Jamieson Wellness Inc. Reports First Quarter 2021 Financial Results

Maintains Fiscal 2021 Guidance and Declares First Quarter Dividend

Jamieson Wellness Inc. (“Jamieson Wellness” or the “Company”) (TSX: JWEL) today reported financial results for its first quarter ended March 31, 2021. All amounts are expressed in Canadian dollars. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures. See “Non-IFRS Financial Measures” below.

Highlights of First Quarter 2021 Results versus First Quarter 2020 Results

• Revenue increased 16.3% to $98.3 million;
• Jamieson Brands revenue increased by 8.7%;
• Adjusted EBITDA increased 11.1% to $18.5 million;
• Net income was $6.1 million and adjusted net income increased 18.2% to $9.2 million; and
• Earnings per diluted share were $0.15 and adjusted earnings per diluted share were $0.22.

“I am incredibly proud of the entire Jamieson team as we maintained our momentum, delivering another quarter of solid top and bottom-line performance; all while continuing to prioritize the health and safety of our employees,” said Mark Hornick, President and Chief Executive Officer of Jamieson Wellness. “Branded Revenue grew by almost 9% led by strong growth in our international business and continued growth in our domestic branded business. While consumption in the quarter was not expected to match the initial demand surge accompanying the first wave of the pandemic, we continue to see very strong baseline demand from both new and existing consumers when comparing consumption to pre-pandemic levels. We remain focused on our long-term strategic objectives and investments required to continue to grow our domestic and international revenues while expanding our gross profit margins.”

First Quarter 2021 Results

Revenue increased 16.3% to $98.3 million in the first quarter of 2021 compared to $84.5 million in the first quarter of 2020 driven by 8.7% growth in Jamieson Brands and 51.9% growth in Strategic Partners.

Revenue in the Jamieson Brands segment increased by 8.7% or $6.1 million to $75.9 million. The Company’s domestic branded sales increased by 3.0% in the first quarter of 2021, offsetting the initial COVID-19 panic buying period which began in the first quarter of 2020 through a mid-quarter price increase, higher shipment volume to support continued demand and inventory replenishment at retailer and distributor partners. The Company’s international branded business increased by 55.2% compared to the first quarter of 2020, which includes non-immunity product order fulfillment in early 2021 as we prioritized immunity based products exiting 2020.

Revenue in the Strategic Partners segment increased 51.9%, or $7.6 million to $22.4 million in the first quarter of 2021 reflecting order timing and the expansion of programs with customers.

Gross profit increased by $2.6 million to $33.9 million in the first quarter of 2021 mainly driven by revenue growth. Gross profit margin decreased by 250 basis points to 34.5%, including 50 basis points as a result of start-up costs associated with completing the transition to a third-party logistics model. Normalized gross profit margin was 35.0% or 200 basis points lower than prior year reflecting a higher proportion of Strategic Partners sales due to timing, costs associated with COVID-19 safety and business continuity measures, and an upfront signing bonus on the renewal of the Company’s 3-year collective bargaining agreement with unionized hourly employees. Normalized gross profit margin in the Jamieson Brands segment decreased by 40 basis points to 41.5% as timing of promotional activities, pricing, and volume driven efficiencies were offset by costs associated with COVID-19 safety and business continuity measures and collective bargaining renewal bonuses. Gross profit margin in Strategic Partners decreased by 70 basis points to 12.7% mainly due to COVID-19 safety and business continuity measures.

Selling, general and administrative (“SG&A”) expenses increased by $3.1 million to $20.8 million in the first quarter of 2021. On a normalized basis, SG&A expenses increased $1.8 million to $19.3 million in the first quarter of 2021 due to additional resources to support strategic initiatives and the timing of marketing investments.

Earnings from operations decreased by $1.8 million, or 14.9%, to $10.5 million in the first quarter of 2021 and operating margin decreased by 390 basis points to 10.7% reflecting a lower gross profit margin, higher fixed costs including the transition to a third-party logistics provider and the acceleration of share-based compensation expense on the Company’s CEO transition. On a normalized basis, earnings from operations increased by $1.4 million, or 11.3% in the first quarter of 2021 and operating margin was 14.2% compared with 14.9% in first quarter of 2020.

Adjusted EBITDA increased 11.1% to $18.5 million in the first quarter of 2021 and adjusted EBITDA margin was 18.9% compared with 19.7% in the first quarter of 2020.

Interest expense and other financing costs decreased $0.5 million to $1.4 million in the first quarter of 2021 due to lower average borrowings and lower interest rates.

Net income for the first quarter of 2021 was $6.1 million compared with $8.0 million in the first quarter of 2020. Adjusted net income, which excludes all non-operating expenses and foreign exchange, increased $1.4 million, or 18.2%, to $9.2 million in the first quarter of 2021.

Adjusted net income excludes costs associated with share-based compensation, foreign exchange, international market expansion, business integration, COVID-19 related costs, other non-recurring income or expenses and related tax effects. A detailed reconciliation of reported net income to non-IFRS adjusted net income is included in the tables accompanying this release under the heading “Non-IFRS Financial Measures”.

Balance Sheet & Cash Flow

The Company used $5.1 million in cash from operations during the first quarter of 2021 compared with $2.9 million provided by operations in the first quarter of 2020. Cash from operating activities before working capital considerations of $11.9 million was $0.7 million lower due to costs incurred as part of the Company’s transition to a third-party logistics provider and COVID-19 safety and business continuity measures, offsetting higher revenues. Cash invested in working capital increased by $7.3 million driven by higher international branded and Strategic Partner sales which carry longer terms, partially offset by timing of payments. The Company’s cash as at March 31, 2021 was $8.8 million compared with $1.2 million on December 31, 2020 and $5.2 million at the end of the first quarter of 2020. The Company ended the quarter with approximately $114.7 million in cash and available operating lines and net debt of $160.3 million.

Maintaining Fiscal 2021 Outlook

The Company is maintaining its outlook for fiscal 2021 and continues to anticipate revenue in a range of $421.0 to $438.0 million, which represents annual growth of 4.3% to 8.6%. The Company estimates adjusted EBITDA in a range of $95.0 to $100.0 million and adjusted diluted earnings per share in a range of $1.24 to $1.32.

For additional details on the Company’s fiscal 2021 outlook, including guidance for the second quarter of 2021, refer to the “Outlook” section in the management’s discussion and analysis of financial condition and results of operations (“MD&A”) for the three months ended March 31, 2021.

Declaration of First Quarter Dividend

On May 4, 2021, the board of directors of the Company declared a cash dividend for the first quarter of 2021 of $0.125 per common share or approximately $5.0 million in the aggregate. The dividend will be paid on June 15, 2021 to all common shareholders of record at the close of business on May 31, 2021. The Company has designated this dividend as an “eligible dividend” for the purposes of the Income Tax Act (Canada).

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 months ended March 31, 2021 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 first quarter 2021 results at 5:00 p.m. ET today, May 5, 2021. The call can be accessed live over the telephone by dialing 1-866-248-8441 from Canada and the U.S. or 1-323-289-6576 from international locations. Due to increased volumes of conference calls this quarter, please dial the conference call number 15 minutes prior to the start time. 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 6067552 and it will be available until Wednesday, May 19, 2021.

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 http://public.viavid.com/player/index.php?id=144443 . 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 manufactures and markets sports nutrition products and specialty supplements under its Progressive, Precision and Iron Vegan brands. The Company also markets Smart Solutions, the #1 women’s natural health focused brand in Canada. For more information please visit 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 2021 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, 2021 and under the “Risk Factors” section in the Company’s MD&A filed today, May 5, 2021. 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 Company’s MD&A for a discussion of the uncertainties, risks and assumptions associated with these statements.

Non-IFRS Financial Measures

This press release makes reference to certain non‑IFRS measures. Management uses these non‑IFRS 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. We use non‑IFRS measures, including “gross profit”, “gross profit margin”, “operating margin”, “EBITDA”, “adjusted EBITDA”, “adjusted EBITDA margin”, “adjusted net income” and “adjusted diluted earnings per share” 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 measures in order to prepare annual operating budgets and to determine components of management compensation. Definitions of non-IFRS measures can be found in the Company’s MD&A.

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