Jamieson Wellness Inc. Reports Third Quarter 2022 Financial Results
TORONTO--(BUSINESS WIRE)--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 100th 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. 2022 2021 8,357 4,636 3,721 80.3% (20,613) 10,081 (30,694) (304.5%) (245,609) (6,615) (238,994) (3612.9%) 265,181 1,048 264,133 25203.5% 7,316 9,150 (1,834) (20.0%) (20,613) 10,081 (30,694) (304.5%) 37,042 9,078 27,964 308.0% 16,429 19,159 (2,730) (14.2%) 411,385 149,125 (7,316) (6,775) 404,069 142,350 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). ___________ (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 2022 2021 2022 2021 138,929 112,368 354,594 321,194 90,440 71,555 227,445 208,169 48,489 40,813 127,149 113,025 34.9% 36.3% 35.9% 35.2% 30,855 19,228 77,471 61,218 1,315 992 3,593 4,651 16,319 20,593 46,085 47,156 11.7% 18.3% 13.0% 14.7% (759) (577) (709) (444) 4,144 1,505 6,660 4,291 12,934 19,665 40,134 43,309 2,052 5,381 9,417 11,417 10,882 14,284 30,717 31,892 14,221 14,051 38,381 34,728 21,744 24,794 58,967 58,171 29,505 25,456 74,890 66,325 21.2% 22.7% 21.1% 20.6% 41,386,719 40,256,983 40,766,991 40,076,485 42,449,242 41,698,267 41,813,337 41,500,445 0.26 0.35 0.75 0.80 0.26 0.34 0.73 0.77 0.34 0.34 0.92 0.84 Jamieson Wellness Inc. Consolidated Statements of Financial Position In thousands of Canadian dollars 7,316 6,775 143,389 104,186 169,685 119,006 7,805 2,149 4,376 5,029 332,571 237,145 113,538 96,977 275,064 122,975 370,808 192,676 4,082 2,702 1,096,063 652,475 132,352 74,533 804 2,896 1,728 3,317 11,147 2,876 146,031 83,622 411,385 149,125 3,798 3,544 58,182 53,291 60,641 20,872 680,037 310,454 306,704 268,214 15,843 14,786 70,496 58,998 22,983 23 416,026 342,021 1,096,063 652,475 Jamieson Wellness Inc. Segment Information In thousands of Canadian dollars, except as otherwise noted 2022 2021 112,248 85,175 27,073 31.8% 45,202 37,690 7,512 19.9% 40.3% 44.3% - (4.0%) 45,202 37,717 7,485 19.8% 40.3% 44.3% - (4.0%) 29,332 17,645 11,687 66.2% 22,127 17,437 4,690 26.9% 1,315 992 323 32.6% 14,555 19,053 (4,498) (23.6%) 13.0% 22.4% - (9.4%) 21,760 19,288 2,472 12.8% 19.4% 22.6% - (3.2%) 27,158 23,363 3,795 16.2% 24.2% 27.4% - (3.2%) 2022 2021 26,681 27,193 (512) (1.9%) 3,287 3,123 164 5.3% 12.3% 11.5% - 0.8% 1,523 1,583 (60) (3.8%) 1,523 1,570 (47) (3.0%) 1,764 1,540 224 14.5% 6.6% 5.7% - 0.9% 1,764 1,553 211 13.6% 6.6% 5.7% - 0.9% 2,347 2,093 254 12.1% 8.8% 7.7% - 1.1% 2022 2021 283,151 243,461 39,690 16.3% 118,694 103,214 15,480 15.0% 41.9% 42.4% - (0.5%) 118,694 103,867 14,827 14.3% 41.9% 42.7% - (0.8%) 72,831 56,151 16,680 29.7% 59,840 53,074 6,766 12.7% 3,593 4,651 (1,058) (22.7%) 42,270 42,412 (142) (0.3%) 14.9% 17.4% - (2.5%) 55,261 46,142 9,119 19.8% 19.5% 19.0% - 0.5% 69,256 59,833 9,423 15.7% 24.5% 24.6% - (0.1%) 2022 2021 71,443 77,733 (6,290) (8.1%) 8,455 9,811 (1,356) (13.8%) 11.8% 12.6% - (0.8%) 4,640 5,067 (427) (8.4%) 4,592 4,850 (258) (5.3%) 3,815 4,744 (929) (19.6%) 5.3% 6.1% - (0.8%) 3,863 4,961 (1,098) (22.1%) 5.4% 6.4% - (1.0%) 5,634 6,492 (858) (13.2%) 7.9% 8.4% - (0.5%) 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 2022 2021 2022 2021 10,882 14,284 30,717 31,892 2,052 5,381 9,417 11,417 4,144 1,505 6,660 4,291 3,194 2,543 8,574 7,377 1,472 1,081 3,599 3,194 21,744 24,794 58,967 58,171 1,315 992 3,593 4,651 (759) (577) (709) (444) 6,270 - 9,754 - 934 - 3,110 - 1 159 175 2,337 - 88 - 1,789 - - - (179) 29,505 25,456 74,890 66,325 (2,052) (5,381) (9,417) (11,417) (4,144) (1,505) (6,660) (4,291) (3,194) (2,543) (8,574) (7,377) (1,472) (1,081) (3,599) (3,194) (2,714) (982) (4,992) (4,389) (1,708) 87 (3,267) (929) 14,221 14,051 38,381 34,728 2022 2021 2022 2021 48,489 40,813 127,149 113,025 - 27 - 653 48,489 40,840 127,149 113,678 34.9% 36.3% 35.9% 35.4% 30,855 19,228 77,471 61,218 (6,270) - (9,754) - (934) - (3,110) - (1) (159) (175) (2,337) - (62) - (1,136) - - - 179 23,650 19,007 64,432 57,924 16,319 20,593 46,085 47,156 6,270 - 9,754 - 934 - 3,110 - 1 159 175 2,337 - 89 - 1,789 - - - (179) 23,524 20,841 59,124 51,103 16.9% 18.5% 16.7% 15.9% (1) Pertains to the expenses relating to our long-term incentive plan (the “LTIP”), along with associated payroll taxes. (2) Expenses for legal, due diligence, regulatory, tax, and fairness opinions relating to the Nutrawise acquisition. (3) Relates to system implementation costs to advance our supply chain planning infrastructure. Unlike other system improvement projects with costs capitalized, due to its cloud-based nature, these system implementation costs are expensed accordingly. (4) Costs related to COVID-19 which do not reflect the ongoing costs of operation. (5) Prior year expenses mainly pertained to start-up costs to complete our transition to a third-party logistics provider to make room for capacity expansion at our existing operations. (6) Costs pertaining to our LTIP, excluding certain one-time grants to certain employees. Prior year expenses included the acceleration of share-based compensation expense in relation to our CEO transition, net of tax benefits realized on the vesting of certain share-based awards.
Nov 03, 2022 | www.businesswire.com