Guru Organic Energy Announces Third Quarter 2021 Financial Results
-- Gross margin of 63% in Q3 2021
-- Transition to PepsiCo Beverages Canada ("PepsiCo") Canadian distribution operations well underway; effective October 4, 2021
-- Completion of bought deal and private placement generating $49.6 million in gross proceeds
-- Strong financial position with cash and credit facilities of over $75 million to support ongoing North American growth plans
-- Subsequent to Q3, more than 2,000 new points of sales added, including two major C&G banners in Canada and independent retailers across Canada and the U.S.
GURU Organic Energy Corp. (TSX: GURU) ("GURU" or the "Company"), Canada's leading organic energy drink brand, is pleased to announce its results for the third quarter and nine-month period ended July 31, 2021. All amounts are expressed in Canadian dollars unless otherwise indicated.
Financial Highlights Three months ended Nine months ended (in thousands of dollars, except per share data) July 31 July 31 2021 2020 2021 2020 Revenue 8,049 6,595 21,725 15,985 Gross profit 5,037 4,351 13,569 10,333 Net (loss) income (2,027 ) 1,236 (3,862 ) 989 Basic (loss) earnings per share (0.07 ) 0.06 (0.13 ) 0.05 Diluted (loss) earnings per share (0.07 ) 0.05 (0.13 ) 0.04 Adjusted EBITDA (1,541 ) 1,777 (3,067 ) 1,847
"In addition to achieving record revenues, maintaining solid margins and expanding our sales channel network, we are proud to have completed two game-changing transactions in the quarter that will contribute significantly to our ambitious long-term growth plans, especially in Canada," said Carl Goyette, President and CEO of GURU.
"First, our exclusive distribution agreement with PepsiCo in Canada is a strong endorsement of the GURU brand as a healthy alternative for consumers in the energy drink category. Our transition to PepsiCo's Canadian distribution operations ahead of the October 4, 2021 effective date is progressing well and as planned. This new way of doing business will vastly simplify our customer relationship management and distribution operations in Canada and will enable us to focus exclusively on supplying PepsiCo and on increasing GURU's brand awareness as the healthy alternative in the energy drink space across Canada."
"Second, the $49.6 million in gross proceeds generated by our recently completed bought deal and private placement further strengthen our financial position to over $75 million of cash and credit facilities. This enables us to ramp up our brand positioning and marketing efforts across North America and in support of PepsiCo."
"Recent market research confirmed that GURU is the #1 energy drink brand among adults under 25 in Quebec, the next generation of energy drink consumers, and that nearly 50% of GURU consumers are women, twice the industry average," added Mr. Goyette. "As we build our brand awareness across Canada, this data confirms that we are on the right track to transform and clean up the energy drink industry."
"Growing our market share in Canada and the U.S. and truly disrupting the industry at a national level will require focus and discipline, but we are confident in our ability to achieve this, as the organic, natural and better-for-you energy drink brand of choice for today's health-conscious consumers and the next generation of energy drink consumers," concluded Mr. Goyette.
Results of operations
Revenue increased by 22% to $8.0 million in the third quarter, compared to $6.6 million for the same period a year ago. The increase reflects sales growth in Canada, as a result of velocity growth and increased points of sale. Sales in Canada grew by 32%, including triple digit growth in the rest of Canada (excluding Quebec), while U.S. sales declined by 7% in constant dollars during the third quarter of fiscal 2021 compared to the same period last year. The decrease in U.S. sales was mainly due to the timing of sales as a product launch from a large banner was postponed from June to August, and to robust U.S. Q3 2020 sales due to a rebound effect in buying activity after the first wave of the COVID-19 pandemic. According to SPINS, which measures U.S. retail sales of GURU energy drinks, GURU experienced 38% growth nationally in Q3 2021 versus Q3 2020, and 54% growth in California for the same period. For the nine-month period, revenue increased by 36% to $21.7 million, up from $16.0 million for the same period in 2020.
Gross profit totalled $5.0 million in the third quarter, an increase of 16% compared to $4.4 million last year. Gross margin was 63%, compared to 66% for the same period a year ago. The decrease in gross margin was due to increased promotional activities and higher product costs driven by increased demand for ready-to-drink beverages and higher transportation costs since the onset of the COVID-19 pandemic. For the nine-month period, gross profit increased to $13.6 million from $10.3 million a year ago. Gross margin for the period was 62%, compared to 65% last year.
Selling, general and administrative expenses ("SG&A"), which include operational, sales, marketing and administration costs, amounted to $7.2 million or 90% of revenue in the third quarter, compared to SG&A of $2.7 million or 41% of revenue for the same period a year ago. The increase is mainly the result of our expansion plans, which included field and trade marketing investments in Ontario, Western and Atlantic Canada, expansion plan set-up costs, set-up costs incurred for the national Canadian distribution agreement, as well as additional costs associated with the operations of a public company. For the nine-month period, SG&A amounted to $17.5 million (80% of revenue), compared to $8.8 million (55% of revenue) for the same period a year ago.
Adjusted EBITDA amounted to $(1.5) million compared to $1.8 million last year. The decrease in adjusted EBITDA was due to higher SG&A, partially offset by the increase in gross profit. Adjusted EBITDA for the first nine months of the year was $(3.1) million in 2021 compared to earnings of $1.8 million in 2020.
Net loss for the third quarter totalled $2.0 million or $(0.07) per share (diluted), compared to a net income of $1.2 million or $0.05 per share (diluted) for the same period a year ago (2020 earnings per share calculated using post-RTO share split numbers). The majority of the net loss reflects the additional costs associated with operating as a public company, field and trade marketing launch activities in Ontario, Western and Atlantic Canada, and other set-up of our expansion plans. Net loss for the nine-month period totalled $3.9 million in 2021, or $(0.13) per share (diluted), compared to a net income of $1.0 million or $0.04 per share (diluted) for the same period a year ago.
As of July 31, 2021, the Company had cash and cash equivalents of $68.5 million and unused $CA and $US denominated credit facilities totalling $10 million.
Market Research conducted by element54 and Patterson Langlois for GURU in June 2021 with 1,500 participants in the province of Quebec.
SPINS IRI data, Total Multi-Outlet (MULO) and Natural channels, period ending August 8, 2021.
Refer to reconciliation of net (loss) income to adjusted EBITDA at the end of this release.
Third quarter 2021 conference call
GURU will hold a conference call to discuss its third quarter 2021 results today, September 14, 2021, at 10:00 a.m. ET. Interested parties can listen in by accessing the live audio webcast at https://investors.guruenergy.com/en/ir-corner or by dialling 833-678-0822 (North America) or 602-563-8278 (International). Participants will need to provide the following Conference ID Number: 1576625. A webcast replay will be available on GURU's website until September 14, 2022.
GURU Organic Energy Corp. (TSX: GURU) is a dynamic, fast-growing beverage company launched in 1999, when it pioneered the world's first natural, plant-based energy drink. The Company markets organic energy drinks in Canada and the United States through a distribution network of more than 21,000 points of sale, and through guruenergy.com and Amazon. GURU has built an inspiring brand with a clean list of organic plant-based ingredients. Its drinks offer consumers good energy that never comes at the expense of their health. The Company is committed to achieving its mission of cleaning the energy drink industry in Canada and the United States. For more information, go to www.guruenergy.com or follow us @guruenergydrink on Instagram and @guruenergy on Facebook.
This press release may contain "forward-looking statements" within the meaning of applicable Canadian securities legislation. Such forward-looking statements include, but are not limited to, information with respect to our objectives and the strategies for achieving those objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, estimates and intentions. Forward-looking statements are typically identified by the use of words such as "may", "would", "should", "could", "expect", "intend", "estimate", "anticipate", "plan", "foresee", "believe", or "continue", although not all forward-looking statements contain these words. Forward-looking statements are 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 the reader is therefore cautioned that such information may not be appropriate for other purposes. Forward-looking statements are based on assumptions and are 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 statements. Those risks and uncertainties include the following management of growth; reliance on key personnel; changes in consumer preferences; significant changes in government regulation; criticism of energy drink products and/or the energy drink market; economic downturn and continued uncertainty in the financial markets and other adverse changes in general economic or political conditions, as well as the COVID-19 pandemic or other major macroeconomic phenomena; global or regional catastrophic events; fluctuations in foreign currency exchange rates; revenues derived entirely from energy drinks; increased competition; relationships with co-packers and/or their ability to manufacture GURU's products; relationships with existing customers; changing retail landscape; increases in costs and/or shortages of raw materials and/or ingredients and/or fuel and/or costs of co-packing; failure to accurately estimate demand for its products; intellectual property rights; maintenance of brand image or product quality; retention of the full-time services of senior management; climate change; litigation; information technology systems; fluctuation of quarterly operating results; no assurance of continued profitability or positive EBITDA; and conflicts of interest. Certain assumptions were made in preparing the forward-looking statements concerning availability of capital resources, business performance, market conditions and consumer demand. Consequently, all of the forward-looking statements contained herein are 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 statements contained herein are provided as of the date hereof, and we do not undertake to update or amend such forward-looking statements whether as a result of new information, future events or otherwise, except as may be required by applicable law.
Non-IFRS Financial Measure
Adjusted EBITDA is a non-IFRS financial measure. Adjusted EBITDA is defined as net income or loss before new distribution agreement set-up expenses, reverse acquisition of Mira X expenses, income taxes, net financial expenses, depreciation and amortization, and stock-based compensation expenses. We believe that adjusted EBITDA is a useful measure of financial performance without the variation caused by the impacts of the items described above because it provides an indication of the Company's ability to seize growth opportunities in a cost-effective manner, finance its ongoing operations and service its long-term debt. Excluding these items does not imply that they are necessarily non-recurring. This non-lFRS financial measure is not an earnings or cash flow measure recognized by International Financial Reporting Standards (IFRS) and does not have a standardized meaning prescribed by IFRS. Our method of calculating this financial measure may differ from the methods used by other issuers and, accordingly, our definition of this non-lFRS financial measure may not be comparable to similar measures presented by other issuers. Investors are cautioned that non-lFRS financial measures should not be construed as an alternative to net income determined in accordance with IFRS as indicators of our performance or to cash flows from operating activities as measures of liquidity and cash flows.
Reconciliation of Net (Loss) Income to Adjusted EBITDA
Three-month periods ended Nine-month periods ended July 31, 2021 July 31, 2020 July 31, 2021 July 31, 2020 (In thousands of Canadian dollars) $ $ $ $ Net (loss) income (2,027 ) 1,236 (3,862 ) 989 National Canadian distribution agreement set-up costs 113 - 147 - Reverse acquisition of Mira X expenses 36 - 112 - Net financial expenses (6 ) 75 97 255 Depreciation and amortization 257 80 337 245 Income taxes (185 ) 364 (241 ) 293 Stock-based compensation expense 271 22 343 65 Adjusted EBITDA (1,541 ) 1,777 (3,067 ) 1,847
For further information, please contact:
GURU Organic Energy Investors Media Carl Goyette, President and CEO Lyla Radmanovich Ingy Sarraf, Chief Financial Officer PELICAN PR 514-845-4878 514-845-8763 email@example.com firstname.lastname@example.org