306% growth capturing channel, category, and
innovation in clean-ingredient food, next generation skincare, and
plant-based wellness
VANCOUVER, BC , May 4, 2023
/CNW/ - Simply Better Brands Corp. ("SBBC" or the "Company") (TSXV:
SBBC) (OTCQB: PKANF) is pleased to announce its unaudited financial
results for the year ended December 31,
2022. 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. The Company
expected to file its audited financial statements for the year
ended December 31, 2022 and
management discussion and analysis shortly.
2022 YEAR KEY COMMERCIAL ACHIEVEMENTS
- TRUBAR Protein Bar: In additional to supporting a
U.S. and Canadian-based retailers base, TRUBAR was able to expand
into roughly 50% of U.S. and Canadian Costco Clubs throughout 2022.
As TRUBAR exceeded the bar category sales velocities at Costco,
TRUBAR is currently in national distribution at Costco. Supporting
the brands continued expansion are four initiatives: manufacturing
capacity expansion, continued omni-channel distribution growth, bar
flavor extensions, and the entry into the $8
billion protein powder category in 2023.
- PureKana Wellness: PureKana, a leading plant-based
wellness brand, remained focused on a its customer acquisition
initiative, adding over 18,700 customers per month and enabling the
sales funnel into a subscription model. To expand beyond human
consumption, PureKana announced its 2023 entry into the
$196 million hemp-based pet category
with offerings in with calming chews, hip & joint chews, and
hair & coat drops. As an estimated 60% of PureKana's loyal
customers have pets, the growth opportunity is sizeable.
- No B.S. Skincare: Originally, the No B.S. brand was
sourced exclusively online at livenobs.com and Amazon. In 2022, the
brand entered 3,200 CVS Health stores for a Back-to-School Event
and continues to maintain a on shelf presence in CVS's healthy skin
section. Initial brick and mortar success has the brand slotted to
enter an additional large, national chain in summer 2023. Sources
of growth include omni-channel expansion supported by
insight-driven innovation with an expanded facial acne patch
portfolio (overnight pimple patch and acne patch plus retinol night
cream) and a natural deodorant category entry.
- Vibez Wellness: The Vibez Wellness line was launched in
November 2022 to capture incremental
millennial consumers on their preventative wellness journey. With
an initial keto gummy supplement offering, the brand achieved
$1.4M in revenue in the first 60 days
of launch. Vibez's primary focus is non-CBD solutions into the
weight management, focal acuity, and healthy hair consumer need
states.
"As our strong 2022 financial and commercial results illustrate,
we are positioned for continued revenue growth, profit improvement,
and debt reduction in 2023. Our strategic priorities remain to lead
consumer-centric innovation and relentlessly acquire customers to
these emerging brands by driving category and channel expansion.
With our recent $7 million finance
raise, we are aptly fueled to deliver the 2023 outlook of
$80 million in revenue and
$3-4 million in adjusted EBITDA at a
gross margin target range of 58-60%," says SBBC CEO, Kathy Casey.
UNAUDITED FINANCIAL HIGHLIGHTS FOR YEAR ENDED DECEMBER 31, 2021
For the twelve months ended December 31,
2022, the Company generated revenue of $65.4 million with a gross profit of $44.6 million (68%) compared to $15.6 million with a gross profit of $9.7 million (62%) during the twelve months ended
December 31, 2021. Revenue
increased by $49.8 million (319%
increase) over the prior year's revenues.
Operating costs for the twelve months ended December 31, 2022, were $54.3 million, an increase of $34.8 million (178%), compared to $19.5 million for the twelve months ended
December 31, 2021.
During the twelve months ended December
31, 2022, the Company recorded a net loss of $11.1 million compared to a net loss of
$12.8 million for the twelve months
ended December 31, 2021.
For the three months ended December 31,
2022, the Company generated revenue of $23.0 million with a gross profit of $16.1 million (70%) compared to $6.5 million with a gross profit of $4.3 million (66%) during the three months ended
December 31, 2021. Revenue
increased by $16.5 million (254%
increase) over the prior period's revenues.
Operating costs for the three months ended December 31, 2022, were $19.9 million, an increase of $13.0 million (188%), compared to $6.9 million for the three months ended
December 31, 2021.
During the three months ended December
31, 2022, the Company recorded a net loss of $4.2 million compared to a net loss of
$4.2 million for the three months
ended December 31, 2021.
Non-IFRS Measures (Earnings before Interest, Taxes,
Depreciation, and Amortization ("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.
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 ended December 31,
2022, and 2021, and a reconciliation of same to net income
(loss):
|
For the years
ended
|
|
|
|
December 31,
2022 (unaudited)
|
December 31,
2021 (audited)
|
Change
in
|
|
$
|
$
|
$
|
%
|
Net
loss
|
(11.10)
|
(12.80)
|
1.70
|
(15 %)
|
Amortization
|
4.70
|
0.60
|
4.10
|
87 %
|
Depreciation
|
0.10
|
0.10
|
-
|
-
|
Finance
costs
|
1.40
|
2.30
|
(0.90)
|
(64 %)
|
Income tax
recovery
|
(1.00)
|
-
|
(1.00)
|
100 %
|
EBITDA
|
(5.90)
|
(9.80)
|
3.90
|
108 %
|
Acquisition-related
costs
|
0.20
|
-
|
0.20
|
100 %
|
Acquisition costs paid
by common shares
|
0.20
|
0.40
|
(0.20)
|
(100 %)
|
Fair value adjustment
of derivative liability
|
(0.10)
|
(1.20)
|
1.10
|
(1,100 %)
|
Impairment of
intangible assets
|
0.40
|
2.50
|
(2.10)
|
(525 %)
|
Impairment of
inventories
|
0.20
|
-
|
0.20
|
100 %
|
Impairment of plant and
equipment
|
0.20
|
-
|
0.20
|
100 %
|
Impairment of
receivable
|
0.10
|
0.10
|
-
|
-
|
Gain on debt
forgiveness
|
-
|
(0.20)
|
0.20
|
100 %
|
Gain on remeasurement
of the provision of earn-out
payments
|
-
|
(0.90)
|
0.90
|
100 %
|
Gain on settlement of
the milestone shares
|
(0.40)
|
-
|
(0.40)
|
100 %
|
Share-based
payments
|
4.30
|
5.60
|
(1.30)
|
(30 %)
|
Consulting fees to be
paid by shares
|
0.30
|
-
|
0.30
|
100 %
|
Shares issued for
services
|
0.40
|
0.20
|
0.20
|
50 %
|
Warrants issued for
services
|
0.10
|
-
|
0.10
|
100 %
|
Write-off of advance
payments
|
0.50
|
-
|
0.50
|
100 %
|
Non-recurring
expenses
|
0.70
|
-
|
0.70
|
100 %
|
Adjusted
EBITDA
|
1.20
|
(3.30)
|
4.50
|
(597 %)
|
The Company has an adjusted EBITDA of $1.2 million for the year ended December 31, 2022, an increase of $4.5 million over the adjusted EBITDA loss for
the comparable period in 2021.
|
For the three months
ended
|
|
|
|
December 31,
2022 (unaudited)
|
December 31,
2021 (audited)
|
Change
in
|
|
$
|
$
|
$
|
%
|
Net
loss
|
(4.20)
|
(4.20)
|
-
|
-
|
Amortization
|
3.30
|
0.20
|
3.10
|
94 %
|
Finance
costs
|
0.50
|
0.50
|
-
|
-
|
Income tax
recovery
|
(1.00)
|
-
|
(1.00)
|
100 %
|
EBITDA
|
(1.40)
|
(3.50)
|
2.10
|
194 %
|
Fair value adjustment
of derivative liability
|
-
|
(0.40)
|
0.40
|
100 %
|
Impairment of
intangible assets
|
0.40
|
2.50
|
(2.10)
|
(525 %)
|
Impairment of
inventories
|
0.20
|
-
|
0.20
|
100 %
|
Impairment of plant and
equipment
|
0.20
|
-
|
0.20
|
100 %
|
Impairment of
receivable
|
-
|
0.10
|
(0.10)
|
100 %
|
Gain on debt
forgiveness
|
-
|
(0.20)
|
0.20
|
100 %
|
Gain on remeasurement
of the provision of earn-out
payments
|
-
|
(0.90)
|
0.90
|
100 %
|
Share-based
payments
|
0.80
|
1.20
|
(0.40)
|
(50 %)
|
Consulting fees to be
paid by shares
|
0.30
|
-
|
0.30
|
100 %
|
Shares issued for
services
|
(0.10)
|
0.10
|
(0.20)
|
200 %
|
Warrants issued for
services
|
0.10
|
-
|
0.10
|
100 %
|
Write-off of advance
payments
|
0.10
|
-
|
0.10
|
100 %
|
Adjusted
EBITDA
|
0.60
|
(1.10)
|
1.70
|
719 %
|
The Company generated positive adjusted EBITDA of $0.6 million for the three months ended
December 31, 2022, an increase of
$1.7 million over the adjusted EBITDA
loss for the comparable period in 2021.
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, 2022 available on SEDAR
at www.sedar.com.
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,
2022, 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 decreased from
$11.8 million as of December 31, 2021, to a working capital
deficiency of $9.3 million as of
December 31, 2022 ($2.5 million decrease). Working capital
deficiency included the Mainstreet loan ($10.3 million) which is classified as current
whereas the term is for 5 years 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. This loan has several covenants including annual and
quarterly reporting and debt service coverage. The Company was not
compliant with the debt service covenant as of December 31, 2022 although it made progress in
improving the Adjusted EBITDA performance of Purekana LLC during
the year. For example, adjusted EBITDA reported for Purekana LLC
for the year ended December 31, 2022
was $1.4 million compared to an
adjusted EBITDA loss of $1.4 million
for the year ended December 31, 2021
or a $2.8 million improvement. No
notice of default has been received by the Company as of the date
of this news release and the Company has been paying the interest
on a regular basis. It has been classified as current as a result
of the noncompliance with the debt service
covenant.
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
The Company completed a private placement raise in August of
2022 and raised CA$3,990,844 ($3,069,880) in common shares and convertible
debentures. The funds raised were used for debt reduction and
working capital.
Subsequent to the year ended December 31,
2022, The Company raised an additional CA$7,000,000 in
equity to be used for further debt reduction, working capital and
for growth initiatives in 2023.
Convertible Debentures
During the year ended December 31,
2022, the Company reduced the balance of convertible
debentures outstanding by $1.0
million. Subsequent to the year ended December 31, 2022, The Company paid down
$1.7 million in convertible
debentures including accrued interest that were due in February 2023.
Line of Credit Facilities
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 year ended
December 31, 2022. For more
information of the line of credit facilities please refer to note
10 in the financial statements for the year ended December 31, 2022. During the year ended
December 31, 2022, the Company raised
over $8 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
$5.9 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 year ended December 31,
2022, the Company reduced the balance of promissory notes
outstanding by approximately $3.5
million. All promissory notes paid off during the year
had a maturity less than 12 months.
The Company was able to secure a $1
million promissory note with a duration of 42 months during
the year for debt reduction and working capital. The loan bears 15%
interest per annum and will be repaid over 42-months starting
November 15, 2022.
The Company entered into an agreement with the third party to
settle the payment of the assigned portion of the PK Promissory
Notes ($1,166,168). The Company made
payments totaling $350,000 to the
assigned portion of the PK Promissory Notes during the year. The
agreement calls for monthly payments of $50,000 which began on December 15, 2022, and continues until the
$1,166,168 amount is paid in full.
The note bears an interest rate of 6%.
2023 OUTLOOK
For our 2023 Outlook:
- The Company's expectation for consolidated net sales to exceed
$80 million.
- The Company expects gross margin as a percentage of net sales
to be between 58% and 60%.
- The Company expects to achieve positive Adjusted EBITDA in the
range of $3-4 million.
The Company is also reported on preliminary sales for the first
quarter of fiscal 2023 of $24.8
million compared to $12.1
million in Q1 2022 or a 205% increase. Preliminary gross
profit for the first quarter of 2023 is 55% compared to 66% in the
first quarter of 2022. The lower gross margin is due to sales
channel mix as a larger portion of sales to retailers compared to
the prior year's predominantly online sales delivery.
About Simply Better Brands
Corp.
Simply Better Brands Corp. leads an international omni-channel
platform with diversified assets in the emerging plant-based and
holistic wellness consumer product categories. The Company's
mission is focused on leading innovation for the informed
Millennial and Generation Z generations in the rapidly growing
plant-based, natural, and clean ingredient space. The Company
continues to focus on expansion into high-growth consumer product
categories including plant-based food, clean ingredient
skincare and plant-based wellness. 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 impact of the COVID-19 pandemic, 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: entry into the $8 billion
protein powder category in 2023, expansion plans for TRU Brands
products, filing of the Company's audited financial statements for
the year ended December 31, 2022 and
management discussion and analysis 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 annual information form available under the Company's
profile at www.sedar.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.
Financial Outlook
This press release contains future-oriented financial
information and financial outlook information (collectively,
"FOFI") about the financial results the quarter ended
March 31, 2023, and the year ended
December 31, 2022, including net
sales, gross margin, and Adjusted EBITDA, all of which are subject
to the same assumptions, risk factors, limitations, and
qualifications as set out under the heading "Forward-Looking
Information". The actual financial results of the Company may vary
from the amounts set out herein and such variation may be material.
The Company and its management believe that the financial outlook
has been prepared on a reasonable basis, reflecting management's
best estimates and judgments and the FOFI contained in this press
release was approved by management as of the date hereof. However,
because this information is subjective and subject to numerous
risks, it should not be relied on as necessarily indicative of
future results. Except as required by applicable securities laws,
the Company undertakes no obligation to update such FOFI. FOFI
contained in this press release was made as of the date hereof and
was provided for the purpose of providing further information about
the Company's anticipated future business operations on a quarterly
and annual basis. Readers are cautioned that the FOFI contained in
this press release should not be used for purposes other than for
which it is disclosed herein.
SOURCE Simply Better Brands Corp