Re-filed to place greater prominence on certain GAAP/IFRS
measures
- Revenue in the first quarter reached $56.3 million, a year-over-year increase of
90%
- Gross profit reached $16.2
million, a year-over-year growth of 150%
- Net loss reached $5.1 million, an
increase of $0.3 million
year-over-year
- Gross merchandise sales1 reached $68.0 million in the first quarter, a
year-over-year increase of 83%
- Adjusted EBITDA margin1 reached -6.5% compared to
-13.2% this quarter last fiscal year, an improvement of 6.7
percentage points, building on solid and consistent margin
improvement
- Generated positive cash from operations of $1.5 million; continuing to finance growth with
company-generated cash flow
- Solid financial position with cash, cash equivalents and
restricted cash of $47.0 million
- Reached a milestone of 230,000 active subscribers1
as at November 30, 2019, a net
increase of 30,000 quarter-over-quarter
MONTREAL, Feb. 20, 2020 /CNW Telbec/ - Goodfood Market
Corp. ("Goodfood" or "the Company") (TSX: FOOD), a leading online
grocery company in Canada, today
announced strong financial results for the first quarter of Fiscal
2020 ended November 30, 2019.
"Fiscal 2020 has started with strong momentum resulting in the
addition of 30,000 net new subscribers1 and gross
merchandise sales run-rate1 of $276 million, a new record for Goodfood. Demand
for our private label grocery essentials and most recent meal
solutions continues to grow as the Goodfood basket of our members
expands. We are thrilled to see the accelerating adoption of
e-commerce for grocery and meal-prep as we are ideally positioned
to capitalize on this positive secular trend," said Jonathan Ferrari, Chief Executive Officer of
Goodfood.
"We are pleased with our solid first quarter results. Goodfood
continues to increase its penetration across the country and we
continue to deliver a unique member experience with an expanded
product offering. In addition to the strong top-line growth, we
have also delivered year-over-year gross margin and adjusted
EBITDA1 margin improvements of, respectively, 6.9
percentage points and 6.7 percentage points, mostly from continuous
investments in automation and growing scale. This improvement has
driven our consistent ability to generate positive cash flow from
operating activities, which has in turn helped us grow our business
and maintain a solid and stable cash position," said Neil Cuggy, President and Chief Operating
Officer of Goodfood.
FINANCIAL
HIGHLIGHTS
|
|
Financial highlights
for the three-month periods ended November 30, 2019 and
2018:
|
|
|
|
|
(Amounts are in
thousands of
Canadian dollars –
Unaudited)
|
Q1 2020
|
Q1 2019
|
Variance
|
Revenue
|
$
|
56,291
|
$
|
29,617
|
$
|
26,674
|
Growth
%
|
|
|
|
|
|
90%
|
Gross
profit
|
|
16,219
|
|
6,494
|
|
9,725
|
Gross margin
%
|
|
28.8%
|
|
21.9%
|
|
6.9
pp
|
Gross merchandise
sales1
|
|
68,036
|
|
37,105
|
|
30,931
|
Growth
%
|
|
|
|
|
|
83%
|
Adjusted gross
profit1
|
|
27,964
|
|
13,982
|
|
13,982
|
Adjusted gross
margin %1
|
|
41.1%
|
|
37.7%
|
|
3.4
pp
|
Net loss
|
|
(5,152)
|
|
(4,851)
|
|
(301)
|
Cash provided by
operating activities
|
|
1,461
|
|
1,750
|
|
(289)
|
REVENUE AND GROSS MERCHANDISE
SALES1
Revenue for the first quarter of Fiscal 2020 increased by 90% to
$56.3 million, compared to
$29.6 million in the corresponding
period of Fiscal 2019. Gross merchandise sales1 ("GMS"),
rose 83% for the first quarter of Fiscal 2020 to reach $68.0 million, compared to $37.1 million for the corresponding period of the
previous fiscal year. The increase in revenue and GMS1
was primarily driven by the continued growth in the number of
active subscribers1, an increase in average order value
and the expansion of our product offering to include private label
grocery products, new meal solutions and expanded ready-to-cook
plans. The increase in revenue has also been driven by a reduction
of incentives and credits as a percentage of GMS1.
The GMS run-rate1 was $276
million at the end of the first quarter of Fiscal 2020,
compared to $226 million at the end
of the fourth quarter of 2019, surpassing its previous high of
$257 million achieved in
the third quarter of Fiscal 2019. This variance is explained
by the continued growth of the business and by the first quarter
being seasonally stronger than the fourth quarter of the year.
The reconciliation of revenue to GMS1 for the
three-month periods ended November 30,
2019 and 2018, is as follows:
|
(Amounts are in
thousands of
Canadian dollars –
Unaudited)
|
Q1
2020
|
Q1 2019
|
Revenue
|
$
|
56,291
|
$
|
29,617
|
Credits removed from
cancelled accounts
|
|
-
|
|
-
|
Incentives and
credits
|
|
11,745
|
|
7,488
|
Gross merchandise
sales1
|
$
|
68,036
|
$
|
37,105
|
GROSS MARGIN AND ADJUSTED GROSS
MARGIN1
The gross margin for the first quarter of 2020 increased
substantially to 28.8%, compared to 21.9% for the corresponding
period of Fiscal 2019. Adjusted gross margin1 was 41.1%
for the first quarter of Fiscal 2020, compared to 37.7% for the
corresponding period last year, an improvement of 3.4 percentage
points. The increase in gross margin and adjusted gross
margin1 resulted from lower production costs as a
percentage of revenue and lower unit costs for food, packaging and
shipping due to increased operational efficiencies, additional
automation investments, increased density among the delivery zones
and purchasing power with key suppliers, but also due to lower
incentive and credits as a percentage of revenue. This was
partially offset by the increase in our product offering, with our
ready-to-cook meal solution presenting a higher gross margin at
this stage than the new meal solutions and private label
grocery products. The Company expects that fixed costs as a
percentage of revenues will continue to decrease with Goodfood's
continued growth which should further increase gross margin and
adjusted gross margin1 in the future.
The reconciliation of adjusted gross profit1 and
adjusted gross margin1 for the three-month periods ended
November 30, 2019 and 2018, is as
follows:
|
(Amounts are in
thousands of
Canadian dollars –
Unaudited)
|
|
Q1 2020
|
|
Q1 2019
|
Gross merchandise
sales1
|
$
|
68,036
|
$
|
37,105
|
Cost of goods
sold
|
|
40,072
|
|
23,123
|
Adjusted gross
profit1
|
$
|
27,964
|
$
|
13,982
|
Adjusted gross
margin1
|
|
41.1%
|
|
37.7%
|
ADJUSTED EBITDA1, NET LOSS
AND NET LOSS PER SHARE
Adjusted EBITDA margin1 improved by 6.7 percentage
points in the first quarter of Fiscal 2020. The increase is
primarily the result of higher revenues and operating leverage,
lower production labour costs as a percentage of revenue, and lower
unit costs with regards to food, packaging and shipping which
generated a higher gross profit, offset by an increase in selling,
general and administrative expenses driven in large part by new
salaried hires and the launch of new product offerings. Net
loss for the first quarter of Fiscal 2020 was $5.2 million, or $0.09 per share (basic and diluted), compared to
a net loss of $4.9 million, or
$0.09 per share (basic and diluted)
for the corresponding period of Fiscal 2019. The increase in net
loss was mainly attributable to factors explained above.
The reconciliation of net loss to EBITDA, Adjusted
EBITDA1 and Adjusted EBITDA margin1 for
the three-month periods ended November 30,
2019 and 2018, is as follows:
|
(Amounts are in
thousands of
Canadian dollars –
Unaudited)
|
|
Q1 2020
|
|
Q1 2019
|
Net loss
|
$
|
(5,152)
|
$
|
(4,851)
|
Net finance
expenses
|
|
97
|
|
87
|
Depreciation and
amortization expense
|
|
993
|
|
487
|
EBITDA1
|
$
|
(4,062)
|
$
|
(4,277)
|
Share-based
payments
|
|
411
|
|
375
|
Adjusted
EBITDA1
|
$
|
(3,651)
|
$
|
(3,902)
|
Revenue
|
$
|
56,291
|
$
|
29,617
|
Adjusted EBITDA
margin1 (%)
|
|
(6.5%)
|
|
(13.2%)
|
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities in the first quarter of
Fiscal 2020 amounted to $1.5 million compared to cash provided by
operating activities of $1.8 million
for the same period last year, with the difference primarily due to
a change in net working capital.
In the first quarter of Fiscal 2020, the Company used its cash
mainly for capital expenditures of $1.7
million for continued investments in automation. The Company
still expects to spend between $10
million and $12 million in
capital expenditures in Fiscal 2020.
As at November 30, 2019, the
Company had total debt of $14.5
million and $47.0 million in
cash, cash equivalents and restricted cash.
OUTLOOK
The online grocery industry is one of the fastest growing
industries in the world. As a result, Goodfood believes that there
are significant opportunities and advantages to rapidly grow its
subscriber1 base by continuing to invest in increased
household penetration through highly targeted marketing campaigns,
in capacity expansion through additional facilities and investments
in automation, and in increasing its product offering and in
continuing to expand its national platform.
Goodfood's strategy is in part to delay short-term profitability
in order to invest in long-term shareholder value creation.
Goodfood's strategy continues to focus on growing its
subscriber1 base while investing in improving its cost
structure to achieve its long-term margin goals. Growing Goodfood's
subscriber1 base, market share, scale and product
offerings will allow the Company to deliver greater value to
its customers while attaining high returns on invested capital. As
the Company grows its subscriber1 base, we are confident
that Goodfood will achieve economies of scale and additional
efficiencies which will lead to improvements in profitability while
maintaining an unrivalled experience for
subscribers1.
CONFERENCE CALL
Goodfood will hold a conference call
to discuss these results on January 8,
2020, at 8:00AM Eastern Time.
Interested parties can join the call by dialing 1-647-788-4922
(Toronto or overseas) or
1-877-223-4471 (elsewhere in North
America). To access the webcast and view the presentation,
click on this
link: https://www.makegoodfood.ca/en/investisseurs/evenements
Parties unable to call in at this time may access a recording by
calling 1-800-585-8367 and entering the passcode 9475358. This
recording will be available on Wednesday,
January 8, 2020 as of 11:00 AM
Eastern Time until 11:59 PM Eastern Time on Wednesday,
January 15, 2020.
A full version of the Company's Management's Discussion and
Analysis (MD&A) and audited Financial Statements for the
quarter ended November 30, 2019 will
be posted on http://www.sedar.com later today.
NON-IFRS FINANCIAL MEASURES
Certain financial and
non-financial measures included in this news release do not have a
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other companies. The Company
includes these measures because it believes they provide to certain
investors a meaningful way of assessing financial performance. For
a more complete description of these measures and a reconciliation
of Goodfood's non-IFRS financial measures to financial results,
please see Goodfood's Management's Discussion and Analysis for the
three-month period ended November 30,
2019.
Goodfood's definition of the non-IFRS terms are as follows:
- Gross merchandise sales measure the total retail value of all
goods sold by the Company before taking into account all incentives
and credits.
- Gross merchandise sales run-rate is defined as gross
merchandise sales for the four-week period ended as at the date
indicated multiplied by thirteen. Management believes that gross
merchandise sales run-rate is a useful measure of financial
performance because it is indicative of gross merchandise sales on
an annual basis for the Company's current level of active
subscribers.
- Adjusted gross profit is calculated as gross merchandise sales
less cost of goods sold.
- Adjusted gross margin is calculated as adjusted gross profit
divided by gross merchandise sales.
- EBITDA is defined as net income or loss before net finance
expenses (income), depreciation and amortization expense and income
tax expense.
- Adjusted EBITDA is defined as EBITDA excluding share-based
payments as they are an equity compensation item.
- Adjusted EBITDA margin is defined as adjusted EBITDA divided by
revenue.
ACTIVE SUBSCRIBERS
An active subscriber is defined as an account that is scheduled
to receive a delivery or has elected to skip delivery in the
subsequent weekly delivery cycle. Active subscribers exclude
cancelled accounts. For greater certainty, an active subscriber is
only accounted for once, although different products might have
been ordered in a given weekly delivery cycle. While active
subscribers is not an IFRS or Non-IFRS Financial Measure, and
therefore, does not appear in and cannot be reconciled to a
specific line item in our financial statements, we believe that
active subscribers is a useful metric for investors because it is
indicative of future revenues. The Company reports the number of
active subscribers at the beginning and end of the period, rounded
to the nearest thousand.
ABOUT GOODFOOD
Goodfood (TSX:FOOD) is a leading
online grocery company in Canada,
delivering fresh meal solutions and grocery items that make it easy
for members from coast to coast to enjoy delicious meals at home
every week. Goodfood's mission is to make the impossible come true,
from farm to kitchen, by enabling members to do their weekly meal
planning and grocery shopping in less than 1 minute. Goodfood
members get access to a unique selection of products online as well
as exclusive pricing made possible by its world class direct to
consumer fulfilment ecosystem that cuts out food waste and
expensive retail overhead. The Company has its main production
facility and administrative offices based in Montreal, Quebec, a second production facility
in Calgary, Alberta, a breakfast
facility in Montreal, Quebec and
is currently building out its new production facility in
Vancouver. Goodfood had 230,000
active subscribers1 as at November 30, 2019. www.makegoodfood.ca
Except where otherwise indicated, all amounts in this press
release are expressed in Canadian dollars.
FORWARD-LOOKING INFORMATION
This release contains
forward-looking information" within the meaning of applicable
Canadian securities legislation. Such forward-looking information
includes, but is not limited to, information with respect to our
objectives and the strategies to achieve these objectives, as well
as information with respect to our beliefs, plans, expectations,
anticipations, estimates and intentions. This forward-looking
information is identified by the use of terms and phrases such as
"may", "would", "should", "could", "expect", "intend", "estimate",
"anticipate", "plan", "foresee", "believe", or "continue", the
negative of these terms and similar terminology, including
references to assumptions, although not all forward-looking
information contains these terms and phrases. Forward-looking
information is provided for the purposes of assisting the reader in
understanding the Company and its business, operations, prospects
and risks at a point in time in the context of historical and
possible future developments and therefore the reader is cautioned
that such information may not be appropriate for other purposes.
Forward-looking information is based upon a number of assumptions
and is subject to a number of risks and uncertainties, many of
which are beyond our control, which could cause actual results to
differ materially from those that are disclosed in or implied by
such forward-looking information. These risks and uncertainties
include, but are not limited to, the following risk factors which
are discussed in greater detail under "Risk Factors" in the
Company's Annual Information Form for the year ended August 31, 2019 available on SEDAR at
www.sedar.com: limited operating history, negative operating cash
flow, food industry, quality control and health concerns,
regulatory compliance, regulation of the industry, public safety
issues, product recalls, damage to Goodfood's reputation,
transportation disruptions, product liability, ownership and
protection of intellectual property, evolving industry,
unionization activities, reliance on management, factors which may
prevent realization of growth targets, competition, availability
and quality of raw materials, limited number of products,
environmental and employee health and safety regulations, online
security breaches and disruption, reliance on data centers, open
source license compliance, future capital requirements, operating
risk and insurance coverage, management of growth, conflicts of
interest, litigation, and catastrophic events. Although the
forward-looking information contained herein is based upon what we
believe are reasonable assumptions, readers are cautioned against
placing undue reliance on this information since actual results may
vary from the forward-looking information. Certain assumptions were
made in preparing the forward-looking information concerning
availability of capital resources, business performance, market
conditions, and customer demand. Consequently, all of the
forward-looking information contained herein is qualified by the
foregoing cautionary statements, and there can be no guarantee that
the results or developments that we anticipate will be realized or,
even if substantially realized, that they will have the expected
consequences or effects on our business, financial condition or
results of operation. Unless otherwise noted or the context
otherwise indicates, the forward-looking information contained
herein is provided as of the date hereof, and we do not undertake
to update or amend such forward-looking information whether as a
result of new information, future events or otherwise, except as
may be required by applicable law.
|
|
|
|
|
|
1 See the
non-IFRS financial measures and active subscribers sections at the
end of this press release.
|
SOURCE Goodfood Market Corp.