Jamieson Wellness Inc. Reports Strong Third Quarter 2023 Results

 

  Consolidated revenue growth of 9.1%;
Jamieson Brands revenue grew 15.0% led by increased demand in the U.S. and China
 

 

Jamieson Wellness Inc. ("Jamieson Wellness" or the "Company") (TSX: JWEL) today reported its third quarter results for the period ended September 30, 2023. All amounts are expressed in Canadian dollars.

 

�I am pleased to report another solid quarter of financial and operational performance," said Mike Pilato, President and CEO of Jamieson Wellness. "We continue taking the actions necessary to position Jamieson strategically, operationally, and financially to seize new growth opportunities and to further capitalize on the value driven by our globally recognized brands.

 

"In Q3 our Jamieson Brands revenue increased by 15%, led by advancements in the U.S. and China as we invest to grow our distribution channels, enhance our marketing efforts, and launch innovative products that meet the evolving needs of consumers in these markets. This is our long-term growth strategy in action, and I am confident it will create significant value for our shareholders, consumers, customers, and partners. We thank our team for their diligence managing the business in this challenging macro environment, and for their commitment to delivering on our mission of becoming a global leader in health and wellness."

 

  Third Quarter Highlights  

 
  • Sustained consumer engagement in Canada with consumption significantly outpacing shipments
  •  
  • New product launches, ecommerce, and distribution gains in the U.S. drove strong revenue growth for the youtheory brand
  •  
  • Continued growth momentum in China under new owned-distribution model and DCP Capital partnership
  •  
  • Growth in International led by new product innovation and marketing initiatives in key markets
  •  
  • Exited the quarter with a leverage ratio of approximately 2.0x net debt to adjusted EBITDA with cash and available borrowings of $222.3 million
  •  
  • Progression of sustainability goals through the Company's partnership with veritree and the planting of 60,000 kelp off the coast of British Columbia
  •  

  Third Quarter Financial Results Consolidated Summary  

 

All comparisons are with the third quarter of 2022

 
  • Consolidated revenue increased 9.1% to $151.5 million driven by 15.0% growth in Jamieson Brands, partly offset by Strategic Partner revenue as expected
  •  
  • Gross profit was $51.2 million in Q3, up $6.2 million on a normalized basis when excluding the impact of acquisition-related amortization. Including amortization, gross profit improved by $2.7 million.
  •  
  • While normalized gross profit margin expanded by 120 basis points in Q3, when including the impact of amortization, gross profit margin 3 was 33.8% or 110bps lower
  •  
  • Adjusted EBITDA 1 increased by $2.4 million or 8.0% to $31.9 million as the Company continued to invest in China and the U.S. for long-term growth; EBITDA 1 increased $3.8 million or 17.3% to $25.5 million
  •  
  • Adjusted net earnings 1 increased 5.4% to $15.0 million as a result of higher revenue and gross profit; Net earnings was $7.8 million due to higher interest rates on borrowings and accretion on preferred shares
  •  
  • Adjusted diluted earnings per share 2 was $0.35; Diluted earnings per share was $0.18
  •  

  Summary of Segment Results  

 

All comparisons are with the third quarter of 2022

 

  Jamieson Brands  

 
  • Revenue was $129.1 million, an increase of 15.0% or $16.9 million
    • Canada was $75.8 million, down 4.6% as expected, due to higher cold and flu shipments in Q3 2022
    •  
    • U.S. (youtheory) was $33.0 million, up 88.6% (70.6% on a pro forma basis), driven by innovation, e-commerce, distribution gains, and timing of certain orders previously expected in Q4
    •  
    • China was $12.2 million, up approximately 67% (24.8% on a pro forma basis), driven by continued strong demand in cross border e-commerce, new domestic club distribution, and the benefits of the Company's owned-distribution model
    •  
    • International was $8.1 million, up 11.8%, driven by new product launches and promotions
    •  
  •  
  • Gross profit increased $2.5 million to $47.7 million; normalized gross profit increased by $6.0 million
  •  
  • Gross profit margin 3 decreased by 340 basis points; normalized gross profit margin decreased by 70 basis points to 39.6%, reflecting the integration of youtheory and evolving product mix
  •  
  • Adjusted EBITDA 1 increased $2.0 million to $29.1 million driven by profitable revenue growth offset by higher SG&A related to the full integration of U.S. and China operations; Adjusted EBITDA margin 2 decreased by 160 basis points to 22.6% due to seasonality of youtheory volumes
  •  

  Strategic Partners  

 
  • Revenue was $22.4 million, or $4.3 million lower, as expected as the result of timing related to Q2 2023 deliveries
  •  
  • Gross profit increased $0.2 million to $3.5 million; gross profit margin 3 increased by 320 basis points to 15.5% due to an improved product mix and higher pricing, offset by higher input costs
  •  
  • Adjusted EBITDA 1 was $2.7 million representing an adjusted EBITDA margin 2 of 12.3%, up 350 basis points
  •  

  Balance Sheet and Cash Flow  

 
  • Cash from operating activities before working capital considerations of $17.7 million increased by $1.3 million compared to Q3 2022 due to higher earnings in the quarter excluding the impact of the non-cash accretion of preferred shares
  •  
  • Cash used in working capital of $31.7 million was driven by the impact of inventory purchases for seasonal demand in the fourth quarter; Cash used in working capital decreased by $5.3 million compared to Q3 2022 driven by timing of accounts receivable collections and payment of purchases
  •  
  • The Company invested $14.0 million in cash from operations compared to $20.6 million in Q3 2022, driven by strategic increases in working capital and preparations for seasonal demand in the fourth quarter
  •  
  • Net debt 1 at the end of the quarter was $277.7 million, or 31.3% lower than Q3 2022
  •  
  • As at September 30, 2023, the Company had approximately $222.3 million in cash and available facilities
  •  

  1 This is a non-IFRS financial measure. See the "Non-IFRS and Other Financial Measures" section of this press release for more information on each non-IFRS financial measure.
2 This is a non-IFRS ratio. See the "Non-IFRS and Other Financial Measures" section of this press release for more information on each non-IFRS ratio.
3 This is a supplementary financial measure. See the "Non-IFRS and Other Financial Measures" section of this press release for more information on each supplementary financial measure.

 

  Fiscal 2023 Outlook  

 

Consumer demand and consumption are both showing signs of continued strength in Canada, the US, and China. Combined with International shipments despite regulatory timing, the Company has decided to update the low end of its guidance range for Jamieson Brands and update guidance for Strategic Partners.

 

The Company now anticipates the following:

 
  • Consolidated fiscal 2023 revenue to range between $680.0 and $690.0 million (+24.0% to +26.0%) from a previous range of +22.0% to +26.0%.
  •  
  • Jamieson Canada revenue growth of 3.0% to 4.0% (increased from 2.0% to 4.0%). Consumer consumption remains strong, reflecting continued consumer prioritization of their health and wellness offset by reduced inventory levels within customer and distributor partners as they lower working capital investments in response to higher costs of capital.
  •  
  • Youtheory revenue of between $150.0 to $155.0 million (increased from $145.0 to $155.0 million) with growth driven by product innovation, expanded e-commerce initiatives and distribution gains.
  •  
  • Jamieson China revenue growth of approximately 75.0% (increased from 65.0% to 75.0%), reflecting continued consumer demand in cross border e-commerce and distribution gains in the domestic retail channels as well as the transition to an owned-distribution model completed in the second quarter and the related step-up to distributor level pricing.
  •  
  • Jamieson International revenue of between 5.0% and 10.0% growth (increased from flat to 10.0%), reflecting the shipment of newly registered products despite a post COVID-19 government slowdown of processing product registrations impacting the timing of entry into new markets. The Company's revised outlook continues to be driven by marketing, innovation and the timing of distribution into new markets.
  •  
  • Strategic Partners revenue growth of approximately 15.0% (updated from 15.0% to 20.0%), reflecting pricing and program changes offset by the wind down of a current third party branded contract.
  •  

The Company's guidance continues to reflect an accelerated investment in marketing, resources, and infrastructure to support long-term growth opportunities in the United States and in China. The Company continues to anticipate:

 
  • Adjusted EBITDA to range from $140.0 to $144.0 million (+13.0% to +16.0%).
  •  
  • Adjusted diluted earnings per share to range from $1.56 to $1.63 (up to +5.2% growth), reflecting revisions to the Company's revenue outlook along with higher prevailing interest rates and the timing of cash flows associated with the Company's partnership in China.
  •  

For additional details on the Company's fiscal 2023 outlook, including guidance for the fourth quarter of 2023, refer to the "Outlook" section in the management's discussion and analysis of financial condition and results of operations ("MD&A") for the three and nine months ended September 30, 2023.

 

  Declaration of Third Quarter Dividend  

 

The board of directors of the Company declared a cash dividend for the third quarter of 2023:

 
  • $0.19 per common share (+11.8% vs Q3 2022), or approximately $8.0 million in the aggregate
  •  
  • Paid on December 15, 2023 to all common shareholders of record at the close of business on December 1, 2023
  •  
  • The Company has designated this dividend as an "eligible dividend" for the purposes of the Income Tax Act (Canada)
  •  

  Announcement of Normal Course Issuer Bid (NCIB)  

 

Also announced today, the Company has received approval from the Toronto Stock Exchange (the "TSX") to commence a normal course issuer bid (the "NCIB") to purchase for cancellation up to 4,165,201 common shares of the Company, representing approximately 10% of its issued and outstanding common shares as of Oct. 31, 2023. The NCIB will commence on November 7, 2023 and will expire on the earlier of November 6, 2024, or the date on which the Company has either acquired the maximum number of common shares allowable or otherwise decided not to make any further repurchases. Details on the NCIB and its terms can be found in a separate media release issued this afternoon.

 

  Consolidated Financial Statements and Management's Discussion and Analysis  

 

The Company's unaudited condensed consolidated interim financial statements and accompanying notes as at and for the three and nine months ended September 30, 2023 and related MD&A are available under the Company's profile on SEDAR at www.sedar.com and on the Investor Relations section of the Company's website at https://investors.jamiesonwellness.com .

 

  Conference Call  

 

Management will host a conference call to discuss the Company's third quarter 2023 results at 5:00 p.m. ET today, November 2, 2023. To access:

 

  About Jamieson Wellness  

 

Jamieson Wellness is dedicated to improving the world's health and wellness with its portfolio of innovative natural health brands. Established in 1922, Jamieson is the Company's heritage brand and Canada's #1 consumer health brand. Jamieson Wellness also offers a variety of VMS products under its youtheory, Progressive, Smart Solutions, Iron Vegan and Precision brands. The Company is a participant of the United Nations Global Compact and adheres to its principles-based approach to responsible business. For more information please visit www.jamiesonwellness.com .

 

Jamieson Wellness' head office is located at 1 Adelaide Street East Suite 2200, Toronto, Ontario, Canada.

 

  Forward-Looking Information  

 

This press release may contain forward-looking information within the meaning of applicable securities legislation. Such information includes, but is not limited to, statements related to the Company's anticipated results and its outlook for its 2023 revenue, Adjusted EBITDA and Adjusted diluted earnings per share. Words such as "expect," "anticipate," "intend," "may," "will," "estimate" and variations of such words and similar expressions are intended to identify such forward-looking information. This information reflects the Company's current expectations regarding future events. 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 and uncertainties include, but are not limited to, the factors discussed under "Risk Factors" in the Company's Annual Information Form dated March 30, 2023 and under the "Risk Factors" section in the MD&A filed today, November 2, 2023. This information is based on the Company's reasonable assumptions and beliefs in light of the information currently available to it and the statements are made as of the date of this press release. 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 or regulatory authority.

 

The Company cautions that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect the Company's results. Readers are urged to consider the risks, uncertainties and assumptions associated with these statements carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. See "Forward-looking Information" and "Risk Factors" within the MD&A for a discussion of the uncertainties, risks and assumptions associated with these statements.

 

  Jamieson Wellness Inc.
Selected Consolidated Financial Information
In thousands of Canadian dollars, except share and per share amounts

 
                                                                                                                                                                                                                                                                                                                                        
   Three months ended     Nine months ended  
   September 30     September 30  
  

  2023  

 
  

  2022  

 
  

  2023  

 
  

  2022  

 
        
  Revenue   

  151,505  

 
  

  138,929  

 
  

  455,807  

 
  

  354,594  

 
Cost of sales  

100,355

 
  

90,440

 
  

301,275

 
  

227,445

 
Gross profit  

51,150

 
  

48,489

 
  

154,532

 
  

127,149

 
        
  Gross profit margin   

  33.8%  

 
  

  34.9%  

 
  

  33.9%  

 
  

  35.9%  

 
        
Selling, general and administrative expenses  

30,780

 
  

30,855

 
  

98,004

 
  

77,471

 
Share-based compensation  

1,413

 
  

1,315

 
  

4,334

 
  

3,593

 
  Earnings from operations   

  18,957  

 
  

  16,319  

 
  

  52,194  

 
  

  46,085  

 
        
  Operating margin   

  12.5%  

 
  

  11.7%  

 
  

  11.5%  

 
  

  13.0%  

 
        
Foreign exchange (gain) loss  

(1,359)

 
  

(759)

 
  

286

 
  

(709)

 
Interest expense and other financing costs  

5,589

 
  

4,144

 
  

17,899

 
  

6,660

 
Accretion on preferred shares  

2,041

 
  

-

 
  

2,868

 
  

-

 
Earnings before income taxes  

12,686

 
  

12,934

 
  

31,141

 
  

40,134

 
Provision for income taxes  

4,915

 
  

2,052

 
  

9,101

 
  

9,417

 
  Net earnings   

  7,771  

 
  

  10,882  

 
  

  22,040  

 
  

  30,717  

 
        
  Net earnings (loss) attributable to:         
Shareholders  

8,224

 
  

10,882

 
  

23,475

 
  

30,717

 
Non-controlling interests  

(453)

 
  

-

 
  

(1,435)

 
  

-

 
  

  7,771  

 
  

  10,882  

 
  

  22,040  

 
  

  30,717  

 
  Adjusted net earnings   

  14,991  

 
  

  14,221  

 
  

  37,469  

 
  

  38,381  

 
        
  EBITDA   

  25,512  

 
  

  21,744  

 
  

  67,095  

 
  

  58,967  

 
  Adjusted EBITDA   

  31,871  

 
  

  29,505  

 
  

  87,435  

 
  

  74,890  

 
        
  Adjusted EBITDA margin   

  21.0%  

 
  

  21.2%  

 
  

  19.2%  

 
  

  21.1%  

 
        
  Weighted average number of shares         
Basic  

42,055,796

 
  

41,386,719

 
  

41,926,277

 
  

40,766,991

 
Diluted  

42,567,969

 
  

42,449,242

 
  

42,421,242

 
  

41,813,337

 
        
  Earnings per share attributable to common shareholders:         
Basic, earnings per share  

0.18

 
  

0.26

 
  

0.53

 
  

0.75

 
Diluted, earnings per share  

0.18

 
  

0.26

 
  

0.52

 
  

0.73

 
Adjusted diluted, earnings per share  

0.35

 
  

0.34

 
  

0.88

 
  

0.92

 
 

  Jamieson Wellness Inc.
Consolidated Statements of Financial Position
In thousands of Canadian dollars

 
                                                                                                                                                                        
  

  September 30,
  2023  

 
  

  December 31,
  2022  

 
  Assets     
  Current assets     
Cash  

23,260

 
  

26,240

 
Accounts receivable  

116,087

 
  

160,798

 
Inventories  

223,442

 
  

154,488

 
Derivatives  

4,878

 
  

6,580

 
Prepaid expenses and other current assets  

7,406

 
  

4,298

 
Income taxes recoverable  

2,138

 
  

-

 
  

  377,211  

 
  

  352,404  

 
  Non-current assets     
Property, plant and equipment  

107,810

 
  

111,709

 
Goodwill  

277,660

 
  

272,916

 
Intangible assets  

372,215

 
  

367,205

 
Deferred income tax  

3,245

 
  

3,029

 
  Total assets   

  1,138,141  

 
  

  1,107,263  

 
    
  Liabilities     
  Current liabilities     
Accounts payable and accrued liabilities  

127,908

 
  

142,566

 
Income taxes payable  

-

 
  

7,387

 
Derivatives  

12

 
  

-

 
Current portion of other long-term liabilities  

19,310

 
  

4,852

 
  

  147,230  

 
  

  154,805  

 
  Long-term liabilities     
Long-term debt  

300,973

 
  

400,000

 
Post-retirement benefits  

1,013

 
  

929

 
Deferred income tax  

59,142

 
  

58,007

 
Redeemable preferred shares  

87,981

 
  

-

 
Other long-term liabilities  

44,842

 
  

61,931

 
  Total liabilities   

  641,181  

 
  

  675,672  

 
    
  Equity     
Share capital  

314,127

 
  

307,200

 
Warrants  

14,705

 
  

-

 
Contributed surplus  

18,812

 
  

17,115

 
Retained earnings  

86,729

 
  

85,483

 
Accumulated other comprehensive income  

19,794

 
  

21,793

 
  Total shareholders' equity   

  454,167  

 
  

  431,591  

 
Non-controlling interests  

42,793

 
  

-

 
  Total equity   

  496,960  

 
  

  431,591  

 
  Total liabilities and equity   

  1,138,141  

 
  

  1,107,263  

 
 

  Non-IFRS and Other Financial Measures  

 

This press release makes reference to certain financial measures, including non-IFRS financial measures that are historical, non-IFRS measures that are forward-looking, non-GAAP ratios and supplementary financial measures. Management uses these financial measures for purposes of comparison to prior periods and development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of ongoing operations and in analyzing the Company's business performance and trends. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. The Company uses the following non‑IFRS financial measures: "EBITDA," "Adjusted EBITDA" and "Adjusted net earnings," the most directly comparable financial measure for each that is disclosed in its financial statements being net earnings, "normalized gross profit," "normalized SG&A," "normalized earnings from operations," "cash from operating activities before working capital considerations" and "net debt," the most directly comparable financial measures for each that is disclosed in its financial statements being gross profit, SG&A, earnings from operations, cash flows from operating activities, and long-term debt, respectively, the following non-IFRS ratios: "Adjusted EBITDA margin," "Adjusted diluted earnings per share," "normalized gross profit margin," "normalized operating margin," and the following supplementary financial measures: "gross profit margin" and "operating margin" to provide supplemental measures of the Company's operating performance and thus highlight trends in the Company's core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management also uses non‑IFRS and supplementary financial measures in order to prepare annual operating budgets and to determine components of management compensation. For an explanation of the composition of each such measure and the usefulness and additional uses of each by management, see the " How we Assess the Performance of our Business " section of the MD&A, which is incorporated by reference. See below for a quantitative reconciliation of each non-IFRS financial measure to its most directly comparable financial measure disclosed in the Company's financial statements to which the measure relates.

 

The following tables provide a quantitative reconciliation of net earnings to EBITDA, Adjusted EBITDA, and Adjusted net earnings, as well as gross profit to normalized gross profit, SG&A to normalized SG&A, earnings from operations to normalized earnings from operations, and net debt, each of which are non-IFRS financial measures (see the " Non-IFRS and Other Financial Measures " of this press release for further information on each non-IFRS financial measure) for the three and nine months ended September 30, 2023 and September 30, 2022.

 

  Jamieson Wellness Inc.
Segment Information
In thousands of Canadian dollars, except as otherwise noted

 
                                                                                                                                                                                                                                                                                                                                                                                    
  Jamieson Brands         
   Three months ended
September 30
 
    
  

  2023  

 
 

 

 
 

  2022  

 
 

 

 
 

  $ Change  

 
 

 

 
 

  % Change  

 
Revenue  

129,138

 
  

112,248

 
  

16,890

 
  

15.0%

 
        
Gross profit  

47,691

 
  

45,202

 
  

2,489

 
  

5.5%

 
Amortization of fair value adjustments  

3,504

 
  

-

 
  

3,504

 
  

100.0%

 
Normalized gross profit  

51,195

 
  

45,202

 
  

5,993

 
  

13.3%

 
        
Gross profit margin  

36.9%

 
  

40.3%

 
  

-

 
  

(3.4%)

 
Normalized gross profit margin  

39.6%

 
  

40.3%

 
  

-

 
  

(0.7%)

 
        
Share-based compensation (1)  

1,413

 
  

1,315

 
  

98

 
  

7.5%

 
        
Selling, general and administrative expenses  

29,258

 
  

29,332

 
  

(74)

 
  

(0.3%)

 
Acquisition and divestiture related costs (2)  

(431)

 
  

(6,270)

 
  

5,839

 
  

93.1%

 
IT system implementation (3)  

(2,370)

 
  

(935)

 
  

(1,435)

 
  

(153.5%)

 
Normalized selling, general and administrative expenses  

26,457

 
  

22,127

 
  

4,330

 
  

19.6%

 
        
  Earnings from operations   

  17,020  

 
  

  14,555  

 
  

  2,465  

 
  

  16.9%  

 
Acquisition and divestiture related costs (2)  

431

 
  

6,270

 
  

(5,839)

 
  

(93.1%)

 
IT system implementation (3)  

2,370

 
  

935

 
  

1,435

 
  

153.5%

 
Amortization of fair value adjustments (4)  

3,504

 
  

-

 
  

3,504

 
  

100.0%

 
  Normalized earnings from operations   

  23,325  

 
  

  21,760  

 
  

  1,565  

 
  

  7.2%  

 
        
  Operating margin   

  13.2%  

 
  

  13.0%  

 
  

  -  

 
  

  0.2%  

 
  Normalized operating margin   

  18.1%  

 
  

  19.4%  

 
  

  -  

 
  

  (1.3%)  

 
        
  Adjusted EBITDA   

  29,125  

 
  

  27,158  

 
  

  1,967  

 
  

  7.2%  

 
  Adjusted EBITDA margin   

  22.6%  

 
  

  24.2%  

 
  

  -  

 
  

  (1.6%)  

 
        
  Strategic Partners         
   Three months ended
September 30
 
    
  

  2023  

 
 

 

 
 

  2022  

 
 

 

 
 

  $ Change  

 
 

 

 
 

  % Change  

 
        
Revenue  

22,367

 
  

26,681

 
  

(4,314)

 
  

(16.2%)

 
        
Gross profit  

3,459

 
  

3,287

 
  

172

 
  

5.2%

 
Gross profit margin  

15.5%

 
  

12.3%

 
  

-

 
  

3.2%

 
        
Selling, general and administrative expenses  

1,522

 
  

1,523

 
  

(1)

 
  

(0.1%)

 
        
  Earnings from operations   

  1,937  

 
  

  1,764  

 
  

  173  

 
  

  9.8%  

 
  Operating margin   

  8.7%  

 
  

  6.6%  

 
  

  -  

 
  

  2.0%  

 
        
  Adjusted EBITDA   

  2,746  

 
  

  2,347  

 
  

  399  

 
  

  17.0%  

 
  Adjusted EBITDA margin   

  12.3%  

 
  

  8.8%  

 
  

  -  

 
  

  3.5%  

 
 

  Jamieson Wellness Inc.
Segment Information (continued)
In thousands of Canadian dollars, except as otherwise noted

 
                                                                                                                                                                                                                                                                                                                                                                                                                                                    
  Jamieson Brands         
   Nine months ended
September 30
 
    
  

  2023  

 
 

 

 
 

  2022  

 
 

 

 
 

  $ Change  

 
 

 

 
 

  % Change  

 
Revenue  

370,164

 
  

283,151

 
  

87,013

 
  

30.7%

 
        
Gross profit  

141,211

 
  

118,694

 
  

22,517

 
  

19.0%

 
Amortization of fair value adjustments (4)  

5,819

 
  

-

 
  

5,819

 
  

100.0%

 
Normalized gross profit  

147,030

 
  

118,694

 
  

28,336

 
  

23.9%

 
        
Gross profit margin  

38.1%

 
  

41.9%

 
  

-

 
  

(3.8%)

 
Normalized gross profit margin  

39.7%

 
  

41.9%

 
  

-

 
  

(2.2%)

 
        
Share-based compensation (1)  

4,334

 
  

3,593

 
  

741

 
  

20.6%

 
        
Selling, general and administrative expenses  

93,200

 
  

72,831

 
  

20,369

 
  

28.0%

 
Acquisition and divestiture related costs (2)  

(5,539)

 
  

(9,754)

 
  

4,215

 
  

43.2%

 
IT system implementation (3)  

(4,469)

 
  

(3,110)

 
  

(1,359)

 
  

(43.7%)

 
Other  

179

 
  

(127)

 
  

306

 
  

240.9%

 
Normalized selling, general and administrative expenses  

83,371

 
  

59,840

 
  

23,531

 
  

39.3%

 
        
  Earnings from operations   

  43,677  

 
  

  42,270  

 
  

  1,407  

 
  

  3.3%  

 
Acquisition and divestiture related costs (2)  

5,539

 
  

9,754

 
  

(4,215)

 
  

(43.2%)

 
IT system implementation (3)  

4,469

 
  

3,110

 
  

1,359

 
  

43.7%

 
Amortization of fair value adjustments (4)  

5,819

 
  

-

 
  

5,819

 
  

(100.0%)

 
Other  

(179)

 
  

127

 
  

(306)

 
  

(240.9%)

 
  Normalized earnings from operations   

  59,325  

 
  

  55,261  

 
  

  4,064  

 
  

  7.4%  

 
        
  Operating margin   

  11.8%  

 
  

  14.9%  

 
  

  -  

 
  

  (3.1%)  

 
  Normalized operating margin   

  16.0%  

 
  

  19.5%  

 
  

  -  

 
  

  (3.5%)  

 
        
  Adjusted EBITDA   

  76,432  

 
  

  69,256  

 
  

  7,176  

 
  

  10.4%  

 
  Adjusted EBITDA margin   

  20.6%  

 
  

  24.5%  

 
  

  -  

 
  

  (3.9%)  

 
        
  Strategic Partners         
   Nine months ended
September 30
 
    
  

  2023  

 
 

 

 
 

  2022  

 
 

 

 
 

  $ Change  

 
 

 

 
 

  % Change  

 
        
Revenue  

85,643

 
  

71,443

 
  

14,200

 
  

19.9%

 
        
Gross profit  

13,321

 
  

8,455

 
  

4,866

 
  

57.6%

 
Gross profit margin  

15.6%

 
  

11.8%

 
  

-

 
  

3.8%

 
        
Selling, general and administrative expenses  

4,804

 
  

4,640

 
  

164

 
  

3.5%

 
Other  

(72)

 
  

(48)

 
  

(24)

 
  

(50.0%)

 
Normalized selling, general and administrative expenses  

4,732

 
  

4,592

 
  

140

 
  

3.0%

 
        
  Earnings from operations   

  8,517  

 
  

  3,815  

 
  

  4,702  

 
  

  123.3%  

 
Other  

72

 
  

48

 
  

24

 
  

50.0%

 
  Normalized earnings from operations   

  8,589  

 
  

  3,863  

 
  

  4,726  

 
  

  122.3%  

 
        
  Operating margin   

  9.9%  

 
  

  5.3%  

 
  

  -  

 
  

  4.6%  

 
  Normalized operating margin   

  10.0%  

 
  

  5.4%  

 
  

  -  

 
  

  4.6%  

 
        
  Adjusted EBITDA   

  11,003  

 
  

  5,634  

 
  

  5,369  

 
  

  95.3%  

 
  Adjusted EBITDA margin   

  12.8%  

 
  

  7.9%  

 
  

  -  

 
  

  4.9%  

 
 

  Reconciliation of Non-IFRS Financial Measures
In thousands of Canadian dollars

 
                                                                                                                                                                                                                                                                                                                                                                                                                
   Three months ended     Nine months ended  
   September 30     September 30  
  ($ in 000's, except as otherwise noted)   

  2023  

 
  

  2022  

 
  

  2023  

 
  

  2022  

 
        
  Net earnings:   

  7,771  

 
  

  10,882  

 
  

  22,040  

 
  

  30,717  

 
  Add:         
Provision for income taxes  

4,915

 
  

2,052

 
  

9,101

 
  

9,417

 
Interest expense and other financing costs  

5,589

 
  

4,144

 
  

17,899

 
  

6,660

 
Accretion on preferred shares  

2,041

 
  

-

 
  

2,868

 
  

-

 
Depreciation of property, plant, and equipment  

3,695

 
  

3,194

 
  

10,821

 
  

8,574

 
Amortization of intangible assets  

1,501

 
  

1,472

 
  

4,366

 
  

3,599

 
        
  Earnings before interest, taxes, depreciation, and amortization (EBITDA)   

  25,512  

 
  

  21,744  

 
  

  67,095  

 
  

  58,967  

 
Share-based compensation  

1,413

 
  

1,315

 
  

4,334

 
  

3,593

 
Foreign exchange loss (gain)  

(1,359)

 
  

(759)

 
  

286

 
  

(709)

 
Acquisition and divestiture related costs  

431

 
  

6,270

 
  

5,539

 
  

9,754

 
Amortization of fair value adjustments  

3,504

 
  

-

 
  

5,819

 
  

-

 
IT system implementation  

2,370

 
  

935

 
  

4,469

 
  

3,110

 
Other  

-

 
  

-

 
  

(107)

 
  

175

 
  Adjusted EBITDA   

  31,871  

 
  

  29,505  

 
  

  87,435  

 
  

  74,890  

 
Provision for income taxes  

(4,915)

 
  

(2,052)

 
  

(9,101)

 
  

(9,417)

 
Interest expense and other financing costs  

(5,589)

 
  

(4,144)

 
  

(17,899)

 
  

(6,660)

 
Depreciation of property, plant, and equipment  

(3,695)

 
  

(3,194)

 
  

(10,821)

 
  

(8,574)

 
Amortization of intangible assets  

(1,501)

 
  

(1,472)

 
  

(4,366)

 
  

(3,599)

 
Share-based compensation (5)  

(1,290)

 
  

(1,315)

 
  

(4,047)

 
  

(3,593)

 
Tax deduction from vesting of certain share-based awards (6)  

-

 
  

(1,399)

 
  

(1,022)

 
  

(1,399)

 
Tax effect of normalization adjustments  

110

 
  

(1,708)

 
  

(2,710)

 
  

(3,267)

 
  Adjusted net earnings   

  14,991  

 
  

  14,221  

 
  

  37,469  

 
  

  38,381  

 
        
        
   Three months ended     Nine months ended  
   September 30     September 30  
  

  2023  

 
  

  2022  

 
  

  2023  

 
  

  2022  

 
        
  Gross profit   

  51,150  

 
  

  48,489  

 
  

  154,532  

 
  

  127,149  

 
Amortization of fair value adjustments  

3,504

 
  

-

 
  

5,819

 
  

-

 
  Normalized gross profit   

  54,654  

 
  

  48,489  

 
  

  160,351  

 
  

  127,149  

 
  Normalized gross profit margin   

  36.1%  

 
  

  34.9%  

 
  

  35.2%  

 
  

  35.9%  

 
        
  Selling, general and administrative expenses   

  30,780  

 
  

  30,855  

 
  

  98,004  

 
  

  77,471  

 
Acquisition and divestiture related costs  

(431)

 
  

(6,270)

 
  

(5,539)

 
  

(9,754)

 
IT system implementation  

(2,370)

 
  

(935)

 
  

(4,469)

 
  

(3,110)

 
Other  

-

 
  

-

 
  

107

 
  

(175)

 
  Normalized selling, general and administrative expenses   

  27,979  

 
  

  23,650  

 
  

  88,103  

 
  

  64,432  

 
        
  Earnings from operations   

  18,957  

 
  

  16,319  

 
  

  52,194  

 
  

  46,085  

 
Acquisition and divestiture related cost  

431

 
  

6,270

 
  

5,539

 
  

9,754

 
IT system implementation  

2,370

 
  

935

 
  

5,819

 
  

-

 
Amortization of fair value adjustments  

3,504

 
  

-

 
  

4,469

 
  

3,110

 
Other  

-

 
  

-

 
  

(107)

 
  

175

 
  Normalized earnings from operations   

  25,262  

 
  

  23,524  

 
  

  67,914  

 
  

  59,124  

 
  Normalized operating margin   

  16.7%  

 
  

  16.9%  

 
  

  14.9%  

 
  

  16.7%  

 
 

  Reconciliation of Net Debt
In thousands of Canadian dollars

 
                        
  ($ in 000's)   

  As at September 30,  

 
  

  As at December 31,  

 
  

  2023  

 
  

  2022  

 
    
  Long-term debt   

  300,973  

 
  

  400,000  

 
Cash  

(23,260)

 
  

(26,240)

 
  Net debt   

  277,713  

 
  

  373,760  

 
 
            
 

(1)

 
 

The Company's share-based compensation expense pertains to our long-term incentive plan (the "LTIP"), with performance-based share units ("PSUs"), time-based restricted share units ("RSUs"), and deferred share units ("DSUs") expenses, along with associated payroll taxes.

 
 

(2)

 
 

Current period expense mainly pertains to legal and consulting costs associated with the acquisition and integration of our former distributor partner in China on April 28, 2023, and costs associated with the completion of our transaction with DCP on May 16, 2023, as well as integration costs relating to our acquisition of youtheory which closed on July 19, 2022.

 
 

(3)

 
 

Current period expense mainly pertains to development costs associated with our IT system implementation to augment our system infrastructure. Unlike other system improvement projects with costs capitalized, due to its cloud-based nature, these system implementation costs are expensed accordingly.

 
 

(4)

 
 

This cost represents the post-closing amortization of the fair value increase of acquired inventories related to the April 28, 2023 transaction with our former distribution partner in China.

 
 

(5)

 
 

Costs pertaining to our LTIP, excluding PSUs granted to certain employees relating to business combinations.

 
 

(6)

 
 

The vesting of share-based compensation provides a tax benefit during the period in which the awards are settled.

 
 

 

 

  

  

  Investor and Media Contact Information:  
Jamieson Wellness
Ruth Winker
416-960-0052
rwinker@jamiesonlabs.com  

 

News Provided by Business Wire via QuoteMedia

JWEL:CA
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