Jamieson Wellness Inc. Reports Third Quarter 2022 Financial Results

Jamieson Wellness Inc. ("Jamieson Wellness" or the "Company") (TSX: JWEL) today reported financial results for its third quarter ended September 30, 2022. All amounts are expressed in Canadian dollars. Certain metrics, including those expressed on an adjusted basis, are non-IFRS and other financial measures. See "Non-IFRS and Other Financial Measures" below.

Highlights of Third Quarter 2022 versus Third Quarter 2021

• Total revenue increased to $138.9 million and Jamieson Brands revenue grew by 31.8%, including organic branded growth of 11.2%
• Increased Adjusted EBITDA ⁽¹⁾ by 15.9% to $29.5 million
• Net earnings were $10.9 million and Adjusted net earnings ⁽¹⁾ increased 1.2% to $14.2 million; and
• Diluted earnings per share were $0.26, and Adjusted diluted earnings per share ⁽²⁾ remain flat at $0.34

"Our third quarter results reflect the ongoing strength of our branded business with continued strong consumer consumption," said Mike Pilato, President and CEO of Jamieson Wellness. "Total revenue increased nearly 24% including organic growth of almost 12% in our domestic branded business and nearly 30% growth in China. It's an exciting time at Jamieson Wellness, as we continue to accelerate our leadership beyond our 100-year anniversary with advancements in the United States and China, two of our key growth pillars. The initial stages of our youtheory integration are progressing well and we are confident in the strategic value of our expansion in the United States, as well as the potential for long-term revenue growth and profitability as we start to realize synergies. As announced separately today, we will acquire specific assets from our distribution partner in China enabling us to directly manage our brands, marketing and distribution in the country. This will bring us closer to our consumers in the world's second largest vitamin market and unlock opportunities to further position the Jamieson brand for growth. Our team continues to execute exceptionally well in a challenging macro environment, and we are on track for a strong finish to our 100 ^th year."

Third Quarter 2022 Results

Revenue increased 23.6% to $138.9 million in the third quarter of 2022 compared with $112.4 million in the third quarter of 2021 driven by 31.8% growth in the Jamieson Brands segment, partially offset by a 1.9% decline in the Strategic Partners segment.

Revenue in the Jamieson Brands segment increased by $27.1 million, or 31.8%, to $112.2 million in the third quarter of 2022. The acquisition of youtheory this quarter added the United States, the largest VMS market in the world, as a key strategic growth pillar in our plan. This transaction contributed $17.5 million or 20.6% incremental revenue this quarter. The Company's domestic branded sales increased by 11.7% in the third quarter of 2022, reflecting the timing of fourth quarter promotional shipments and continued consumer demand supporting our elevated consumer base. The Company's international revenue grew by 8.5% on a reported basis compared with the third quarter of 2021 driven by growth in China of 29.2% reflecting recovery after COVID-19 related lockdowns last quarter, along with the strengthening of the US dollar, offset by a 7.8% decline in rest of the world as a result of continued geopolitical pressures in eastern Europe impacting the macro-economic environment.

Revenue in the Strategic Partners segment decreased by $0.5 million, or 1.9%, to $26.7 million in the third quarter of 2022 reflecting order timing and strategic exit of certain low margin programs.

Gross profit increased by $7.7 million to $48.5 million in the third quarter of 2022 mainly driven by higher revenue, including the impact of the youtheory acquisition. Normalized gross profit margin ⁽²⁾ for the Company and normalized gross profit margin in Jamieson Brands segment each decreased by 140 basis points to 34.9% and by 400 basis points to 40.3%, respectively, reflecting the lower gross profit margin profile, higher depreciation expense and product mix of youtheory and its proportional mix in overall sales. Gross profit margin ⁽³⁾ in Strategic Partners increased by 80 basis points to 12.3% mainly due to favourable customer mix and pricing offsetting higher global supply chain and input costs.

Selling, general and administrative ("SG&A") expenses increased by $11.6 million to $30.9 million in the third quarter of 2022. Excluding the impact of specified costs of $7.2 million mainly comprised of acquisition related costs and IT system development and implementation costs, and the acquisition impact of youtheory of $4.2 million, SG&A expenses increased by $0.5 million or 2.8% to $17.9 million in the third quarter of 2022. Jamieson Brands incurred higher costs to support its strategic initiatives, which were partially offset by the timing of marketing investments which were weighted heavier in the first half of the year to support the launch of our 100-year anniversary campaign.

Earnings from operations decreased by $4.3 million, or 20.8%, to $16.3 million in the third quarter of 2022 and operating margin ⁽³⁾ decreased by 660 basis points to 11.7% due to factors affecting gross profit margin discussed above and higher SG&A expenses including specified cost mainly related to youtheory acquisition and IT system implementation. Normalized earnings from operations ⁽¹⁾ increased by $2.7 million, or 12.9% in the third quarter of 2022 and normalized operating margin ⁽²⁾ was 16.9% compared with 18.5% in the third quarter of 2021.

Adjusted EBITDA increased by 15.9% to $29.5 million in the third quarter of 2022 and Adjusted EBITDA margin ⁽²⁾ was 21.2% compared with 22.7% in the third quarter of 2021. While gross profit margins are lower on the acquired youtheory business, Adjusted EBITDA margin ⁽²⁾ of Jamieson Brands remains strong at 24.2% in the quarter.

Interest expense and other financing costs increased by $2.6 million to $4.1 million due to higher average borrowing rates and higher borrowings to support the youtheory transaction in the quarter.

Net earnings for the third quarter of 2022 was $10.9 million compared with $14.3 million in the third quarter of 2021. Adjusted net earnings, which excludes all non-operating expenses and foreign exchange, increased by $0.2 million, or 1.2%, to $14.2 million in the third quarter of 2022.

Adjusted net earnings excludes costs associated with foreign exchange gain/loss, acquisition related costs, IT system improvements, COVID-19 related costs, business integration, and other non-operating earnings or expenses net of related tax effects. A quantitative reconciliation of reported net earnings to EBITDA, Adjusted EBITDA, and non-IFRS normalized gross profit, normalized SG&A, normalized earnings from operations and Adjusted net earnings are included in the table accompanying this release under the heading "Non-IFRS and Other Financial Measures".

Balance Sheet & Cash Flow

The Company used $20.6 million in cash from operations during the third quarter of 2022 compared with $10.1 million generated in the third quarter of 2021. Cash from operating activities before working capital considerations ⁽¹⁾ of $16.4 million was $2.7 million lower due to decreased earnings in the current quarter as a result of expenses associated with the acquisition of youtheory. Cash investments in working capital increased by $28.0 million driven by the investment in youtheory working capital as anticipated, higher inventories to maintain continuity of supply and the timing of sales and collections within the quarter. The Company's cash as at September 30, 2022 was $7.3 million compared with $6.8 million on December 31, 2021 and $9.2 million at the end of the third quarter of 2021. The Company ended the quarter with approximately $95.9 million in cash and available operating lines and net debt ⁽¹⁾ of $404.1 million.

Fiscal 2022 Outlook

The Company is narrowing its outlook for fiscal 2022 and anticipates revenue in the range of $550.0 to $560.0 million, which represents annual growth of 6.0% to 8.0% in the base business plus revenue growth of approximately 16.0% from the acquisition. The Company estimates Adjusted EBITDA in the range of $122.0 to $124.0 million and Adjusted diluted earnings per share in the range of $1.52 to $1.56.

For additional details on the Company's fiscal 2022 outlook, including guidance for the fourth quarter of 2022, 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, 2022.

Declaration of Third Quarter Dividend

The board of directors of the Company authorized and declared a cash dividend for the third quarter of 2022 of $0.17 per common share, or approximately $7.2 million in the aggregate. The dividend will be paid on December 15, 2022 to all common shareholders of record at the close of business on December 1, 2022. The Company has designated this dividend as an "eligible dividend" for the purposes of the Income Tax Act (Canada).

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⁽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.

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, 2022 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 2022 results at 5:00 p.m. ET today, November 3, 2022. The call can be accessed live over the telephone by dialing 1-888-204-4368 from Canada and the U.S. or 1-323-994-2093 from international locations. A replay will be available shortly after the call and can be accessed by dialing 1-844-512-2921 from Canada and the U.S. or 1-412-317-6671 from international locations. The passcode for the replay is 7518646 and it will be available until Thursday November 17, 2022.

Interested parties may listen to a simultaneous webcast of the conference call by logging on via the Investor Relations section of the Company's website at https://investors.jamiesonwellness.com or directly at https://viavid.webcasts.com/starthere.jsp?ei=1568803&tp_key=3467792580 . A replay of the webcast will be available for approximately 30 days following the call.

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 2022 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 29, 2022 and under the "Risk Factors" section in the MD&A filed today, November 3, 2022. 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

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

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

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, 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, 2022 and September 30, 2021.

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

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Investor and Media Contact Information:  
Jamieson Wellness
Ruth Winker
416-705-5437
rwinker@jamiesonlabs.com