash charges related to amortization of
finance costs incurred in securing the loan.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
About Mimi's Rock Corp.:
Mimi's Rock Corp. is an online dietary supplement and wellness
company operating under the Dr. Tobias brand. The brand features
over 30 products including the top selling colon cleansing product
and the #1 selling Omega 3 Fish Oil on Amazon.com. Mimi's Rock
currently serves customers in the United
States and has rapid growth plans to expand into other
markets. For more information, visit https://mimisrock.com.
Forward-Looking Information
This news release contains forward-looking statements and
forward looking information within the meaning of applicable
securities laws. Often, but not always, forward-looking statements
can be identified by the use of words such as "plans", "expects",
or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or describes a "goal", or variation of
such words and phrases or state that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur
or be achieved. The forward looking statements in this press
release include, but are not limited to, statements
regarding the impact of the COVID-19 pandemic on the business
and operations of the Company, the Company's expected
revenues, the expected increase in quarterly revenues and Adjusted
EBITDA. Please refer to the Company's 2019 Annual Financial
Statements and MD&A for more details on the Company's
calculation of EBITDA and Adjusted EBITDA.
All forward-looking statements reflect the Company's beliefs and
assumptions based on information available at the time the
statements were made. Actual results or events may differ from
those predicted in these forward-looking statements. All of the
Company's forward-looking statements are qualified by the
assumptions that are stated or inherent in such forward-looking
statements, including the assumptions listed below. Although the
Company believes that these assumptions are reasonable, this list
is not exhaustive of factors that may affect any of the
forward-looking statements.
Forward-looking statements involve known and unknown risks,
future events, conditions, uncertainties and other factors which
may cause the actual results, performance or achievements to be
materially different from any future results, prediction,
projection, forecast, performance or achievements expressed or
implied by the forward-looking statements, including risks relating
to: the Company's reliance on strength of reputation and
brands, third-party manufacturing, transportation and distribution,
the Company's ability to protect its intellectual property, the
Company's reliance on e-commerce sites, disruption or breaches in
information technology systems, the successful integration
subsequent to acquisitions, litigation, volatility in the market
price, the inability to successfully implement growth strategy on a
timely basis, difficulty expanding sales in targeted international
markets, changes in general economic conditions, the
Company's ability to service its debt obligations, management
of growth, reliance on management, conflicts of interest, local and
foreign tax matters, liquidity, currency and other financial risks,
potential product liability or other regulatory claims, product
recalls, the need to develop and innovate products, changes in
legal and regulatory standards, competition, operating risk and
insurance coverage, natural disasters, unusual weather and
geo-political events, the effect of COVID-19 on operations
and other risks relating to the business and industry of the
Company that are detailed from time to time in the Company's
filings with the Canadian provincial securities regulators.
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements. All forward-looking information contained in this press
release is given as of the date hereof and is based upon the
opinions and estimates of management and information available to
management as at the date hereof. The Company disclaims any
intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events,
or otherwise, except in accordance with applicable securities
laws.
Please visit www.mimisrock.com or www.sedar.com for the
Company's recent filings.
SOURCE Mimi's Rock Corp.