Yahoo Finanza SIMPLY BETTER BRANDS CORP. ANNOUNCES YEAR END 2023 FINANCIAL RESULTS
VANCOUVER, BC, April 24, 2024 /CNW/ - Simply Better Brands Corp. ("SBBC" or the "Company") (TSXV: SBBC) (OTCQB: SBBCF) today reported its audited financial results for the year ended December 31, 2023. All amounts are expressed in United States dollars unless otherwise noted. Certain metrics, including those expressed on an adjusted basis, are non-International Financial Reporting Standards ("IFRS") measures, see "Non-IFRS Measures" below.
Selected financial and operating information are outlined below and should be read with the Company's consolidated financial statements and related management's discussion and analysis for the year ended December 31, 2023, which are available under the Corporation's profile on SEDAR+ at www.sedarplus.ca.
SBBC generated revenue of $79.9 million in fiscal 2023, a 22% increase over the prior year, gross profit of $46.9 million, and an adjusted EBITDA loss of $2.7 million. The primary driver of the adjusted EBITDA loss was the performance of the Purekana subsidiary which commenced bankruptcy proceedings earlier this month following completion by SBBC of a comprehensive review of strategic alternatives for the business.
"Our 2023 performance was highlighted by the continued robust growth of TRUBARTM which further expanded its distribution footprint across North America and delivered year over year revenue growth of 133%," said SBBC Interim Chief Executive Officer and Chairman, Kingsley Ward. "With our exit of Purekana now complete, we are putting additional resources and investment behind TRUBARTM and we are well positioned for continued TRUBARTM revenue growth, driving further profit improvement, and debt reduction for SBBC in 2024."
2023 YEAR KEY COMMERCIAL HIGHLIGHTS
TRUBARTM Protein Bar: TRUBARTM revenue was $24.7 million in 2023 compared to $10.6 million in 2022, an increase of $14.1 million. Growth of the brand in 2023 was driven by continued multi-channel distribution expansion to a growing list of major retailers in convenience, grocery, ecommerce and club channels led by Costco.. To support its retail expansion, TRUBARTM signed a strategic agreement with Acosta, a full-service sales agency with deep CPG brand experience and added a second manufacturing facility to its supply chain to meet growing product demand.
No B.S. Skincare: Following its online launch and exclusive sale at livenobs.com and Amazon, the No B.S. brand became available at retail in TJ Maxx locations in Q2 2023 followed by a national launch into Walgreen's in Q4 2023 across 3,400 locations.
FINANCIAL HIGHLIGHTS FOR YEAR ENDED DECEMBER 31, 2023
For the twelve months ended December 31, 2023, the Company generated revenue of $79.9 million with a gross profit of $46.9 million (59%) compared to $65.4 million with a gross profit of $44.6 million (68%) during the twelve months ended December 31, 2022. Revenue increased by $14.5 million (22% increase) over the prior year's revenues.
Operating costs for the twelve months ended December 31, 2023, were $57.6 million, an increase of $3.1 million (6%), compared to $54.3 million for the twelve months ended December 31, 2022.
During the twelve months ended December 31, 2023, the Company recorded a net loss of $24.3 million compared to a net loss of $12.3 million for the twelve months ended December 31, 2022. Non-cash charges including goodwill impairment, intangible asset impairment, amortization expense and stock-based compensation were $18.1 million. Finance charges accounted for $2.3 million. The impairment charges in 2023 were largely related to the Company's hemp-based businesses and the operating loss was driven by Purekana during 2023. Purekana filed for Chapter 7 bankruptcy on April 3, 2024 after the completion by SBBC of a comprehensive review of strategic alternatives for the business.
For the three months ended December 31, 2023, the Company generated revenue of $12.3 million with a gross profit of $6.7 million (54%) compared to $23.0 million with a gross profit of $16.1 million (70%) during the three months ended December 31, 2022.
Operating costs for the three months ended December 31, 2023, were $10.0 million, a decrease of $9.9 million (50%), compared to $19.9 million for the three months ended December 31, 2022.
During the three months ended December 31, 2023, the Company recorded a net loss of $14.6 million compared to a net loss of $5.4 million for the three months ended December 31, 2022. Non-cash charges including goodwill impairment, intangible asset impairment, amortization expense and stock-based compensation were $12.9 million. Finance charges accounted for $0.6 million.
Non-IFRS Measures (EBITDA and Adjusted EBITDA)
EBITDA and Adjusted EBITDA are non-IFRS measures used by management that are not defined by IFRS. EBITDA and Adjusted EBITDA do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. Management believes that EBITDA and Adjusted EBITDA provide meaningful and useful financial information as these measures demonstrate the operating performance of the business excluding non-cash charges.
"EBITDA" is calculated as earnings before interest, taxes, depreciation, depletion and amortization. "Adjusted EBITDA" is calculated as EBITDA adjusted for non-cash, extraordinary, non-recurring and other items unrelated to the Company's core operating activities.
The most directly comparable measure to EBITDA and Adjusted EBITDA calculated in accordance with IFRS is net loss. The following table presents the EBITDA and Adjusted EBITDA for the twelve months ending December 31, 2023, and 2022, and a reconciliation of same to net income (loss):
For the years ended | ||||
December 31, 2023 | December 31, 2022 | Change in | ||
$ | $ | $ | % | |
Net loss | (24.30) | (12.30) | (12.00) | 49 % |
Amortization | 3.80 | 4.70 | (0.90) | (24 %) |
Depreciation | - | 0.10 | (0.10) | 100 % |
Finance costs | 2.30 | 1.40 | 0.90 | 39 % |
Income tax recovery | - | (1.00) | 1.00 | 100 % |
EBITDA | (18.20) | (7.10) | (11.10) | |
Acquisition-related costs | - | 0.20 | (0.20) | 100 % |
Acquisition costs paid by common shares | - | 0.20 | (0.20) | 100 % |
Fair value adjustment of derivative liability | (0.20) | (0.10) | (0.10) | 50 % |
Impairment of intangible assets | 1.00 | 1.60 | (0.60) | (60 %) |
Impairment of goodwill | 10.90 | - | 10.90 | 100 % |
Impairment of inventories | 0.10 | 0.20 | (0.10) | (100 %) |
Impairment of plant and equipment | - | 0.20 | (0.20) | 100 % |
Impairment of receivable | 0.20 | 0.10 | 0.10 | 50 % |
Gain on settlement of the milestone shares | - | (0.40) | 0.40 | 100 % |
Share-based payments | 2.00 | 4.30 | (2.30) | (115 %) |
Consulting fees to be paid by shares | - | 0.30 | (0.30) | 100 % |
Shares issued for services | - | 0.40 | (0.40) | 100 % |
Warrants issued for services | - | 0.10 | (0.10) | 100 % |
Write-off of advance payments | 0.30 | 0.50 | (0.20) | (67 %) |
Non-recurring expenses | 1.20 | - | 1.20 | 100 % |
Adjusted EBITDA | (2.70) | 0.50 | (3.20) | |
The Company had an Adjusted EBITDA loss of $2.7 million for the twelve months ending December 31, 2023, a decrease of $3.2 million over the Adjusted EBITDA of $0.5 million for the comparable period in 2022. The primary driver for the increased Adjusted EBITDA loss of $2.7 million for the twelve months ending December 31, 2023, is the increase in cash operating expenses ($6.2 million) which were offset by increased gross profits ($2.3 million) and non-recurring expenses ($1.2 million) compared to the prior period in 2022. The biggest contributor to the Adjusted EBITDA loss was Purekana for the twelve months ended December 31, 2023. On a stand-alone basis, Purekana was the biggest driver of the EBITDA loss before non-recurring expenses. Purekana's 2023 EBITDA loss was $4.1 million compared to TRU's positive EBITDA of $1.0 million during the year. The other divisions did not contribute materially to the Adjusted EBITDA loss for the year. Purekana filed for Chapter 7 bankruptcy on April 3, 2024 after the Company's Board had explored all viable options for this business.
The most directly comparable measure to EBITDA and Adjusted EBITDA calculated in accordance with IFRS is net loss. The following table presents the EBITDA and Adjusted EBITDA for the three months ended December 31, 2023, and 2022, and a reconciliation of same to net income (loss):
For the three months ended | ||||
December 31, 2023 | December 31, 2022 | Change in | ||
$ | $ | $ | % | |
Net loss | (14.60) | (5.40) | (9.20) | 63 % |
Amortization | 0.70 | 3.30 | (2.60) | (371 %) |
Finance costs | 0.60 | 0.50 | 0.10 | 17 % |
Income tax recovery | - | (1.00) | 1.00 | 100 % |
EBITDA | (13.30) | (2.60) | (10.70) | |
Fair value adjustment of derivative liability | (0.10) | - | (0.10) | 100 % |
Impairment of intangible assets | 0.80 | 1.60 | (0.80) | (100 %) |
Impairment of goodwill | 10.90 | - | 10.90 | 100 % |
Impairment of inventories | (0.10) | 0.20 | (0.30) | 300 % |
Impairment of plant and equipment | - | 0.20 | (0.20) | 100 % |
Share-based payments | 0.40 | 0.80 | (0.40) | (100 %) |
Consulting fees to be paid by shares | - | 0.30 | (0.30) | 100 % |
Shares issued for services | - | (0.10) | 0.10 | 100 % |
Warrants issued for services | - | 0.10 | (0.10) | 100 % |
Write-off of advance payments | 0.20 | 0.10 | 0.10 | 50 % |
Non-recurring expenses | 0.40 | - | 0.40 | 100 % |
Adjusted EBITDA | (0.80) | 0.60 | (1.40) | |
The Company had an Adjusted EBITDA loss of $0.8 million for the three months ended December 31, 2023, a $1.4 million reduction over the Adjusted EBITDA achieved in the comparable period in 2022. The reduction in Adjusted EBITDA was due to the lower sales and gross profit in the fourth quarter of 2023 compared to the prior year's sales and gross profit.
Readers are cautioned that EBITDA and Adjusted EBITDA should not be construed as an alternative to net income as determined under IFRS; nor as an indicator of financial performance as determined by IFRS; nor a calculation of cash flow from operating activities as determined under IFRS; nor as a measure of liquidity and cash flow under IFRS. The Company's method of calculating EBITDA and Adjusted EBITDA may differ from methods used by other companies and, accordingly, the Company's EBITDA and Adjusted EBITDA may not be comparable to similar measures used by any other company. Except as otherwise indicated, EBITDA and Adjusted EBITDA are calculated and disclosed by SBBC on a consistent basis from period to period. Specific adjusting items may only be relevant in certain periods.
See also Earnings before Interest, Taxes, Depreciation, and Amortization ("EBITDA") and Adjusted EBITDA (Non-GAAP Measures) in the Company's management discussion and analysis for the year ended December 31, 2023 available on SEDAR+ at www.sedarplus.ca.
Liquidity and Capital Resources
The Company's primary liquidity and capital requirements are for inventory and general corporate working capital purposes. The Company had a cash balance of $2.3 million as of December 31, 2023, which will provide capital to support the planned growth of the business and for general corporate working capital purposes. The Company's working capital deficiency increased from $9.3 million as of December 31, 2022, to a working capital deficiency of $12.4 million as of December 31, 2023 ($3.1 million increase). Working capital deficiency included the Mainstreet loan ($10.4 million) which is classified as current whereas the term of the loan is maturing in December 2025. The Mainstreet loan has a five-year term with principal repayments due to start in December 2023 with the first $1.5 million principal repayment. Purekana was in discussions with the financial institution to restructure that Mainstreet loan payment into several installments to be paid in 2024 at year-end. This loan has several covenants including annual and quarterly reporting and debt service coverage. It has been classified as current as a result of the noncompliance with the debt service covenant. Also see subsequent events in the financial statements concerning the status of the Company's Purekana subsidiary and the Mainstreet loan (Purekana, LLC filed for Chapter 7 bankruptcy on April 3, 2024). The bankruptcy of Purekana will remove Purekana's $10.4 Million loan obligation from SBBC's consolidated financial statements.
The Company continues to focus on improving its working capital position through a number of initiatives including equity and convertible debt private placements, issuance of promissory notes and establishment of lines of credit for its subsidiaries.
Private Placements
In February 2023, the Company completed a private placement of units for CAD $7 million in equity to be used for further debt reduction, working capital and for growth initiatives in 2023.
The Company also announced on April 17, 2024 a non-brokered private placement of up to 5,714,285 units of the Company (the "Units") at a price of $0.35 per Unit, for aggregate gross proceeds of up to $2,000,000. Each Unit will consist of one (1) common share in the capital of the Company (each, a "Share") and one-half of one Share purchase warrant (each whole warrant, a "Warrant"). Each Warrant will entitle the holder thereof to purchase one (1) additional Share at an exercise price of $0.45 per Share for a period of 24 months following the closing of the non-brokered private placement.
Convertible Debentures
The Company paid down $1.7 million in convertible debentures including accrued interest that were due in February 2023.
Line of Credit Facilities
Additionally, the Company has secured several lines of credit facilities for three of its subsidiaries to support the financing of purchase orders from key customers. These lines of credit have been critical to finance the large retail purchase orders the Company's subsidiaries have successfully generated during the twelve months ended December 31, 2023. For more information of the line of credit facilities please refer to note 10 in the audited financial statements for the year ended December 31, 2023. During the twelve months ended December 31, 2023, the Company raised over $18.1 million in funds from these lines of credit to finance purchase orders from its large retail customers. Over the same period, the Company repaid over $16.1 million of these credit facilities to the lender. TRU was able to increase its primary line of credit with this lender to $6 million in December 2022. The nature of these loans is to turnover between 3-5 months from the time the money is advanced to repayment.
Promissory Notes
During the three months ended December 31, 2023, the Company reduced the balance of promissory notes outstanding by approximately $1.0 million (see note 13 in the financial statements for the year ended December 31, 2023). All promissory notes paid off during the year had a maturity less than 12 months. The balance of promissory notes was $2.4 million as of December 31, 2022, and the balance as of December 31, 2023, is $1.45 million.
The Company's ability to fund operating expenses will depend on its future operating performance which will be affected by general economic, financial, regulatory, and other factors including factors beyond the Company's control (See "Risk and Uncertainties").
Management continually assesses liquidity in terms of the ability to generate sufficient cash flow to fund the business. Net cash flow is affected by the following items: (i) operating activities, including the level of accounts receivable, other receivable, accounts payable, accrued liabilities and unearned revenue and deposits; (ii) investing activities (iii) financing activities.
About Simply Better Brands Corp.
Simply Better Brands Corp. is an international omni-channel platform with a portfolio of diversified assets in the rapidly growing plant-based, natural, and clean ingredient space. The Company targets informed, health conscious Millennial and Generation Z consumers with a focus opportunities for expansion into high-growth consumer product categories. For more information on Simply Better Brands Corp., please visit: For more information on Simply Better Brands Corp., please visit: https://www.simplybetterbrands.com/investor-relations.
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 release.
Forward-Looking Information
Certain statements contained in this news release constitute "forward-looking information" and "forward looking statements" as such terms are used in applicable Canadian securities laws. Forward-looking statements and information are based on plans, expectations and estimates of management at the date the information is provided and are subject to certain factors and assumptions, including, among others, that the Company's financial condition and development plans do not change as a result of unforeseen events, the regulatory climate in which the Company operates, and the Company's ability to execute on its business plans. Specifically, this news release contains forward-looking statements relating to, but not limited to: expansion plans for TRU Brands products, and success of the Company's marketing efforts.
Forward-looking statements and information are subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking statements and information. Factors that could cause the forward-looking statements and information in this news release to change or to be inaccurate include, but are not limited to, the risk that any of the assumptions referred to prove not to be valid or reliable, that occurrences such as those referred to above are realized and result in delays, or cessation in planned work, that the Company's financial condition and development plans change, ability to obtain necessary regulatory approvals for proposed transactions, as well as the other risks and uncertainties applicable to the plant-based food, clean ingredient skincare and plant-based wellness or broader wellness industries and to the Company, and as set forth in the Company's management's discussion and analysis available under the Company's SEDAR+ profile at www.sedarplus.com.
The above summary of assumptions and risks related to forward-looking statements in this news release has been provided in order to provide shareholders and potential investors with a more complete perspective on the Company's current and future operations and such information may not be appropriate for other purposes. There is no representation by the Company that actual results achieved will be the same in whole or in part as those referenced in the forward-looking statements and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities law.
SOURCE Simply Better Brands Corp.
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