ELSE NUTRITION HOLDINGS INC
(BABY)
(BABYF)
(0YL.F)
("Else" or the
"Company") the
Plant-Based baby, toddler, and children nutrition company, today
reported its third quarter 2023 financial results for the period
ending September 30, 2023. The financial statements and MD&A
are available on SEDAR under the Company’s profile.
Financial Highlights
- Total revenues were $1.7 million CAD for the third quarter of
2023, versus $2.2 M for the same period last year, due to a
deliberate shift of limited inventory earlier this year, away from
e-commerce channels, towards new retail channels.
- Outlook for a strong return to growth beginning in the fourth
quarter of 2023, as manufacturing ramps up and retailers that
placed high initial stocking orders in earlier quarters are selling
through inventory and have begun placing follow-on orders.
- Revenue outlook in the range of $2.7 million to $3.0 million
for the fourth quarter of 2023, representing growth of 58-75%
compared to the third quarter of 2023.
- Sales to brick-and-mortar retailers in the US and Canada during
the third quarter increased by 8%, compared to the third quarter of
2022.
- As of September 30, 2023, Else products were listed in nearly
13,000 stores in North America, compared with 3,000 stores for the
same period last year—management expects to reach over 15,000
listed stores and over 40,000 points of distribution by the end of
2023.
- Total e-commerce sales during the third quarter of 2023
decreased by 40% compared to the same period last year, as a result
of management’s decision in the first quarter of 2023 to divert
products from e-commerce channels to brick-and-mortar retailers due
to limited inventory at the time.
- The Company is rebuilding its sales velocity on Amazon and its
own e-commerce store and expects these channels to return to growth
in 2024.
- Cash position as of September 30, 2023, was $4.2 million CAD,
including restricted cash and short-term bank deposits.
Recent Business Highlights
- Entered into a multi-stage collaboration agreement with Danone
S.A., commencing with Danone licensing Else’s products and
including them in its specialized nutrition portfolio.
- Expanded distribution to more than 7,000 CVS stores, more than
1,100 Walmart stores, 900 Shoppers Drug Mart locations across 11
provinces and territories, over 440 Loblaws stores, over 600
Sobey’s stores, 161 Giant Food Stores, and 110 Schnucks
Supermarkets.
- Launched kids ready-to-drink products in the USA and Canada,
and planning to launch adult ready-to-drink products in 2024.
- Expanded production capacity by adding a second manufacturing
facility in the US and launching first production facility in
Europe, which will increase the Company’s production capacity by
approximately threefold.
- Entered the Western European market during the fourth quarter
of 2023, initially launching in the UK via Amazon and natural food
distributors, with other European countries to follow.
- Planning to enter the Australian market during the fourth
quarter of 2023, with an initial launch via Amazon to be followed
by drug and grocery chains.
- Received key approval by the Institutional Review Board (IRB)
of the infant growth study protocol for the testing of the Else
Infant Formula.
Hamutal Yitzhak, CEO of Else Nutrition,
commented, “We continue to make progress on our growth objectives
and have advanced Else Nutrition as a national brand in North
America. Over the past year we have focused on expanding our North
American distribution to over 13,000 retail locations including
Walmart, CVS, and many more leading retailers. The feedback from
these retailers and their customers has been overwhelmingly
positive. We are now at an exciting point in time where many of
these retailers have sold through the initial orders and are
starting placing follow-on orders—a significant validation of our
products and overall retail strategy. As a result, we expect sales
to meaningfully accelerate in the coming quarters.”
“Importantly, we have more than tripled our
manufacturing capacity to support the anticipated growth. Our two
new manufacturing facilities in the US and Europe are now
operational, allowing us to properly meet our customers’ growing
demands and mitigating the risk of out-of-stock situations. In
addition, our new facilities have made our production more
efficient and cost-effective, and we now expect our manufacturing
costs to decline by 50-60% beginning in the fourth quarter of 2023
and beyond, which should lead to increased gross margins.”
“We also continue to rapidly expand our global
footprint. Most recently, we announced our multi-stage
collaboration with Danone, a leading global food and beverage
company. During the initial stage of the collaboration, Danone will
license Else’s products and include them in its specialized
nutrition portfolio. This is a monumental event for Else as it not
only opens many doors for our products, but also substantiates
Else’s unique plant-based formulation. We look forward to working
closely with Danone and entering additional stages of this
agreement. At the same time, we are excited about our recent launch
into Western Europe, beginning with United Kingdom. In the UK we
are seeing increasing demand from parents for infant and children
plant-based nutrition, as many children are exhibiting increasing
sensitivities and intolerances to existing formulas. We are also
excited about our planned launch into Australia, an important
geography for us as it not only boasts a healthy eating consumer
base, but also serves as a cross border gateway into China and
other Southeast Asian markets.”
“We continue to focus on product innovation as
we recently launched our highly anticipated ready-to-drink kids
shakes. Our retail partners are very enthusiastic about this
product, and we expect initial shipments to over 600 stores in
North America. Our adult ready-to-drink shakes are expected to roll
out during the first half of 2024.
“While we have now rightsized our production and
inventory levels, there is still work to do to remedy the effects
caused by our production issues. After approximately one year of
diverting inventory from e-commerce channels in favor of
brick-and-mortar customers, we are now in the process of rebuilding
our sales velocity in e-commerce channels which should lead to
increased growth in 2024.”
“Finally, I’d like to address everyone’s
concerns regarding the recent events in Israel. Our team in our
home office in Tel Aviv is resilient and we continue to focus on
our business. Over 95% of our production is located outside of
Israel and, thankfully, we have not witnessed any disruptions and
do not foresee any issues with operations,” concluded Ms.
Yitzhak.
FDA Update
As part of the pathway to bring its infant
formulation to market under FDA and other authorities’ approvals,
Else concluded two successful preclinical safety studies on its
plant-based infant formula, to demonstrate safety and nutrient
bioavailability of the infant formula and its ingredients. The
results demonstrated proper growth, similar to dairy-based infant
formula, in a neonatal preclinical model, as well as the infant
formula protein efficiency and quality. Those steps represent key
milestones on the path to obtaining the FDA and other regulatory
permits to bring the product to market.
In February 2023, the Company announced that the
Institutional Review Board (the ethical committee) approved the
infant growth study protocol for the testing of the Else Infant
Formula. As a final step before initiating the study, the Company
has now submitted the preclinical study results as well as the
infant growth study protocol to the FDA for review and is in
discussion with the FDA for the infant formula optimization prior
to the clinical study initiation, in parallel to continuously
seeking for a comparator formula which is currently unavailable due
to the continuous infant formula shortage followed by several
recent product recalls in the US.
Conference Call
The Company will host a conference call to
discuss the quarter's financial results today at 10:00 a.m.
Eastern Time.
Interested parties can listen via a live webcast, from the link
available in the Investors section of the Company's website or at
https://app.webinar.net/PmpXNAn81qR.
A replay will be available after the call, in the Investors
section of the Company's website or at
https://app.webinar.net/PmpXNAn81qR.
About Else Nutrition Holdings
Inc.
Else Nutrition Holdings Inc. is a food and
nutrition company in the international expansion stage focused on
developing innovative, clean, and plant-based food and nutrition
products for infants, toddlers, children, and adults. Its
revolutionary, plant-based, non-soy formula is a clean-ingredient
alternative to dairy-based formula. Else Nutrition (formerly INDI)
won the "2017 Best Health and Diet Solutions" award at Milan's
Global Food Innovation Summit. The holding company, Else Nutrition
Holdings Inc., is a publicly-traded company, listed on TSX Venture
Exchange under the trading symbol BABY and is quoted on the US OTC
Markets Q.X. board under the trading symbol BABYF and the Frankfurt
Exchange under the symbol 0YL. Since launching its Plant-Based
Complete Nutrition for Toddlers, made of whole foods, almonds,
buckwheat, and tapioca, the brand has received thousands of
powerful testimonials and reviews from parents and gained national
retailer support from Sprouts Farmers Market, and achieved rapid
sales growth. Else became the #1 Best Seller on Amazon in the Fall
of 2020 in the New Baby & Toddler Formula Category. It recently
won the 'Best Dairy Alternative' Award 2021 at World Plant-Based
Expo and was a Nexty Award Finalist at Expo West 2022 in the
Plant-Based lifestyle category.
Investor Relations
Contact:Crescendo Communications, LLCAlexandra
SchiltOffice: (212) 671-1020 Ext: 305Email:
baby@crescendo-ir.com
Lytham Partners, LLCBen ShamsianNew York |
PhoenixE: shamsian@lythampartners.comP: 646-829-9701
Toronto Stock Exchange
Neither the Toronto Stock Exchange nor its
regulation services provider (as that term is defined in the
policies of the Toronto Stock Exchange) a responsibility for the
adequacy or accuracy of this release.
Caution Regarding Forward-Looking
Statements
This press release contains forward-looking
information within the meaning of applicable securities
legislation, which reflects the Company’s current expectations
regarding future events as of the date hereof. Such forward-looking
information may include but are not limited to statements regarding
revenue guidance information for Q4 2023, e-Commerce growth due to
a resumption of focus on e-Commerce channels, expectations
regarding re-orders and its effects on sales growth, production
capacity and demand for that capacity, manufacturing cost decreases
and benefits of strategic collaborations. Forward-looking
information is based on a number of assumptions and is subject to a
number of risks and uncertainties, many of which are beyond the
Company’s control, that could cause actual results and events to
differ materially from those that are disclosed in or implied by
such forward-looking information. Such risks include the factors
discussed under the "Risk Factors" section in the Company’s Annual
Information Form for the year ended December 31, 2022 and
subsequent MD&A and other filings publicly available on SEDAR+.
Other factors that could cause actual results or events to differ
materially include the inability of the Company to rebuild sales
and maintain growth from e-Commerce channels, expand its product
distribution in retail locations, achieve or maintain growth from
follow-on orders by existing customers and retailers, successfully
obtain FDA approvals of its infant formulation, maintain sufficient
production capacity to support existing and future growth outlooks,
reduce manufacturing costs to achieve increased margins, to
complete collaboration agreements with strategic partners and
achieve anticipated benefits therefrom, the impact of inflation and
rising costs of goods and services on the Company’s business model,
the Company’s ability to maintain sufficient capital to support
growth and FDA processes. Accordingly, readers should not place
undue reliance on forward-looking information. The purpose of
guidance contained in this news release is to provide an update to
financial results based on management's latest expectations.
Readers are cautioned that such guidance is not appropriate for any
other purpose. The Company does not undertake any obligation to
update such forward-looking information, whether as a result of new
information, future events or otherwise, except as expressly
required by applicable law.
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